III. Analysis

First, this section analyzes and expands the arguments presented by Judge Gajarsa in his concurring opinion in Seagate. This section next examines the Federal Circuit's enhanced damages doctrine in light of the Supreme Court's opinion in eBay. Finally, this section briefly analyzes the Federal Circuit's enhanced damages doctrine in the context of tort theory.

A. Enhanced Damages Outside of Title 35

Several enhanced damages statutes outside of title 35 illustrate the anomalous nature of the Federal Circuit's enhanced damages doctrine under § 284. Indeed, in several of these statutes, Congress has explicitly stated both the purpose of enhanced damages and the necessity of finding willfulness as a predicate for such awards.99 Courts expect such clear statements from Congress when limiting recovery for patent infringement.100 Conversely, statutes lacking clear statements generally have been interpreted as giving courts broad equitable discretion to award enhanced damages on a case-by-case basis.101

Under the Copyright Act, copyright owners can elect to receive statutory damages in lieu of actual damages for infringement of their copyrights.102 If the owner so elects and is able to prove that the infringement was “willful,” the trial court has discretion to enhance the award of statutory damages up to a maximum amount of $150,000.103 Although the term “willful infringement” is not defined in the statute, it has been interpreted as reckless disregard of infringement risk.104 It is important to note that the copyright laws contain no provisions similar to § 284 that allow discretionary enhancement of damages based on general equitable principles. Thus, by express language, Congress has made willfulness a necessary condition for awarding enhanced damages under copyright law, and courts rely upon that express language when making such awards.105

The trademark statutes provide for enhanced damages in two distinct ways. First, 15 U.S.C. § 1117(a) provides for discretionary awards of enhanced damages based on general equitable principles:

Although not identical to § 284, the language of § 1117(a) has been interpreted to embody the same equitable principles-discretion, flexibility, and justice-that are implicit in § 284

In addition, a specific exception to the flexible, equity-based principles of § 1117(a) is provided in § 1117(b).108 This statute mandates trebling actual damages upon finding a trademark infringer “intentionally us[es] a mark or designation, knowing such mark or designation is a counterfeit mark . . . in connection with the sale, offering for sale, or distribution of goods or services.”109 The knowledge and intent requirements of § 1117(b) are analogous to the “willfulness” requirement under § 284.

One of Congress's stated purposes in passing the Fair Credit Reporting Act111 was to “insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy.”112 Consistent with this purpose, two statutory provisions exist for governing awards of damages in civil actions for violations of credit reporting statutes. In the case of a negligent violation, the successful plaintiff is entitled to actual damages and reasonable attorney's fees.113 The courts also have discretion to assess punitive damages against anyone who “willfully fails to comply with any requirement imposed under this subchapter.”114 Congress's explicit statements of the purpose of enhanced damages and the requirement for willfulness to justify enhanced damages awards differ significantly from § 284, and call into question the Federal Circuit's reading of an implicit willfulness requirement in § 284 without any such legislative guidance as to purpose.

B. Pre-Judgment Interest under 35 U.S.C. § 284

In General Motors Corp. v. Devex Corp.,115 the Supreme Court interpreted the conditions for which pre-judgment interest may be awarded under § 284 upon a finding of infringement.116 The issue facing the Court was whether Congress intended the Patent Act of 1946 to codify the common-law doctrine on pre-judgment interest known as the Duplate standard-this doctrine included several enumerated conditions for which an award of pre-judgment interest was not available.117

The Court noted that because Congress chose statutory language distinct from the common-law language of Duplate, there was no basis to infer that the new statutory provision merely codified the Duplate standard.118 Furthermore, the Court compared the language of § 284 with the statutory language restricting the discretionary award of attorney's fees to “exceptional cases,”119 and concluded that § 284 allowed a court to award interest and costs at its discretion. The Court supported this conclusion of presumed legislative intent by noting that “[w]hen Congress wished to limit an element of recovery in a patent infringement action, it said so explicitly.”120 The Court also held that award of pre-judgment interest should be generally available as a remedy and not restricted to “exceptional cases.”121 Applying the same rule of construction and reasoning to the language of the enhanced damages provision that immediately follows in § 284 leads to the conclusion that enhanced damages awards should not be unnecessarily limited.122

