U.S. Supreme Court Gouled v. United States, 255
U.S. 298 (1921) Gouled v. United
States No. 250 Argued January 4,
1921 Decided February 28,
1921 255
U.S. 298 CERTIFICATE FROM THE CIRCUIT COURT
OF APPEALS FOR THE SECOND
CIRCUIT Syllabus 1. The Fourth and Fifth Amendments are to be liberally
construed. P. 255 U. S.
303 .

															2. When a defendant in a criminal case first learns of the
Government's possession of his document when it is offered against
him on the trial, his objection that it was obtained by an
unreasonable search and seizure should not be overruled as coming
too late. P. 255 U. S.
305 .

															3. An unreasonable search and seizure, in the sense of the
Fourth Amendment, does not necessarily involve the employment of
force or coercion, but is committed when a representative of any
branch or subdivision of the Government, by stealth, through social
acquaintance, or in the guise of a business call, gains entrance to
the house or office of a person suspected of crime, whether in the
presence or absence of the owner, and, in the owner's absence,
searches for and abstracts his papers without his knowledge or
consent. P. 255 U. S.
305 .

															4. The admission of a paper so obtained in evidence against and
over the objection of the owner when indicted for crime compels him
to be a witness against himself, in violation of the Fifth
Amendment. P. 255 U. S.
306 .

															5. The Fourth Amendment permits of searches and seizures
under Page 255 U. S. 299 valid search warrants when justified by an interest of the
public, or of the complainant, in the property to be seized, or in
its possession, or when a lawful exercise of police power renders
its possession by the accused unlawful and provides for its
seizure; and papers, as such, are not immune from such search and
seizure. P. 255 U. S.
308 .

															6. But papers of no pecuniary value in themselves, which are
evidence of criminal fraud against their owner, and are of interest
to and are sought by the Government for use as evidence merely, and
not because they have been or may be used to defraud it, as an
executed contract might be, cannot constitutionally be searched for
and seized in their owner's house or office by resort to a search
warrant. P. 255 U. S.
310 .

															7. Papers lawfully obtained under a valid search warrant may be
used as evidence by the Government in prosecuting a person for a
different offense than that charged against him in the affidavit
upon which the search warrant was issued. P. 255 U. S.
311 .

															8. Where, in the progress of a criminal trial, it becomes
probable that there has been an unconstitutional seizure of papers
of the accused, it is the duty of the trial court to entertain an
objection to their admission in evidence against him or a motion
for their exclusion, and to decide the question as then presented,
even where a motion to return the papers has been denied before
trial and by another judge. P. 255 U. S.
312 .

															The case is stated in the opinion. Page 255 U. S. 302 MR. JUSTICE CLARKE delivered the opinion of the Court.

															In a joint indictment the plaintiff in error, Gouled, one
Vaughan, an officer of the United States Army, and a third, an
attorney at law, were charged in the first count with being parties
to a conspiracy to defraud the United States, in violation of
section 37 of the federal Criminal Code, and, in the second count,
with having used the mails to Page 255 U. S. 303 promote a scheme to defraud the United States, in violation of §
215 of that Code. Vaughan pleaded guilty, the attorney was
acquitted, and Gouled, whom we shall refer to as the defendant, was
convicted, and thereupon prosecuted error to the Circuit Court of
Appeals, which certifies to this Court six questions which we are
to consider.

															Of these questions, the first two relate to the admission in
evidence of a paper surreptitiously taken from the office of the
defendant by one acting under direction of officers of the
Intelligence Department of the Army of the United States, and the
remaining four relate to papers taken from defendant's office under
two search warrants, issued pursuant to the Act of June 15, 1917,
c. 30, 40 Stat. 217, 228. It was objected on the trial, and is here
insisted upon, that it was error to admit these papers in evidence
because possession of them was obtained by violating the rights
secured to the defendant by the Fourth and Fifth Amendments to the
Constitution of the United States.

															The Fourth Amendment reads:

															"The right of the people to be secure in their persons, houses,
papers, and effects, against unreasonable searches and seizures,
shall not be violated, and no warrant shall issue, but upon
probable cause, supported by oath or affirmation, and particularly
describing the place to be searched, and the persons or things to
be seized."

															The part of the Fifth Amendment here involved reads:

															"No person . . . shall be compelled in any criminal case to be a
witness against himself."

															It would not be possible to add to the emphasis with which the
framers of our Constitution and this Court (in Boyd v. United
States, 116 U. S. 616 , in Weeks v. United States, 232 U. S. 383 , and
in Silverthorne Lumber Co. v. United States, 251 U.
S. 385 ) have declared the importance to political
liberty and to the welfare of our country of the due observance of
the rights guaranteed under the Constitution Page 255 U. S. 304 by these two amendments. The effect of the decisions cited is
that such rights are declared to be indispensable to the "full
enjoyment of personal security, personal liberty and private
property"; that they are to be regarded as of the very essence of
constitutional liberty; and that the guaranty of them is as
important and as imperative as are the guaranties of the other
fundamental rights of the individual citizen -- the right to trial
by jury, to the writ of habeas corpus, and to due process of law.
It has been repeatedly decided that these amendments should receive
a liberal construction, so as to prevent stealthy encroachment upon
or "gradual depreciation" of the rights secured by them, by
imperceptible practice of courts or by well intentioned, but
mistakenly overzealous, executive officers.

															In the spirit of these decisions, we must deal with the
questions before us.

															The facts derived from the certificate essential to be
considered in answering the first two questions are: that, in
January, 1918, it was suspected that the defendant, Gouled, and
Vaughan were conspiring to defraud the government through contracts
with it for clothing and equipment; that one Cohen, a private in
the Army, attached to the Intelligence Department, and a business
acquaintance of defendant Gouled, under direction of his superior
officers, pretending to make a friendly call upon the defendant,
gained admission to his office and, in his absence, without warrant
of any character, seized and carried away several documents; that
one of these papers, described as "of evidential value only" and
belonging to Gouled, was subsequently delivered to the United
States District Attorney, and was by him introduced in evidence
over the objection of the defendant that possession of it was
obtained by a violation of the Fourth or Fifth Amendment to the
Constitution; and that the defendant did not know that Cohen had
carried away any of his papers until Page 255 U. S. 305 he appeared on the witness stand and detailed the facts with
respect thereto as we have stated them, when, necessarily,
objection was first made to the admission of the paper in
evidence.

