A recent ruling by the United States Court of Appeals for the Federal Circuit could raise the bar for "willful infringement" claims in patent cases, making it more difficult for patent owners to collect treble damages. That's good news to those concerned that the mere threat of these massive damages often leads defendants to settle out of court rather than risk a negative judicial decision.

The case in question involves Seagate and centers on some discovery issues from a patent infringement case brought against the company by an inventor and by MIT (masochists can read the entire decision here). Willful infringement claims generally mean that a company has to pay three times the normal damages, and previous court decisions meant that the bar for such infringement was rather low. Companies only had to be found "negligent" to receive a smack with the willful infringement beatdown stick.

Now, the Court of Appeals for the Federal Circuit (which handles all federal patent appeals) has raised the bar. Accusers must now produce "at least a showing of objective recklessness" to claim willful infringement. Previously, companies would be forced to get the (expensive) opinion of outside counsel if they came across a patent that might in any way be possibly relevant to their business. This led to many companies encouraging employees not to read other companies' patents, and it could also create big expenses for small firms. In its decision, the court noted that "there is no affirmative obligation to obtain opinion of counsel" regarding other patents. The case could still be appealed to the Supreme Court.

Further reforms to the willful infringement standard could come from Congress if the Patent Reform Act of 2007 is passed. The bill has already cleared committees in both the House and Senate and will be picked up again when Congress returns from its August recess. The Patent Reform Act deals with the issue of willful damages, and it requires that a patent owner first notify the alleged infringer (in detail) and give the company time to respond. Only if the infringer then copies the invention can a willful infringement claim be brought. Willfulness can also not be claimed if the alleged infringer believed the patent was invalid after "reasonable reliance on advice of counsel."

Should the bill pass, willfulness infringement claims should become less of a minefield for companies and could lead to more patent cases proceeding to trial. It looks like Congress, the Court of Appeals for the Federal Circuit, the Supreme Court, and even the USPTO have recognized that patent litigation has become a problem. Thankfully, they're at least making an effort to fix it.

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