Recent Decision in Halo Requires Reconsideration of Summary Judgment Motion on Willfulness

July 12, 2016

In a multi-district litigation, the district court had previously granted summary judgment in favor of the defendants on the issue of willful infringement. After the Supreme Court's decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., the plaintiff moved to reconsider the ruling on the ground that the substantive legal standard required for a finding of enhanced damages due to willful infringement had changed.

In response, the defendants argued that the plaintiff's motion was futile because the plaintiff had failed to identify any facts that would suggest egregious conduct subject to enhanced damages. The defendants also argued that if the motion was granted, then they should be permitted time to take discovery on the issue of willfulness and file appropriate motions after the discovery was completed.

The district court began its analysis by noting that the previous decision relied exclusively on In re Seagate Technology, LLC in granting summary judgment of no willful infringement and found "Plaintiff cannot satisfy its burden of establishing by clear and convincing evidence that Defendants' actions were objectively reckless." The district court then explained that "[t]he Supreme Court expressly rejected this legal standard in Halo. Halo, 2016 WL 3221515, at *8. In Halo, the Court found, the 'subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless.' Id. In doing so, the Halo Court expressly abrogated the two-prong test required by Seagate. Id. at *3."

As a result, the district court concluded that "prospectively applying the August 28, 2015 order would not be consistent with the current state of the law on enhanced damages. Thus, the August 28, 2015 grant of summary judgment on Plaintiff's claim of willful infringement is vacated."

The district court also concluded that the issue of willfulness remains a factual question reserved for the jury, for which there were disputed issues of fact that would preclude a future summary judgment motion. "In addition, the question of subjective willfulness under the current state of the law is typically a determination reserved for the jury. Traditionally, the subjective "second-prong" of Seagate has been viewed as a question of fact. Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., 682 F.3d 1003, 1006 (Fed. Cir. 2012). Post-Halo, at least one court has reasoned that the question of subjective willfulness remains a factual inquiry reserved for the jury. Presidio Components, Inc. v. Am. Technical Ceramics Corp., No. 3:14-cv-02061, Doc. No. 368 at 27 (S.D. Cal. June 17, 2016) (explaining that the Supreme Court in Halo did not hold that a jury may not make a finding as to subjective willfulness in denying judgment as a matter of law). This Court agrees. Here, the pre-trial record reveals factual disputes such that the question of subjective willfulness must be decided by the jury. Should Plaintiff fail to present sufficient evidence for a jury determination of subjective willfulness, such failure can of course be the subject of a Rule 50 motion. Ultimately, this Court will decide whether it is appropriate to award enhanced damages in this case, and, if so, in what amount. 35 U.S.C. ยง 284; Halo, 2016 WL 3221515, at *8."

Finally, the district court denied the request for additional discovery given the time the case had been pending and the extensive discovery already conducted. "The instant action has been active since October 21, 2010 and is set for trial to start on July 18, 2016. The parties have already exchanged extensive discovery throughout the course of this litigation and discovery has long been closed. The evidence that will be permitted at trial is only that evidence which has already been disclosed through discovery."

Transdata, Inc. v. Denton Municipal Electric and Oncor Electric Delivery Company, LLC
, Case No. 6:10-cv-00557-RWS-JDL (E.D. Tex. June 29, 2016)

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.