															Out of these facts arise the first two questions, both relating
to the paper thus seized. The first of these is:

															"Is the secret taking, without force, from the house or office
of one suspected of crime, of a paper belonging to him, of
evidential value only, by a representative of any branch or
subdivision of the government of the United States, a violation of
the Fourth Amendment?"

															The ground on which the trial court overruled the objection to
this paper is not stated, but, from the certificate and the
argument, we must infer that it was admitted either because it
appeared that the possession of it was obtained without the use of
force or illegal coercion or because the objection to it came too
late.

															The objection was not too late, for, coming as it did promptly
upon the first notice the defendant had that the government was in
possession of the paper, the rule of practice relied upon, that
such an objection will not be entertained unless made before trial,
was obviously inapplicable.

															The prohibition of the Fourth Amendment is against all
unreasonable searches and seizures, and if for a government officer
to obtain entrance to a man's house or office by force or by an
illegal threat or show of force, amounting to coercion, and then to
search for and seize his private papers would be an unreasonable,
and therefore a prohibited search and seizure, as it certainly
would be, it is impossible to successfully contend that a like
search and seizure would be a reasonable one if only admission were
obtained by stealth, instead of by force or coercion. The security
and privacy of the home or office and of the papers of the owner
would be as much invaded and the search and Page 255 U. S. 306 seizure would be as much against his will in the one case as in
the other, and it must therefore be regarded as equally in
violation of his constitutional rights.

															Without discussing them, we cannot doubt that such decisions as
there are in conflict with this conclusion are unsound, and that,
whether entrance to the home or office of a person suspected of
crime be obtained by a representative of any branch or subdivision
of the government of the United States by stealth, or through
social acquaintance, or in the guise of a business call, and
whether the owner be present or not when he enters, any search and
seizure subsequently and secretly made in his absence, falls within
the scope of the prohibition of the Fourth Amendment, and therefore
the answer to the first question must be in the affirmative.

															The second question reads:

															"Is the admission of such paper in evidence against the same
person when indicted for crime a violation of the Fifth
Amendment?"

															Upon authority of the Boyd case, supra, this
second question must also be answered in the affirmative. In
practice, the result is the same to one accused of crime, whether
he be obliged to supply evidence against himself or whether such
evidence be obtained by an illegal search of his premises and
seizure of his private papers. In either case, he is the unwilling
source of the evidence, and the Fifth Amendment forbids that he
shall be compelled to be a witness against himself in a criminal
case.

															The remaining four questions relate to three other papers which
were admitted in evidence on the trial over the same constitutional
objections as were interposed to the admission of the first paper.
One was an unexecuted form of contract between the defendant and
one Lavinsky; another was a written contract, signed by the
defendant and one Steinthal; and the third was a bill for Page 255 U. S. 307 disbursements and professional services rendered by the attorney
at law to the defendant Gouled.

															Of these papers, the first was seized in defendant's office
under a search warrant dated June 17, and the other two under a
like warrant dated July 22, 1918, each of which was issued by a
United States commissioner on the affidavit of an agent of the
Department of Justice. It is certified that it was averred in the
first affidavit that there were in Gouled's office

															"certain property, to-wit, certain contracts of the said Felix
Gouled with S. Lavinsky which were used as a means of committing a
felony, to-wit, . . . as a means for the bribery of a certain
officer of the United States."

															It is also certified that the second affidavit declared that
Gouled had at his office

															"certain letters, papers, documents and writings which relate to
and have been used in the commission of a felony, to wit, a
conspiracy to defraud the United States."

															Neither the affidavits nor the warrants are given in full in the
certificate, but no exception was taken to the sufficiency of
either.

															After the seizure of the papers, a joint indictment was
returned, as stated, against Gouled, Vaughan, and the attorney,
and, before trial, a motion was made by Gouled for a return of the
papers seized under the search warrants, which was denied, and when
the motion was renewed at the trial, but before any evidence was
introduced, it was again denied. The denial of this motion is not
assigned as error.

															The contract of the defendant with Steinthal, which was seized
under the warrant, was not offered in evidence, but a duplicate
original, obtained from Steinthal, was admitted over the objection
that the possession of the seized original must have suggested the
existence and the obtaining of the counterpart, and that therefore
the use of it in evidence would violate the rights of the defendant
under the Fourth or Fifth Amendment. Silverthorne Page 255 U. S. 308 Lumber Co. v. United States, 251 U.
S. 385 . The unsigned form of contract and the attorney's
bill were offered and also admitted over the same constitutional
objection. There is no statement in the certificate of the contents
of these papers, but it is said of them only that they belonged to
Gouled, that they were without pecuniary value, and that they
constituted evidence "more or less injurious to the defendant."

															It is apparent from this statement that to answer the remaining
four questions involves a consideration of the applicable law of
search warrants.

															The wording of the Fourth Amendment implies that search warrants
were in familiar use when the Constitution was adopted and,
plainly, that when issued "upon probable cause, supported by oath
or affirmation, and particularly describing the place to be
searched and the persons or things to be seized," searches, and
seizures made under them, are to be regarded as not unreasonable,
and therefore not prohibited by the amendment. Searches and
seizures are as constitutional under the amendment when made under
valid search warrants as they are unconstitutional, because
unreasonable, when made without them -- the permission of the
amendment has the same constitutional warrant as the prohibition
has, and the definition of the former restrains the scope of the
latter. All of this is abundantly recognized in the opinions of the Boyd and Weeks cases, supra, in which it
is pointed out that, at the time the Constitution was adopted,
stolen or forfeited property, or property liable to duties and
concealed to avoid payment of them, excisable articles and books
required by law to be kept with respect to them, counterfeit coin,
burglars' tools and weapons, implements of gambling "and many other
things of like character" might be searched for in home or office
and, if found, might be seized, under search warrants, lawfully
applied for, issued and executed. Page 255 U. S. 309 Although search warrants have thus been used in many cases ever
since the adoption of the Constitution, and although their use has
been extended from time to time to meet new cases within the old
rules, nevertheless it is clear that, at common law and as the
result of the Boyd and Weeks cases, supra, they may not be used as a means of gaining access
to a man's house or office and papers solely for the purpose of
making search to secure evidence to be used against him in a
criminal or penal proceeding, but that they may be resorted to only
when a primary right to such search and seizure may be found in the
interest which the public or the complainant may have in the
property to be seized, or in the right to the possession of it, or
when a valid exercise of the police power renders possession of the
property by the accused unlawful and provides that it may be taken. Boyd case, pp. 116 U. S.
623 -624.

