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Supreme Court will look at patent damages (again)

The Supreme Court on Monday announced it will take up a case involving so-called “enhanced damages” for patent cases, a process that allows patent owners to seek triple damages in situations where a company has deliberately infringed their invention.

The case involves a dispute between two electronics manufacturers, Halo Electronics and Pulse Electronics, over a microelectronic connector described in U.S. Patent 6116963, but its real significance relates to the triple damages rule, which can be a powerful weapon for patent owners.

The legal issue turns on a narrow technical question of whether the standard for obtaining triple damages should be the same as the one for obtaining attorneys’ fees. (The Supreme Court addressed the latter question in a 2014 case known as Octane). But, as patent scholars point out, the Halo case could offer the Supreme Court a chance to weigh in on a wider range of damages issues—including the role of juries in the patent system.

More broadly, the case signifies that the Supreme Court has not finished its work trying to fix a U.S. patent system that is considered by many, including prominent judges, to have become dysfunctional. Current problems include the power of shell companies known as patent trolls, and the role of plaintiff-friendly venues like East Texas, where juries regularly issue eye-popping verdicts—including a $533 million award against Apple in favor of a company that makes no products.

In the past five years, the Supreme Court has taken on an unusual number of intellectual property cases (Stanford law professor Lisa Ouellette has a helpful summary of recent patent rulings here), but this year it appeared set to scale back its IP docket. The decision to hear Halo now suggests that’s not the case. In addition, other cases that could soon come down the pipe include Samsung’s appeal in its epic battle with Apple (APPL) over smartphone patents.

Meanwhile, a major patent reform movement that saw bills sail through Congress earlier this year appears to have stalled.

You can hear more about the patent system’s problem in this interview with Senator Charles Schumer:

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