## Facts

- Halo Electronics manufactured patented surface-mount electronic packages used on circuit boards.
- Pulse Electronics competed in the same market and sold similar surface-mount packages.
- In 2002, Halo proposed licensing its patents to Pulse; Pulse declined after an internal review concluded the patents were invalid.
- Halo sued Pulse for patent infringement in the District of Nevada in 2007.
- A jury found Pulse infringed (including induced infringement), found willfulness, and awarded $1.5 million in reasonable royalty damages.
- Applying the Federal Circuit’s then-governing Seagate framework, the district court set aside the willfulness finding and denied enhanced damages under 35 U.S.C. § 284, reasoning that Pulse’s conduct was not “objectively reckless” in light of its invalidity position.
- The Federal Circuit affirmed the denial of enhanced damages under Seagate.

## Issues

1. Whether the Federal Circuit’s Seagate two-part test improperly limited district courts’ discretion to award enhanced damages under 35 U.S.C. § 284.
2. What standard of proof applies to willfulness/enhanced damages determinations under § 284.
3. What standard of appellate review applies to a district court’s decision to enhance damages under § 284.

## Decision

- The Supreme Court vacated the Federal Circuit’s judgment and remanded.
- The Court held Seagate’s framework was inconsistent with § 284 because it imposed an unduly rigid, judge-made threshold centered on “objective recklessness.”
- The Court rejected Seagate’s clear-and-convincing evidentiary burden as unsupported by § 284’s text.
- The Court held that enhanced damages determinations under § 284 are committed to the district court’s discretion and are reviewed on appeal for abuse of discretion.
- The Court emphasized enhanced damages are reserved for egregious misconduct beyond typical infringement.

## Legal Principles

- 35 U.S.C. § 284 authorizes courts to increase damages up to three times the amount found or assessed; the statutory term “may” confers discretion.
- Enhanced damages serve primarily punitive and deterrent purposes and are generally appropriate only for egregious infringement behavior (e.g., willful, malicious, bad-faith, flagrant conduct).
- A rigid requirement of “objective recklessness,” especially one that can be defeated by later-developed litigation defenses, improperly narrows § 284 and can shield highly culpable infringers.
- Absent statutory direction, a heightened “clear and convincing” burden is not required for § 284 enhancement decisions.
- Appellate review of a district court’s decision to award or deny enhanced damages under § 284 is for abuse of discretion, not a segmented standard tied to Seagate’s prongs.

## Conclusion

The Court restored broad, statute-based discretion to district courts under § 284, limiting enhanced damages to exceptional cases involving egregious infringement misconduct, rejecting Seagate’s rigid willfulness framework and its heightened proof and appellate-review structures.


Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93 (2016)