															There is no special sanctity in papers, as distinguished from
other forms of property, to render them immune from search and
seizure, if only they fall within the scope of the principles of
the cases in which other property may be seized, and if they be
adequately described in the affidavit and warrant. Stolen or forged
papers have been so seized, Langdon v. People, 133
Illinois 382, and lottery tickets, under a statute prohibiting
their possession with intent to sell them, Commonwealth v.
Dana, 2 Metc. 329, and we cannot doubt that contracts may be
so used as instruments or agencies for perpetrating frauds upon the
government as to give the public an interest in them which would
justify the search for and seizure of them, under a properly issued
search warrant, for the purpose of preventing further frauds.

															With these principles of law in mind, we come to the remaining
questions.

															The third question reads:

															"Are papers of no pecuniary value but possessing evidential
value against persons presently suspected and subsequently indicted
under Page 255 U. S. 310 Sections 37 and 215 of the United States Criminal Code, when
taken under search warrants issued pursuant to the Act of June 15,
1917, from the house or office of the person suspected, seized and
taken in violation of the Fourth Amendment?"

															That the papers involved are of no pecuniary value is of no
significance. Many papers, having no pecuniary value to others, are
of the greatest possible value to the owners, and are property of a
most important character ( Boyd case, supra, pp. 116 U. S.
627 -628), and, since those here involved possessed
"evidential value" against the defendant, we must assume that they
were relevant to the issue.

															Restraining the questions to the papers described, and first as
to the unexecuted form of contract with Lavinsky, a stranger to the
indictment. While the contents of this paper are not given, it is
impossible to see how the government could have such an interest in
such a paper that, under the principles of law stated, it would
have the right to take it into its possession to prevent injury to
the public from its use. The government could desire its possession
only to use it as evidence against the defendant and to search for
and seize it for such purpose was unlawful.

															Likewise, the public could be interested in the bill of the
attorney for legal services only to the extent that it might be
used as evidence and the seizure of this also was unlawful.

															As to the contract with Steinthal, also a stranger to the
indictment: it is not difficult, as we have said, to imagine how an
executed written contract might be an important agency or
instrumentality in the bribing of a public servant and in
perpetrating frauds upon the government, so that it would have a
legitimate and important interest in seizing such a paper in order
to prevent further frauds, but the facts necessary to give this
contract such a character do not appear in the certificate. On the
contrary, Page 255 U. S. 311 this third question recites that the papers are all of no
pecuniary, but are of evidential, value, and, in the sixth
question, it is recited that they are "of evidential value only,"
so that it is impossible to say, on the record before us, that the
government had any interest in it other than as evidence against
the accused, and therefore as to all three papers the answer to the
question must be in the affirmative.

															The fourth question reads:

															"If such papers so taken are admitted in evidence against the
person from whose house or office they were taken, such person
being then on trial for the crime for which he was accused in the
affidavit for warrant, is such admission in evidence a violation of
the Fifth Amendment?"

															The same papers being involved, the answer to this question must
be in the affirmative, for, they having been seized in an
unconstitutional search, to permit them to be used in evidence
would be, in effect, as ruled in the Boyd case, to compel
the defendant to become a witness against himself.

															The fifth question reads:

															"If in the affidavit for search warrant under Act of June 15,
1917, the party whose premises are to be searched be charged with
one crime and property be taken under the warrant issued thereon,
can such property so seized be introduced in evidence against said
party when on trial for a different offense?"

															It has never been required that a criminal prosecution should be
pending against a person in order to justify search for and seizure
of his property under a proper warrant, if a case of crime having
been committed and of probable cause is made out sufficient to
satisfy the law and the officer having authority to issue it, and
we see no reason why property seized under a valid search warrant,
when thus lawfully obtained by the government, may not be used in
the prosecution of a suspected person for a crime other than that
which may have been described Page 255 U. S. 312 in the affidavit as having been committed by him. The question
assumes that the property seized was obtained on a search warrant
sufficient in form to satisfy the law, and if the papers to which
the question refers had been of a character to be thus obtained,
lawfully, it would have been competent to use them to prove any
crime against the accused as to which they constituted relevant
evidence.

															The sixth question reads:

															"If papers of evidential value only be seized under a search
warrant and the party from whose house or office they are taken be
indicted; if he then move before trial for the return of said
papers and said motion is denied -- is the court at trial bound in
law to inquire as to the origin of or method of procuring said
papers when they are offered in evidence against the party so
indicted?"

															The papers being of "evidential value only" and having been
unlawfully seized, this question really is whether, it having been
decided on a motion before trial that they should not be returned
to the defendant, the trial court, when objection was made to their
use on the trial, was bound to again inquire as to the
unconstitutional origin of the possession of them. It is plain that
the trial court acted upon the rule, widely adopted, that courts in
criminal trials will not pause to determine how the possession of
evidence tendered has been obtained. While this is a rule of great
practical importance, yet, after all, it is only a rule of
procedure, and therefore it is not to be applied as a hard and fast
formula to every case, regardless of its special circumstances. We
think, rather, that it is a rule to be used to secure the ends of
justice under the circumstances presented by each case, and where,
in the progress of a trial, it becomes probable that there has been
an unconstitutional seizure of papers, it is the duty of the trial
court to entertain an objection to their admission or a motion for
their exclusion and to consider Page 255 U. S. 313 and decide the question as then presented, even where a motion
to return the papers may have been denied before trial. A rule of
practice must not be allowed for any technical reason to prevail
over a constitutional right.

															In the case we are considering the certificate shows that a
motion to return the papers, seized under the search warrants, was
made before the trial and was denied, and that, on the trial of the
case before another judge, this ruling was treated as conclusive,
although, as we have seen, in the progress of the trial, it must
have become apparent that the papers had been unconstitutionally
seized. The constitutional objection having been renewed, under the
circumstances, the court should have inquired as to the origin of
the possession of the papers when they were offered in evidence
against the defendant. Each question is answered, Yes.


Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc.

NOTICE: This opinion is subject to
formal revision before publication in the preliminary print of the
United States Reports. Readers are requested to notify the Reporter
of Decisions, Supreme Court of the United States, Washington,
D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print
goes to press.

