“Awards of enhanced damages are not to be meted out in a typical infringement case, but are instead designed as a punitive or vindictive sanction for egregious infringement behavior.” WCM v. IPS. There is “no requirement that enhanced damages must follow a finding of egregious misconduct.” Id. Rather, “courts should continue to take into account the particular circumstances of each case in deciding whether” to enhance damages. Id. “Because a finding of willful infringement does not command the enhancement of damages,” the Read v. Portec factors, “although not mandatory, do assist the trial court in evaluating the degree of the infringer’s culpability and in determining whether to exercise its discretion to award enhanced damages at all, and if so, by how much the damages should be increased.” WCM.
The Read factors are:
(1) whether the infringer deliberately copied the ideas or design of another;
(3) the infringer’s behavior as a party to the litigation;
(4) the infringer’s size and financial condition;
(5) the closeness of the case;
(6) the duration of the infringer’s misconduct;
(7) remedial action by the infringer;
(8) the infringer’s motivation for harm; and
(9) whether the infringer attempted to conceal its misconduct.
This post will focus on Federal Circuit decisions involving the second Read factors: whether the infringer, when it knew of the other’s patent protection, investigated the scope of the patent and formed a good-faith belief that the patent was invalid or not infringed.
| Case | Strong Evidence of Lack of Good-Faith Belief? | Enhanced Damages? | Enhancement Multiple | Notes |
| I4I Ltd. Partnership v. Microsoft Corp., 598 F.3d 831 (Fed. Cir. 2010) | Yes | Yes | 1.2x | Enhancement was warranted. There was evidence that the defendant was aware of plaintiff’s patent, never formed a good-faith belief of noninfringement, and intended to add a feature in its product with similar capabilities to plaintiff’s patented products. Moreover, factors 2, 4, 6, 7, and 8 supported enhancement. |
| Ncube Corp. v. Seachange Intern., Inc., 436 F.3d 1317 (Fed. Cir. 2006) | Yes | Yes | 2x | Enhancement was warranted. Defendant deliberately copied plaintiff’s invention in its product without investigating the scope of the patent. So defendant had not formed a good-faith belief excusing its conduct. Moreover, the case for literal infringement was not close. |
| Engineered Products Co. v. Donaldson Company, Inc., 147 Fed. Appx. 979 (Fed. Cir. 2005) | Yes | Yes | 3x | Enhancement was warranted because defendant deliberately copied, failed to make a good-faith effort to avoid infringement, and because the case of infringement was not close. |
| Metabolite Lab., Inc. v. Laboratory Corp., 370 F.3d 1354 (Fed. Cir. 2004) | Yes | Yes | 2x | Enhancement was warranted. Defendant failed to conduct a reasonable and independent investigation as to whether its product infringed despite evidence of possible infringement. Moreover, at least 3 other Read factors favored enhancement. |
| Johns Hopkins University v. Cellpro, 152 F.3d 1342 (Fed. Cir. 1998) | Yes | Yes | 3x | Enhancement was warranted. Defendant’s opinion letters did not provide it with a good-faith belief because they were untimely, not competent, and not relied on by defendant. |
| SRI Intl. v. Advanced Technology Laboratories Inc., 127 F.3d 1462 (Fed. Cir. 1997) | Yes | Yes | 3x | Enhancement was warranted because defendant’s opinion from counsel did not provide it with an adequate basis for a good faith belief that the patent would be held invalid or unenforceable or not infringed. Moreoever, other factors favored enhancement. |
| WCM Indus., Inc. v. IPS Corp., 2016-2211 (Fed. Cir. Feb. 5, 2018) | No | No | — | The district court erred in balancing the factors and in trebling damages. Although defendant knew that plaintiff’s products in general were patent protected and defendant did not investigate certain patents involved in a different lawsuit, the evidence involves patents or products not at issue in this case. |
| Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 670 F.3d 1171 (Fed. Cir. 2012) | No | Yes | 2x | Enhancement was warranted because the district court found that all Read factors except one weighed in favor of enhanced damages. The good-faith belief of invalidity or noninfringement was only slightly in favor of enhanced damages. |
| Odetics, Inc. v. Storage Technology Corp., 185 F.3d 1259 (Fed. Cir. 1999) | No | No | — | Enhancement was not warranted because defendant had not copied the invention, engaged in no misconduct during litigation, had evinced no motivation to harm plaintiff; and had not attempted to conceal its infringement. Moreover, the district court noted that given the closeness of the case, it would have denied enhanced damages even if defendant had not mounted a good-faith and substantial challenge to the existence of infringement. |
| Virginia Panel Corporation v. Mac Panel Co., 133 F.3d 860 (Fed. Cir. 1997) | No | Yes | 1.1x | Only a slight enhancement was warranted because defendant conducted a marginally sufficient investigation of the asserted patents, and because on balance the other factors did not favor a larger enhancement. |
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