Willful infringement

A finding that an infringer knew of the patent and deliberately continued to infringe — as opposed to innocent or accidental copying — which makes the infringer eligible for enhanced damages of up to three times compensatory damages under 35 U.S.C. § 284. The Supreme Court's Halo Electronics v. Pulse Electronics (2016) decision relaxed the standard for willfulness, giving district courts broader discretion to award enhanced damages in cases of egregious misconduct. For litigation funders, the presence of a credible willfulness theory substantially increases the expected value of a case and may influence whether to structure an investment around a damages-only theory versus seeking injunctive relief as leverage. Pre-suit notice letters and opinion-of-counsel defenses are key factual inquiries during diligence because they directly affect whether a willfulness claim will survive summary judgment.

A credible willfulness theory is underwritten as contingent upside rather than base-case recovery, since Halo gave district courts broad discretion that produces inconsistent enhancement awards even where willfulness is found. Funders weight pre-suit notice letters, any opinion-of-counsel defense the infringer is likely to raise, and the egregiousness of the alleged copying, because these facts — assembled well before trial — are the best available predictor of whether a willfulness finding will actually translate into enhanced damages rather than remaining a nominal jury finding.