															SUPREME COURT OF THE UNITED STATES

															_________________

															No. 17–1229

															_________________

															HELSINN HEALTHCARE S. A., PETITIONER v. TEVA PHARMACEUTICALS USA, INC., et al.

															on writ of certiorari to the united states
court of appeals for the federal circuit

															[January 22, 2019]

															Justice Thomas delivered the opinion of the
Court.

															The Leahy-Smith America Invents Act (AIA) bars a
person from receiving a patent on an invention that was “in public
use, on sale, or otherwise available to the public before the
effective filing date of the claimed invention.” 35
U. S. C. §102(a)(1). This case requires us to decide
whether the sale of an invention to a third party who is
contractually obligated to keep the invention confidential places
the invention “on sale” within the meaning of §102(a).

															More than 20 years ago, this Court determined
that an invention was “on sale” within the meaning of an earlier
version of §102(a) when it was “the subject of a commercial offer
for sale” and “ready for patenting.” Pfaff v. Wells
Electronics , Inc ., 525 U.S.
55 , 67 (1998). We did not further require that the sale make
the details of the invention available to the public. In light of
this earlier construction, we determine that the reenactment of the
phrase “on sale” in the AIA did not alter this meaning.
Accordingly, a commercial sale to a third party who is required to
keep the invention confidential may place the invention “on sale”
under the AIA.

															I

															Petitioner Helsinn Healthcare S. A.
(Helsinn) is a Swiss pharmaceutical company that makes Aloxi, a
drug that treats chemotherapy-induced nausea and vomiting. Helsinn
acquired the right to develop palonosetron, the active ingredient
in Aloxi, in 1998. In early 2000, it submitted protocols for Phase
III clinical trials to the Food and Drug Administration (FDA),
proposing to study a 0.25 mg and a 0.75 mg dose of palonosetron. In
September 2000, Helsinn announced that it was beginning Phase III
clinical trials and was seeking marketing partners for its
palonosetron product.

															Helsinn found its marketing partner in MGI
Pharma, Inc. (MGI), a Minnesota pharmaceutical company that markets
and distributes drugs in the United States. Helsinn and MGI entered
into two agreements: a license agreement and a supply and purchase
agreement. The license agreement granted MGI the right to
distribute, promote, market, and sell the 0.25 mg and 0.75 mg doses
of palonosetron in the United States. In return, MGI agreed to make
upfront payments to Helsinn and to pay future royalties on
distribution of those doses. Under the supply and purchase
agreement, MGI agreed to purchase exclusively from Helsinn any
palonosetron product approved by the FDA. Helsinn in turn agreed to
supply MGI however much of the approved doses it required. Both
agreements included dosage information and required MGI to keep
confidential any proprietary information received under the
agreements.

															Helsinn and MGI announced the agreements in a
joint press release, and MGI also reported the agreements in its
Form 8–K filing with the Securities and Exchange Commission.
Although the 8–K filing included redacted copies of the agreements,
neither the 8–K filing nor the press releases disclosed the
specific dosage formulations covered by the agreements.

															On January 30, 2003, nearly two years after
Helsinn and MGI entered into the agreements, Helsinn filed a
provisional patent application covering the 0.25 mg and 0.75 mg
doses of palonosetron. Over the next 10 years, Helsinn filed four
patent applications that claimed priority to the January 30, 2003,
date of the provisional application. Helsinn filed its fourth
patent application—the one relevant here—in May 2013, and it issued
as U. S. Patent No. 8,598,219 (’219 patent). The ’219 patent
covers a fixed dose of 0.25 mg of palonosetron in a 5 ml solution.
By virtue of its effective date, the ’219 patent is governed by the
AIA. See §101(i).

															Respondents Teva Pharmaceutical Industries,
Ltd., and Teva Pharmaceuticals USA, Inc. (Teva), are, respectively,
an Israeli company that manufactures generic drugs and its American
affiliate. In 2011, Teva sought approval from the FDA to market a
generic 0.25 mg palonosetron product. Helsinn then sued Teva for
infringing its patents, including the ’219 patent. In defense, Teva
asserted that the ’219 patent was invalid because the 0.25 mg dose
was “on sale” more than one year before Helsinn filed the
provisional patent application covering that dose in January
2003.

															The AIA precludes a person from obtaining a
patent on an invention that was “on sale” before the effective
filing date of the patent application:

															“A person shall be entitled to a patent
unless . . . the claimed invention was patented,
described in a printed publication, or in public use, on
sale , or otherwise available to the public before the effective
filing date of the claimed invention.” 35 U. S. C.
§102(a)(1) (emphasis added).

															See also §102(b)(1) (exception for certain
disclosures made within a year before the effective filing date).
Disclosures described in §102(a)(1) are often referred to as “prior
art.”

															The patent statute in effect before the passage
of the AIA included a similar proscription, known as the “on-sale
bar”:

															“A person shall be entitled to a patent
unless—

															“(a) the invention was known or used by others
in this country, or patented or described in a printed publication
in this or a foreign country, before the invention thereof by the
applicant for patent, or

															“(b) the invention was patented or described in
a printed publication in this or a foreign country or in public use
or on sale in this country, more than one year prior to the
date of the application for patent in the United States.” 35
U. S. C. §§102(a)–(b) (2006 ed.) (emphasis added).

															The District Court determined that the “on sale”
provision did not apply. It concluded that, under the AIA, an
invention is not “on sale” unless the sale or offer in question
made the claimed invention available to the public. Helsinn
Healthcare S . A . v. Dr . Reddy’s Labs . Ltd ., 2016 WL 832089, *45, *51 (D NJ, Mar. 3, 2016). Because
the companies’ public disclosure of the agreements between Helsinn
and MGI did not disclose the 0.25 mg dose, the court determined
that the invention was not “on sale” before the critical date. Id ., at *51–*52.

															The Federal Circuit reversed. 855 F.3d 1356,
1360 (2017). It concluded that “if the existence of the sale is
public, the details of the invention need not be publicly disclosed
in the terms of sale” to fall within the AIA’s on-sale bar. Id ., at 1371. Because the sale between Helsinn and MGI was
publicly disclosed, it held that the on-sale bar applied. Id ., at 1364, 1371.

