Cisco Systems, Inc. v. SRI International, Inc.

The Patent Act grants district courts discretion to enhance patent “damages up to three times the amount” awarded. 35 U.S.C. § 284. Under Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93, 110 (2016), enhancement is limited to “egregious cases of misconduct beyond typical infringement.” The “conduct warranting enhanced damages” must relate to the defendant’s alleged “infringement behavior” and has been “described … as willful, wanton, malicious, badfaith, deliberate, consciously wrongful, flagrant, or— indeed—characteristic of a pirate.” Id. at 103-104. The district court rejected SRI’s enhancement request because it found the threshold requirement of willful infringement not satisfied, as there was “no substantial evidence that Cisco’s infringement was ‘wanton, malicious, and bad-faith.’” App. 25a. Without reviewing that particular finding, the Federal Circuit reversed on willfulness. But rather than remand on enhancement, the Federal Circuit awarded enhanced damages by reaching back to a previously-vacated ruling that was not part of the judgment on appeal and where the prior district judge had not applied the Halo standard. As a result, the Federal Circuit imposed enhanced damages without any court ever finding that Cisco engaged in egregious infringement behavior. The questions presented are:

1. Whether enhanced damages under 35 U.S.C. § 284 may be awarded absent a finding of egregious infringement behavior; and

2. Whether the court of appeals may award enhanced damages without first allowing the district court to exercise its discretion to decide that issue. (i)