Claims for enhanced damages based solely on post-filing conduct have always been a tough sell, and it's only been getting worse for cases here in Delaware . This week, Judge Connolly held that a complaint can’t create a claim for willfulness, it can only be used to obtain relief on an existing claim.
Post-Filing Willfulness Has Taken Some Hits Generally
The downswing began with dicta in In re Seagate Tech., LLC, 497 F.3d 1360, 1374 (Fed. Cir. 2007), a case more famous for setting the general willfulness standard. The court closed that opinion by opining that
[a] patentee who does not attempt to stop an accused infringer's activities [via a preliminary injunction] should not be allowed to accrue enhanced damages based solely on the infringer's post-filing conduct
Seagate thus birthed the "Seagate bar," which would bedevil plaintiffs for years.
Mentor Graphics Did Not Help, at Least in Delaware
Things appeared to be looking up when the Federal Circuit addressed the Seagate bar again in Mentor Graphics Corp. v. EVE-USA, Inc., 851 F.3d 1275 (Fed. Cir. 2017). There, the Federal Circuit disavowed the rigid application of the Seagate bar as inconsistent with the intervening decision in Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016), which established a looser framework for establishing willfulness and enhanced damages.
As it happened, however, Mentor Graphics would actually contribute to the death of post-filing willfulness claims—at least in Delaware. Reviewing the decision in a later case, Judge Burke noted that the Federal Circuit spent much of the opinion analyzing whether the patentee's willfulness claims were based entirely on post-filing conduct—an inquiry which seems unnecessary in light of the ruling on the bar.
Indeed, he noted that the Court "could have simply said that it did not matter whether the alleged infringing conduct was entirely 'post-suit' conduct, because a claim of willful infringement may solely be based on post-suit conduct." Valinge Innovation AB v. Halstead New Eng. Corp., C.A. No. 16-1082-LPS-CJB, 2018 U.S. Dist. LEXIS 88696, at *30 (D. Del. May 29, 2018) (emphasis original).
Accordingly, he concluded that, "if a patentee wishes to successfully plead a claim of willful infringement, the patentee needs to be able to allege that some form of willfully infringing conduct has occurred as of the time it files its claim." Id. (emphasis added). The opinion is attached and well worth reading in full.
This rule appears significantly harsher than the "rigid" Seagate bar disavowed in Mentor Graphics, because it cannot be overcome even if the patentee moves for a preliminary injunction.
Judge Connolly Rejects Willfulness Based on the Notice in the Complaint
Interestingly, Judge Connolly recently arrived at potentially even harsher rule, through an entirely separate line of reasoning without citing Vallinge, Mentor Graphics, or Seagate. In Helios Streaming, LLC v. Vudu, Inc., C.A. No. 19-1792-CFC-SRF, D.I. 32 (D. Del. June 16, 2020), he adopted Magistrate Fallon's R&R dismissing willfulness allegations based entirely on post-suit conduct simply because "[t]he purpose of a complaint is not to create a claim but rather to obtain relief for an existing claim[,]" and thus "the complaint itself cannot be the source of the knowledge required to sustain claims of induced or willful infringement." Id. at 3.
This slightly different formulation of the rule appears to answer a question left open by Judge Burke's opinion in Valinge—can a patentee get around the requirement by filing an amended pleading that alleges willfulness as of the date of the original pleading? Judge Connolly's answer appears to be "no":
Plaintiffs should not assume that if they accept the Magistrate Judge's invitation to 'to file an amended pleading alleging post-suit inducement based on knowledge derived from the filing of the original complaint[,]' . . . I will deny a motion by defendants to dismiss that amended pleading.
Id. at 4 n.1. In other words, the Judge Connolly suggests that even if the patentee amends, the original complaint cannot serve as notice to support a willfulness claim.