LegiStorm

Summary:

For more than a decade, some Members of Congress have considered bills that have proposed reforms to the law of patent remedies. Under current law, courts may award damages to compensate patent proprietors for an act of infringement. Damages consist of the patent owner’s lost profits due to the infringement, if they can be proven. Otherwise the adjudicated infringer must pay a reasonable royalty. Courts may also award enhanced damages of up to three times the actual damages in exceptional cases. In addition, courts may issue an injunction that prevents the adjudicated infringer from employing the patented invention until the date the patent expires. Finally, although usually each litigant pays its own attorney fees in patent infringement cases, win or lose, the courts are authorized to award attorney fees to the prevailing party in exceptional cases. Some observers believe that the courts are adequately assessing remedies against adjudicated patent infringers. Others have expressed concerns that the current damages system systematically overcompensates patent proprietors. Some suggest that the usual rule regarding attorney fees— under which each side most often pays its own fees—may encourage aggressive enforcement tactics by “patent assertion entities,” which are sometimes pejoratively called patent trolls. Damages often occur in the context of a patent that covers a single feature of a multi-component product. In addition, many of these other components are subject to additional patents with a fragmented ownership. The courts have developed such principles as the “entire market value rule” and have also addressed the concept of “royalty stacking,” in order to address these issues. Legislation was introduced before Congress relating to these matters, but these bills were not enacted. Current law allows courts to award enhanced damages in exceptional cases, which ordinarily applies to circumstances of willful infringement or litigation misconduct. Recent Supreme Court decisions appear to have increased the likelihood that enhanced damages will be awarded, in contrast to earlier legislative proposals that were more restrictive. Bills in the 114th Congress would have called for the prevailing party to be awarded its attorney fees in patent litigation. Under these proposals, fees would not be awarded if the nonprevailing party’s position and conduct were justified or special circumstances made the award unjust. This legislation was not enacted, but it may be reintroduced in the 115th Congress. Design patents are subject to a special damages statute which asserts that anyone who sells an “article of manufacture” containing the patented design may be liable to the patent owner “to the extent of his total profit.” In its 2016 decision in Samsung v. Apple, the Supreme Court ruled that an “article of manufacture” need not consist of the entire product sold to consumers, but could also mean a portion of a multi-component product. This ruling appears to have decreased the damages available for the infringement of design patents that apply to products with multiple features. In the 115th Congress, the STRONGER Patents Act of 2017, S. 1390, would modify the principles governing the award of an injunction against an adjudicated patent infringer. S. 1390 would establish a presumption that future infringements would cause irreparable injury and that legal remedies, such as damages, are inadequate to compensate for those infringements. This proposal would increase the likelihood that patentees could obtain an injunction against infringers.