															We granted certiorari to determine whether,
under the AIA, an inventor’s sale of an invention to a third party
who is obligated to keep the invention confidential qualifies as
prior art for purposes of determining the patent- ability of the
invention. 585 U. S. ___ (2018). We conclude that such a sale
can qualify as prior art.

															II

															A

															The United States Constitution authorizes
Congress “[t]o promote the Progress of Science and useful Arts, by
securing for limited Times to Authors and Inventors the exclusive
Right to their respective Writings and Discoveries.” Art. 1, §8,
cl. 8. Under this grant of authority, Congress has crafted a
federal patent system that encourages “the creation and disclosure
of new, useful, and nonobvious advances in technology and design”
by granting inventors “the exclusive right to practice the
invention for a period of years.” Bonito Boats , Inc .
v. Thunder Craft Boats , Inc ., 489
U.S. 141 , 151 (1989).

															To further the goal of “motivating innovation
and enlightenment” while also “avoiding monopolies that
unnecessarily stifle competition,” Pfaff , 525 U. S., at
63, Congress has imposed several conditions on the “limited
opportunity to obtain a property right in an idea,” Bonito
Boats , supra , at 149. One such condition is the on-sale
bar, which reflects Congress’ “reluctance to allow an inventor to
remove existing knowledge from public use” by obtaining a patent
covering that knowledge. Pfaff , supra , at 64; see
also Pennock v. Dialogue , 2 Pet. 1, 19 (1829)
(explaining that “it would materially retard the progress of
science and the useful arts” to allow an inventor to “sell his
invention publicly” and later “take out a patent” and “exclude the
public from any farther use than what should be derived under
it”).

															Every patent statute since 1836 has included an
on-sale bar. Pfaff , supra , at 65. The patent statute
in force immediately before the AIA prevented a person from
receiving a patent if, “more than one year prior to the date of the
application for patent in the United States,” “the invention was
. . . on sale” in the United States. 35
U. S. C. §102(b) (2006 ed., Supp. IV). The AIA, as
relevant here, retained the on-sale bar and added the catchall
phrase “or otherwise available to the public.” §102(a)(1) (2012
ed.) (“A person shall be entitled to a patent unless” the “claimed
invention was . . . in public use, on sale, or otherwise
available to the public . . . ”). We must decide whether
these changes altered the meaning of the “on sale” bar. We hold
that they did not.

															B

															Congress enacted the AIA in 2011 against the
backdrop of a substantial body of law interpreting §102’s on-sale
bar. In 1998, we determined that the pre-AIA on-sale bar applies
“when two conditions are satisfied” more than a year before an
inventor files a patent application. Pfaff , 525 U. S.,
at 67. “First, the product must be the subject of a commercial
offer for sale.” Ibid . “Second, the invention must be ready
for patenting,” which we explained could be shown by proof of
“reduction to practice” or “drawings or other descriptions of the
invention that were sufficiently specific to enable a person
skilled in the art to practice the invention.” Id ., at
67–68.

															Although this Court has never addressed the
precise question presented in this case, our precedents suggest
that a sale or offer of sale need not make an invention available
to the public. For instance, we held in Pfaff that an offer
for sale could cause an inventor to lose the right to patent,
without regard to whether the offer discloses each detail of the
invention. E . g ., id ., at 67. Other cases focus
on whether the invention had been sold, not whether the details of
the invention had been made available to the public or whether the
sale itself had been publicly disclosed. E . g ., Consolidated Fruit-Jar Co . v. Wright , 94 U.S.
92 , 94 (1877) (“[A] single instance of sale or of use by the
patentee may, under the circumstances, be fatal to the patent
. . . ”); cf. Smith & Griggs Mfg . Co .
v. Sprague , 123 U.S.
249 , 257 (1887) (“A single sale to another . . .
would certainly have defeated his right to a patent . . .
”); Elizabeth v. Pavement Co ., 97 U.S.
126 , 136 (1878) (“It is not a public knowledge of his invention
that precludes the inventor from obtaining a patent for it, but a
public use or sale of it”).

															The Federal Circuit—which has “exclusive
jurisdiction” over patent appeals, 28 U. S. C.
§1295(a)—has made explicit what was implicit in our precedents. It
has long held that “secret sales” can invalidate a patent. E . g ., Special Devices, Inc . v. OEA , Inc. , 270 F.3d 1353 , 1357 (2001) (invalidating patent claims based on
“sales for the purpose of the commercial stockpiling of an
invention” that “took place in secret”); Woodland Trust v. Flowertree Nursery , Inc ., 148 F.3d 1368 , 1370 (1998) (“Thus an inventor’s own prior
commercial use, albeit kept secret, may constitute a public use or
sale under §102(b), barring him from obtaining a patent”).

															In light of this settled pre-AIA precedent on
the meaning of “on sale,” we presume that when Congress reenacted
the same language in the AIA, it adopted the earlier judicial
construction of that phrase. See Shapiro v. United
States , 335 U.S.
1 , 16 (1948) (“In adopting the language used in the earlier
act, Congress ‘must be considered to have adopted also the
construction given by this Court to such language, and made it a
part of the enactment’ ”). The new §102 retained the exact
language used in its predecessor statute (“on sale”) and, as
relevant here, added only a new catchall clause (“or otherwise
available to the public”). As amicus United States noted at
oral argument, if “on sale” had a settled meaning before the AIA
was adopted, then adding the phrase “or otherwise available to the
public” to the statute “would be a fairly oblique way of attempting
to overturn” that “settled body of law.” Tr. of Oral Arg. 28. The
addition of “or otherwise available to the public” is simply not
enough of a change for us to conclude that Congress intended to
alter the meaning of the reenacted term “on sale.” Cf. Holder v. Martinez Gutierrez , 566
U.S. 583 , 593 (2012) (determining that a reenacted provision
did not ratify an earlier judicial construction where the provision
omitted the word on which the prior judicial constructions were
based).

															Helsinn disagrees, arguing that our construction
reads “otherwise” out of the statute. Citing Paroline v. United States , 572 U.S. 434 (2014), and Federal Maritime
Comm’n v. Seatrain Lines , Inc ., 411 U.S.
726 (1973), Helsinn contends that the associated-words canon
requires us to read “otherwise available to the public” to limit
the preceding terms in §102 to disclosures that make the claimed
invention available to the public.

