We've written a lot on the developing case law in Delaware around willfulness and motions to dismiss. Willfulness requires knowledge of the infringement, and some of our judges have dismissed willfulness claims because the filing of a complaint for patent infringement cannot serve as the basis of knowledge of infringement.
Today, Judge Andrews followed that case law, and dismissed a willfulness claim in an amended complaint, stating that the original complaint cannot serve as a basis for establishing knowledge:
iFIT also alleges that Peloton knew of the '407 patent as of the filing of its original complaint. . . . I think this is irrelevant. My view is that an amended complaint cannot rely upon the original complaint as a basis to allege knowledge for a willful infringement claim. . . . Thus, iFIT has failed to sufficiently allege knowledge of the asserted patent to support its willful infringement claim. . . . In sum, iFIT has failed to state a claim for willful infringement because it has failed to plead that Peloton knew of the '407 patent and that Peloton knew of any alleged infringement. Thus, I will grant Peloton's motion to dismiss iFIT's claim for willful infringement . . . .
But here is the new part: despite dismissing plaintiff's "willfulness" allegation, Judge Andrews permitted plaintiff's claim for "enhanced damages" under § 284–the willfulness statute—to remain in the case. As he explained, "willfulness" is not the only basis for enhanced damages under 35 U.S.C. 284:
I am not prepared to say that a finding of willfulness at trial is an absolute prerequisite to an award of enhanced damages. The Supreme Court has held that " we eschew any rigid formula for awarding enhanced damages under§ 284." Halo, 579 U.S. at 107. And, "enhanced damages . . . should generally be reserved for egregious cases typified by willful misconduct." Id. at 106 (emphasis added). What if the defendant's witnesses perjure themselves in depositions and then at trial? There is no reason to expect that in this case, but, as in any case, at the pleading stage, no one knows what will happen as the case progresses. That is why every case has boilerplate claims that the case is an exceptional case and the party should be awarded its attorneys' fees. . . . The parties do not cite any controlling case stating that a trial verdict of willfulness is an absolute prerequisite to an award of enhanced damages. Indeed, Peloton's brief concedes the possibility that there could be some other sort of egregious behavior that would be the basis for enhanced damages. (D.I. 14 at 7).
He then made clear that no factual allegations are necessary to support a "boilerplate claim" of enhanced damages under § 284:
We do not require any factual allegations supporting the plausibility of this assertion. . . . Since I do not think a plaintiff has to plead anything in support of a boilerplate claim of enhanced damages, and since I cannot rule out what a defendant might later do, I will deny the motion to dismiss iFIT' s claim of enhanced damages.
What does this mean?
The full implications of this are a bit unclear. The Court dismissed the "willfulness" allegation but allowed the § 284 claim for treble damages to remain, in light of potential future conduct.
Could that future conduct include ongoing sales in light of the infringement allegations in a patent case? What if there is a later e-mail that says "sure, this product definitely infringes, but let's launch it anyway"? To me, the answer is uncertain. Those things sound like willfulness—which was dismissed—but also sound like future conduct that could support a claim of enhanced damages.
It is also notable that the example Judge Andrews gives, perjury by witnesses on the stand, goes to the accused infringer's conduct in the litigation, not outside of it.
When discussions about treble damages under § 284 are framed on willfulness terms, they normally focus on the parties' substantive conduct outside of the case, e.g., sales despite knowledge of infringement. Allegations of misconduct by the attorneys or others in the litigation are more often part of a § 285 argument for attorneys' fees, rather than a § 284 argument for treble damages.
This decision suggests that § 284 can actually encompass both, and that attorneys for patentees should consider expanding the scope of arguments when it comes to enhanced damages under § 284. Treble damages can be a massive hammer, even in comparison to the sky-high attorney's fees in some patent cases. Plus, I don't know of anything that says a patentee can't get both § 284 enhanced damages and § 285 attorney's fees.
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