Halo Electronics Inc v Pulse Electronics Inc (2016): In the United States, section 284 of the Patent Act provides that “upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement… [and] may increase the damages up to three times the amount found or assessed.” To determine when treble damages would be appropriate, the US Federal Circuit adopted a two-part test in In re Seagate Technology, LLC, 497 F.3d 1360, 1367. Under Seagate, a patent owner had to show “by clear and convincing evidence” that: (1) the infringer acted despite a high likelihood that its actions constituted infringement of a valid patent; and (2) that the risk of infringement was either known or so obvious that it should have been known to the accused infringer.
In Halo Electronics, Chief Justice Roberts noted that section 284 provides that “the court may increase damages up to three times the amount found or assessed.” On this point, Chief Justice Roberts stressed the lack of limiting language in the statute and emphasized that the use of the word “may” clearly connotes judicial discretion. When analyzing the conformity of the Seagate test to section 284, Chief Justice Roberts found the test to be unduly rigid and cumbersome on the statutory grant of discretional powers to the divisional courts. The main problem with the Seagate test was its prerequisite of a finding of objective recklessness. Chief Justice Roberts found that the rigidity of the test, specifically the objective recklessness requirement, has the effect of insulating some of the worst patent infringers from any liability for enhanced damages
In applying the discretion granted by section 284, the district courts are supposed to be guided by the sound legal principles developed over two centuries of interpretation. This discretion is broad, though should limit the award of enhanced damages to egregious cases of misconduct beyond typical infringement. The Seagate test imposes an artificial limit on this statutory discretion, and as such, was found to be inconsistent with section 284.