The District of Massachusetts Sheds Light on Halo’s New Standard for Willfulness and Enhanced Damages in Trustees of Boston University v. Everlight Electronics Co., Ltd.

Since the Supreme Court decision in Halo Electronics v. Pulse Electronics came down earlier this year (as previously discussed here), district courts across the country have been grappling with the high court’s new standard for determining willful infringement and awarding enhanced damages in patent cases. In the District of Massachusetts, only one case to date has interpreted this new standard, Trustees of Boston University v. Everlight Electronics Co., Ltd.

In this case, plaintiff Trustees of Boston University (BU) alleged that defendants Everlight Electronics Co., Ltd., Epistar Corporation, and Lite-On Inc. infringed U.S. Patent No. 5,686,738 (the ’738 patent) and that Epistar’s and Everlight’s infringement was willful, among other things. On the issue of willfulness, the court instructed the jury that, “[t]o prove willfulness, Boston University must persuade you by clear and convincing evidence ... that the defendant actually knew, or it was so obvious that the defendant should have known, that its actions constituted an unjustifiably high likelihood of infringement of a valid patent.” This instruction was based on the subjective willfulness prong of In re Seagate Tech., LLC. The jury returned a verdict in favor of BU finding that defendants infringed the ’738 patent and that Epistar’s and Everlight’s infringement was willful.

After Halo, BU moved the court to award enhanced damages arguing: 1) the jury’s willfulness finding was binding on the Court; 2) enhanced damages are required; and 3) the Court’s discretion lies only in deciding what amount of enhanced damages to award.  The defendants responded that, because Halo completely rejected the Seagate test, the Court should accord no weight to the jury’s finding of willful infringement because it was based on the wrong standard.

Interpreting Halo, Judge Saris noted that the Supreme Court eliminated the ability of an infringer to avoid enhanced damages by relying on an objectively reasonable defense that was created by his “attorney’s ingenuity” solely for litigation, and that the Supreme Court rejected Seagate’s requirement that willfulness be proven by clear and convincing evidence. Judge Saris also stated that Justice Breyer’s concurrence in Halo provides helpful guidance for determining whether to award enhanced damages. Specifically, the district court referred to Breyer’s distinction that “while the Court explains that ‘intentional or knowing’ infringement ‘may’ warrant a punitive sanction, the word it uses is may, not must,” and that “[i]t is circumstance that transforms simple knowledge into such egregious behavior, and that makes all the difference.”

In its first post-Halo decision on the issues of willfulness and enhanced damages, the District of Massachusetts denied BU’s motion for enhanced damages. Despite the jury’s finding of willful infringement, the Court exercised its discretion in holding that the defendants' conduct did not rise to the level of egregiousness meriting an award of enhanced damages pursuant to 35 U.S.C. § 284 under the standard articulated in Halo. However, the district court’s decision leaves open the issue of whether a jury’s verdict, based on the subjective prong of the now-overruled Seagate test, is sufficient for a court to also find subjective willfulness. In this case, the District of Massachusetts “assumed” that the jury’s finding was sufficient to support the court’s finding. But nevertheless, the district court declined to award enhanced damages even in light of the jury’s finding of subjective willfulness.

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