In Halo, the Supreme Court unanimously rejected the two-part test for willful infringement under 35 U.S.C. §284 established by the Federal Circuit in In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc), and explicitly lowered the standard of evidence for enhanced damages due to willful infringement from clear and convincing to a preponderance of evidence.

Under Seagate, a finding of willful infringement that would warrant enhanced damages required a patent owner to show by clear and convincing evidence that: the alleged infringer's actions were objectively likely to constitute infringement; and the defendant knew or should have known of the risk of infringement. First, the Court rejected the use of the clear and convincing standard of evidence, holding, "patent-infringement litigation has always been governed by a preponderance of the evidence standard." Second, the Court rejected the two-part test, noting, "subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless."

In a concurring opinion, Justice Breyer, joined by Justices Kennedy and Alito, suggested three situations where enhanced damages would not be appropriate. First, a court cannot, "award enhanced damages simply because the evidence shows that the infringer knew about the patent and nothing more." Second, under 35 U.S.C. §298, enhanced damages cannot be awarded because the infringer failed to obtain legal advice on the matter. Third, because 35 U.S.C. §285 provides patent owners an opportunity to recover attorneys' fees, enhanced damages, "may not 'serve to compensate patentees' for infringement-related costs or litigation expenses."