															As an initial matter, neither of the cited
decisions addresses the reenactment of terms that had acquired a
well-settled judicial interpretation. And Helsinn’s argument places
too much weight on §102’s catchall phrase. Like other such phrases,
“otherwise available to the public” captures material that does not
fit neatly into the statute’s enumerated categories but is
nevertheless meant to be covered. Given that the phrase “on sale”
had acquired a well-settled meaning when the AIA was enacted, we
decline to read the addition of a broad catchall phrase to upset
that body of precedent.

															III

															Helsinn does not ask us to revisit our pre-AIA
interpretation of the on-sale bar. Nor does it dispute the Federal
Circuit’s determination that the invention claimed in the ’219
patent was “on sale” within the meaning of the pre-AIA statute.
Because we determine that Congress did not alter the meaning of “on
sale” when it enacted the AIA, we hold that an inventor’s sale of
an invention to a third party who is obligated to keep the
invention confidential can qualify as prior art under §102(a). We
therefore affirm the judgment of the Federal Circuit.

															It is so ordered .


NOTICE: This opinion is subject to
formal revision before publication in the preliminary print of the
United States Reports. Readers are requested to notify the Reporter
of Decisions, Supreme Court of the United States, Washington,
D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print
goes to press.

															SUPREME COURT OF THE UNITED STATES

															_________________

															Nos. 14–1513 and 14–1520

															_________________

															HALO ELECTRONICS, INC., PETITIONER

															14–1513 v. PULSE ELECTRONICS, INC.,
et al.

															STRYKER CORPORATION, et al.,
PETITIONERS

															14–1520 v. ZIMMER, INC., et al.

															on writs of certiorari to the united states
court of appeals for the federal circuit

															[June 13, 2016]

															Chief Justice Roberts delivered the opinion of
the Court.

															Section 284 of the Patent Act provides that, in
a case of infringement, courts “may increase the damages up to
three times the amount found or assessed.” 35 U. S. C.
§284. In In re Seagate Technology, LLC , 497 F. 3d
1360 (2007) (en banc), the United States Court of Appeals for the
Federal Circuit adopted a two-part test for determining when a
district court may increase damages pursuant to §284. Under Seagate , a patent owner must first “show by clear and
convincing evidence that the infringer acted despite an objectively
high likelihood that its actions constituted infringement of a
valid patent.” Id. , at 1371. Second, the patentee must
demonstrate, again by clear and convincing evidence, that the risk
of infringement “was either known or so obvious that it should have
been known to the accused infringer.” Ibid. The question
before us is whether this test is consistent with §284. We hold
that it is not.

															I

															A

															Enhanced damages are as old as U. S.
patent law. The Patent Act of 1793 mandated treble damages in any
successful infringement suit. See Patent Act of 1793, §5, 1Stat.
322. In the Patent Act of 1836, however, Congress changed course
and made enhanced damages discretionary, specifying that “it shall
be in the power of the court to render judgment for any sum above
the amount found by [the] verdict . . . not exceeding
three times the amount thereof, according to the circumstances of
the case.” Pat-ent Act of 1836, §14, 5Stat. 123. In construing that
new provision, this Court explained that the change was prompted by
the “injustice” of subjecting a “defendant who acted in ignorance
or good faith” to the same treatment as the “wanton and malicious
pirate.” Seymour v. McCormick , 16 How. 480, 488
(1854). There “is no good reason,” we observed, “why taking a man’s
property in an invention should be trebly punished, while the
measure of damages as to other property is single and actual
damages.” Id. , at 488–489. But “where the injury is wanton
or malicious, a jury may inflict vindictive or exemplary damages,
not to recompense the plaintiff, but to punish the defendant.” Id. , at 489.

															The Court followed the same approach in other
decisions applying the 1836 Act, finding enhanced damages
appropriate, for instance, “where the wrong [had] been done, under
aggravated circumstances,” Dean v. Mason , 20 How.
198, 203 (1858), but not where the defendant “appeared in truth to
be ignorant of the existence of the patent right, and did not
intend any infringement,” Hogg v. Emerson , 11 How.
587, 607 (1850). See also Livingston v. Woodworth , 15
How. 546, 560 (1854) (“no ground” to inflict “penalty” where
infringers were not “wanton”).

															In 1870, Congress amended the Patent Act, but
preserved district court discretion to award up to treble damages
“according to the circumstances of the case.” Patent Act of 1870,
§59, 16Stat. 207. We continued to describe enhanced damages as
“vindictive or punitive,” which the court may “inflict” when “the
circumstances of the case appear to require it.” Tilghman v. Proctor , 125 U. S. 136 –144 (1888); Topliff v. Topliff , 145 U. S. 156, 174 (1892) (infringer knowingly
sold copied technology of his former employer). At the same time,
we reiterated that there was no basis for increased damages where
“[t]here is no pretence of any wanton and wilful breach” and
“nothing that suggests punitive damages, or that shows wherein the
defendant was damnified other than by the loss of the profits which
the plaintiff received.” Cincinnati Siemens-Lungren Gas
Illuminating Co. v. Western Siemens-Lungren Co. , 152
U. S. 200, 204 (1894) .

															Courts of Appeals likewise characterized
enhanced damages as justified where the infringer acted
deliberately or willfully, see, e.g. , Baseball Display
Co. v. Star Ballplayer Co. , 35 F. 2d 1, 3–4 (CA3
1929) (increased damages award appropriate “because of the
deliberate and willful infringement”); Power Specialty Co. v. Connecticut Light & Power Co. , 80 F. 2d 874, 878
(CA2 1936) (“wanton, deliberate, and willful” infringement); Brown Bag Filling Mach. Co. v. Drohen , 175 F. 576,
577 (CA2 1910) (“a bald case of piracy”), but not where the
infringement “was not wanton and deliberate,” Rockwood v. General Fire Extinguisher Co. , 37 F. 2d 62, 66 (CA2
1930), or “conscious and deliberate,” Goodyear Tire & Rubber
Co. v. Overman Cushion Tire Co. , 95 F. 2d 978, 986
(CA6 1938).

