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Trolls vs Pirates: Halo/Stryker Oral Arguments. Today the Supreme Court heard.

Pulse Electronics, Inc., et al. Government agreed that the objectively reasonable defense “creates an arbitrary loophole that allows some of the most egregious infringers to escape enhanced damages.”MR. MARTINEZ: So recklessness, everyone agrees, is an objective inquiry.

And in every other area of law where courts are conducting an objective inquiry, what you . And you take what that actual person knew, and you figure out whether a reasonable man in that person’s shoes would have thought that there was a very high risk that the conduct at. What they are essentially doing is taking the reasonable man and giving him the benefit of omniscience, giving him the benefit of hindsight and saying, what facts do we know at the time of trial? And now that we know these facts at the time of trial, . I thought what they were doing was saying, we are not going to allow punitive damages in a case where the patent is so weak.

MARTINEZ: I think it’s possible to imagine . It wasn’t in anyone’s head. No one was aware of it at the time the infringement occurred. And maybe that law firm then puts together a reasonable but wrong theory under which the patent is invalid in light of that prior art. We think that’s a case in which the . There are thousands of patents, hundreds of thousands of patents.

There are lots of entities creating new products every day, new services. And we have tried, and I believe we have succeeded, in crafting an approach that balances the Court’s concerns with the need to respect the rights of patentees, including small companies like Halo. Justice Breyer offered some concern for software companies being accused of infringing weak patents: MR. WALL: Justice Breyer, the sky didn’t fall for a century and a half, and it’s not going to fall if you reverse the Federal Circuit’s framework, just as it didn’t fall after Octane and Highmark in the fees context. JUSTICE BREYER: It hasn’t fallen?

Go look at the market shares of the different companies that are seriously involved in software. PHILLIPS: This is not a classic copying case. I mean, in a lot of ways this case comes down to sort of trolls versus pirates in terms of how you want to analyze it.

Phillips, there’s a whole lot of worry articulated by Justice Breyer and reflected in your briefs about protecting innovation. But there’s not a whole lot of worry about protecting the patent owner. WALL: That’s right. JUSTICE SOTOMAYOR: All right? So if it’s not whim, what is it? How do we articulate a test that protects what Justice Breyer is concerned about, which I think is a legitimate concern, but doesn’t entrench a position that just favors you? MR. WALL: We think the statute was invoked for.

That needs to be intentional or reckless based on the facts as they were known to the infringer. How do I articulate this in a more generalized way? MR. WALL: I think what you would say is that in judging whether a reasonable person would have thought that there was a really high risk, you’ve got to take account of both the strength of the notice, what kind of notice were they on of the patent, and what would have been commercially reasonable in the industry as it exists. PHILLIPS: I would desperately ask you not to take out de novo review because we’re talking about an objective standard; it’s really almost . The issue is, is there an objectively reasonable basis for what’s been done here?

Wall identified as the “typical” case and.