C. The Tipping Point-eBay and Permanent Injunctions Under 35 U.S.C. § 283

The Supreme Court in eBay considered the conditions under which a patentee is entitled to a permanent injunction against an infringer under 35 U.S.C. § 283.123 The case arose when patentee MercExchange sued website operators eBay and Half.com for patent infringement after the parties failed to come to terms on a license agreement.124 The district court awarded damages after finding that eBay and Half.com infringed the patent but denied permanent injunctive relief.125 The Federal Circuit reversed based on its “general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.”126

In considering the appropriateness of the Federal Circuit's general rule upon appeal, the Supreme Court held that district courts have discretion to grant or deny injunctive relief in patent infringement cases.127 Nevertheless, this discretion must be exercised according to the principles of equity that apply to all types of cases.128 Thus, a patentee's request for equitable relief arising under § 283 is subject to the same four-factor test as required for injunctive relief arising under any other statute.129

In support of this holding, the Court drew an analogy between § 283 and the injunctive relief provision of the Copyright Act, which provides that courts “may . . . grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.”130 The Court cited previous cases where it had refused to replace traditional equitable considerations with a rule automatically granting an injunction upon finding that a copyright was infringed.131 A similar analogy can be drawn between § 284 and the enhanced damages provision of trademark law, 15 U.S.C. § 1117(a), under which a court may exercise its discretion to enhance or reduce damages on a case-by-case basis.132 Courts also have interpreted this statute based on equitable considerations rather than applying per se rules.133 Since § 284 contains permissive language very similar to the language of 15 U.S.C. § 1117(a), under the eBay reasoning § 284 should also be interpreted based on flexible equitable considerations rather than as implying a rigid requirement for willfulness.134

In a concurring opinion, Chief Justice John Roberts noted the historical practice of granting injunctions against infringement in the vast majority of patent cases.135 He observed, however, that “[t]his historical practice . . . does not entitle a patentee to a permanent injunction or justify a general rule that such injunctions should issue.”136 Likewise, a historical practice-albeit an inconsistent one137 -of awarding enhanced damages under § 284 upon a finding of willfulness should not justify a general rule requiring willfulness as a predicate for such awards.

Numerous examples in the eBay opinions strongly advise courts against classifications and categorizations.138 When viewed together with the above arguments, ample evidence exists to conclude that, at a minimum, the Federal Circuit's enhanced damages doctrine is in tension with eBay.

D. The Tort of Negligent Infringement

The purpose served by awarding enhanced damages is an important but controversial issue underlying the Federal Circuit's enhanced damages doctrine interpreting § 284.139 Since patent infringement is a strict liability tort,140 even the most careful, accidental infringer will be liable for actual damages sustained by the patentee. As a result, an infringer's state of mind is only relevant to the degree to which the actual damages are enhanced.141 The infringer's state of mind, or degree of culpability, can range from accidental to deliberate.142 “Willful” is one degree within this range, defined as acting in reckless disregard or in spite of “an unjustifiably high risk of harm that is either known or so obvious that it should be known.”143 Awarding enhanced damages for willful infringement serves to punish culpable behavior and deter potential infringers from engaging in such behavior.144

Between willful and purely accidental infringement exists a spectrum of culpability for which punishment or deterrence may be desirable but currently unavailable under the Federal Circuit's enhanced damages doctrine. For instance, the two-part Seagate test determines willful infringement first by assessing whether the defendant acted in spite of an objectively high likelihood of infringement and, if so, by determining the defendant's subjective awareness of that high likelihood.145 By itself, the objective inquiry describes behavior commonly known as negligence, which is defined as “conduct which falls below the standard established by law for the protection of others against unreasonable risk of harm.”

Arguably, it is equally desirable to deter potential infringers from engaging in the unreasonable behavior defined by the first prong of the Seagate test.148 While the threat of actual damages and injunctive relief may provide some degree of deterrence,149 the Federal Circuit has recognized the importance of enhanced damages to serve this deterrent function.