															Some early decisions did suggest that enhanced
dam-ages might serve to compensate patentees as well as to punish
infringers. See, e.g. , Clark v. Wooster , 119
U. S. 322, 326 (1886) (noting that “[t]here may be damages
beyond” licensing fees “but these are more properly the subjects”
of enhanced damage awards). Such statements, however, were not for
the ages, in part because the merger of law and equity removed
certain procedural obstacles to full compensation absent
enhancement. See generally 7 Chisum on Patents §20.03[4][b][iii],
pp. 20–343 to 20–344 (2011). In the main, moreover, the references
to compensation concerned costs attendant to litigation. See Clark , 119 U. S., at 326 (identifying enhanced damages
as compensation for “the expense and trouble the plaintiff has been
put to”); Day v. Woodworth , 13 How. 363, 372 (1852)
(enhanced damages appropriate when defendant was “stubbornly
litigious” or “caused unnecessary expense and trouble to the
plaintiff”); Teese v. Huntingdon , 23 How. 2, 8–9
(1860) (discussing enhanced damages in the context of “counsel
fees”). That concern dissipated with the enactment in 1952 of 35
U. S. C. §285, which authorized district courts to award
reasonable attorney’s fees to prevailing parties in “exceptional
cases” under the Patent Act. See Octane Fitness, LLC v. ICON Health & Fitness Inc. , 572 U. S. ___, ___
(2014) (slip op., at 7).

															It is against this backdrop that Congress, in
the 1952 codification of the Patent Act, enacted §284. “The stated
purpose” of the 1952 revision “was merely reorganization in
language to clarify the statement of the statutes.” Aro Mfg.
Co. v. Convertible Top Replacement Co. , 377 U. S.
476, 505, n. 20 (1964) (internal quotation marks omitted). This
Court accordingly described §284—consistent with the history of
enhanced damages under the Patent Act—as providing that “punitive
or ‘increased’ damages” could be recovered “in a case of willful or
bad-faith infringement.” Id., at 508; see also Dowling v. United States , 473 U. S. 207 ,
n. 19 (1985) (“willful infringement”); Florida Prepaid
Postsecondary Ed. Expense Bd. v. College Savings Bank ,
527 U. S. 627 , n. 11 (1999) (describing §284 damages as
“punitive”).

															B

															In 2007, the Federal Circuit decided Seagate and fashioned the test for enhanced damages now
before us. Under Seagate , a plaintiff seeking enhanced
damages must show that the infringement of his patent was
“willful.” 497 F. 3d, at 1368. The Federal Circuit announced a
two-part test to establish such willfulness: First, “a patentee
must show by clear and convincing evidence that the infringer acted
despite an objectively high likelihood that its actions constituted
infringement of a valid patent,” without regard to “[t]he state of
mind of the accused infringer.” Id. , at 1371 . This
objectively defined risk is to be “determined by the record
developed in the infringement proceedings.” Ibid. “Objective
recklessness will not be found” at this first step if the accused
infringer, during the infringement proceedings, “raise[s] a
‘substantial question’ as to the validity or noninfringement of the
patent.” Bard Peripheral Vascular, Inc. v. W. L. Gore
& Assoc., Inc. , 776 F. 3d 837, 844 (CA Fed. 2015).
That categorical bar applies even if the defendant was unaware of
the arguable defense when he acted. See Seagate , 497
F. 3d, at 1371; Spine Solutions, Inc. v. Medtronic
Sofamor Danek USA, Inc. , 620 F. 3d 1305, 1319 (CA Fed.
2010).

															Second, after establishing objective
recklessness, a patentee must show—again by clear and convincing
evidence—that the risk of infringement “was either known or so
obvious that it should have been known to the accused infringer.” Seagate , 497 F. 3d, at 1371. Only when both steps have
been satisfied can the district court proceed to consider whether
to exercise its discretion to award enhanced damages. Ibid. Under Federal Circuit precedent, an award of
enhanced damages is subject to trifurcated appellate review. The
first step of Seagate —objective recklessness—is reviewed de novo ; the second—subjective knowledge—for
substantial evidence; and the ultimate decision—whether to award
enhanced damages—for abuse of discretion. See Bard Peripheral
Vascular, Inc. v. W. L. Gore & Assoc.,
Inc., 682 F. 3d 1003, 1005, 1008 (CA Fed. 2012); Spectralytics, Inc. v. Cordis Corp. , 649 F. 3d
1336, 1347 (CA Fed. 2011).

															C

															1

															Petitioner Halo Electronics, Inc., and
respondents Pulse Electronics, Inc., and Pulse Electronics
Corporation (collectively, Pulse) supply electronic components. 769
F. 3d 1371, 1374–1375 (CA Fed. 2014). Halo alleges that Pulse
infringed its patents for electronic packages containing
transformers designed to be mounted to the surface of circuit
boards. Id. , at 1374. In 2002, Halo sent Pulse two letters
offering to license Halo’s patents. Id., at 1376. After one
of its engineers concluded that Halo’s patents were invalid, Pulse
continued to sell the allegedly infringing products. Ibid. In 2007, Halo sued Pulse. Ibid. The jury
found that Pulse had infringed Halo’s patents, and that there was a
high probability it had done so willfully. Ibid. The
District Court, however, declined to award enhanced damages under
§284, after determining that Pulse had at trial presented a defense
that “was not objectively baseless, or a ‘sham.’ ” App. to
Pet. for Cert. in No. 14–1513, p. 64a (quoting Bard , 682
F. 3d, at 1007). Thus, the court concluded, Halo had failed to
show objective recklessness under the first step of Seagate .
App. to Pet. for Cert. in No. 14–1513, at 65a. The Federal Circuit
affirmed. 769 F. 3d 1371 (2014).

															2

															Petitioners Stryker Corporation, Stryker
Puerto Rico, Ltd., and Stryker Sales Corporation (collectively,
Stryker) and respondents Zimmer, Inc., and Zimmer Surgical, Inc.
(collectively, Zimmer), compete in the market for orthopedic pulsed
lavage devices. App. to Pet. for Cert. in No. 14–1520, p. 49a. A
pulsed lavage device is a combination spray gun and suction tube,
used to clean tissue during surgery. Ibid. In 2010, Stryker
sued Zimmer for patent infringement. 782 F. 3d 649, 653 (CA
Fed. 2015). The jury found that Zimmer had willfully infringed
Stryker’s patents and awarded Stryker $70 million in lost profits. Ibid. The District Court added $6.1 million in supplemental
damages and then trebled the total sum under §284, resulting in an
award of over $228 million. App. in No. 14–1520, pp. 483–484.

															Specifically, the District Court noted, the jury
had heard testimony that Zimmer had “all-but instructed its design
team to copy Stryker’s products,” App. to Pet. for Cert. in No.
14–1520, at 77a, and had chosen a “high-risk/high-reward strategy
of competing immediately and aggressively in the pulsed lavage
market,” while “opt[ing] to worry about the potential legal
consequences later,” id. , at 52a. “[T]reble damages [were]
appropriate,” the District Court concluded, “[g]iven the
one-sidedness of the case and the flagrancy and scope of Zimmer’s
infringement.” Id. , at 119a.

															The Federal Circuit affirmed the judgment of
infringement but vacated the award of treble damages. 782
F. 3d, at 662. Applying de novo review, the court
concluded that enhanced damages were unavailable because Zimmer had
asserted “reasonable defenses” at trial. Id., at
661–662.

															We granted certiorari in both cases, 577
U. S. ___ (2015), and now vacate and remand.

															II

															A

															The pertinent text of §284 provides simply
that “the court may increase the damages up to three times the
amount found or assessed.” 35 U. S. C. §284. That
language contains no explicit limit or condition, and we have
emphasized that the “word ‘may’ clearly connotes discretion.” Martin v. Franklin Capital Corp. , 546 U. S. 132,
136 (2005) (quoting Fogerty v. Fantasy, Inc. , 510
U. S. 517, 533 (1994) ).

															At the same time, “[d]iscretion is not whim.” Martin , 546 U. S., at 139. “[I]n a system of laws
discretion is rarely without limits,” even when the statute “does
not specify any limits upon the district courts’ discretion.” Flight Attendants v. Zipes , 491 U. S. 754, 758
(1989) . “[A] motion to a court’s discretion is a motion, not to
its inclination, but to its judgment; and its judgment is to be
guided by sound legal principles.” Martin, 546 U. S.,
at 139 (quoting United States v. Burr , 25
F. Cas. 30, 35 (No. 14,692d) (CC Va. 1807) (Marshall,
C. J.); alteration omitted). Thus, although there is “no
precise rule or formula” for awarding damages under §284, a
district court’s “discretion should be exercised in light of the
considerations” underlying the grant of that discretion. Octane
Fitness, 572 U. S., at ___ (slip op., at 8) (quoting Fogerty , 510 U. S., at 534).

															Awards of enhanced damages under the Patent Act
over the past 180 years establish that they are not to be meted out
in a typical infringement case, but are instead designed as a
“punitive” or “vindictive” sanction for egregious infringement
behavior. The sort of conduct warranting enhanced damages has been
variously described in our cases as willful, wanton, malicious,
bad-faith, deliberate, consciously wrongful, flagrant,
or—indeed—characteristic of a pirate. See supra, at 2–5.
District courts enjoy discretion in deciding whether to award
enhanced damages, and in what amount. But through nearly two
centuries of discretionary awards and review by appellate
tribunals, “the channel of discretion ha[s] narrowed,” Friendly,
Indiscretion About Discretion, 31 Emory L. J. 747, 772 (1982),
so that such damages are generally reserved for egregious cases of
culpable behavior.

															B

															The Seagate test reflects, in many
respects, a sound recognition that enhanced damages are generally
appropriate under §284 only in egregious cases. That test, however,
“is unduly rigid, and it impermissibly encumbers the statutory
grant of discretion to district courts.” Octane Fitness, 572
U. S., at ___ (slip op., at 7) (construing §285 of the Patent
Act). In particular, it can have the effect of insulating some of
the worst patent infringers from any liability for enhanced
damages.

															1

															The principal problem with Seagate ’s
two-part test is that it requires a finding of objective
recklessness in every case before district courts may award
enhanced damages. Such a threshold requirement excludes from
discretionary punishment many of the most culpable offenders, such
as the “wanton and malicious pirate” who intentionally infringes
another’s patent—with no doubts about its validity or any notion of
a defense—for no purpose other than to steal the patentee’s
business. Seymour , 16 How., at 488. Under Seagate , a
district court may not even consider enhanced damages for such a
pirate, unless the court first determines that his infringement was
“objectively” reckless. In the context of such deliberate
wrongdoing, how-ever, it is not clear why an independent showing of
objective recklessness—by clear and convincing evidence, no
less—should be a prerequisite to enhanced damages.

															Our recent decision in Octane Fitness arose in a different context but points in the same direction. In
that case we considered §285 of the Patent Act, which allows
district courts to award attorney’s fees to prevailing parties in
“exceptional” cases. 35 U. S. C. §285. The Federal
Circuit had adopted a two-part test for determining when a case
qualified as exceptional, requiring that the claim asserted be both
objectively baseless and brought in subjective bad faith. We
rejected that test on the ground that a case presenting “subjective
bad faith” alone could “sufficiently set itself apart from mine-run
cases to warrant a fee award.” 572 U. S., at ___ (slip op., at
9). So too here. The subjective willfulness of a patent infringer,
intentional or knowing, may warrant enhanced damages, without
regard to whether his infringement was objectively reckless.

															The Seagate test aggravates the problem
by making dispositive the ability of the infringer to muster a
reasonable (even though unsuccessful) defense at the infringement
trial. The existence of such a defense insulatesthe infringer from
enhanced damages, even if he did not act on the basis of the
defense or was even aware of it. Under that standard, someone who
plunders a patent—in-fringing it without any reason to suppose his
conduct is arguably defensible—can nevertheless escape any
come-uppance under §284 solely on the strength of his attorney’s
ingenuity.

															But culpability is generally measured against
the knowledge of the actor at the time of the challenged conduct.
See generally Restatement (Second) of Torts §8A (1965) (“intent”
denotes state of mind in which “the actor desires to cause
consequences of his act” or “believes” them to be “substantially
certain to result from it”); W. Keeton, D. Dobbs, R. Keeton, &
D. Owen, Prosser and Keeton on Law of Torts §34, p. 212 (5th ed.
1984) (describing willful, wanton, and reckless as “look[ing] to
the actor’s real or supposed state of mind”); see also Kolstad v. American Dental Assn. , 527 U. S. 526,
538 (1999) (“Most often . . . eligibility for punitive
awards is characterized in terms of a defendant’s motive or
intent”). In Safeco Ins. Co. of America v. Burr , 551
U. S. 47 (2007) , we stated that a person is reckless if he
acts “ knowing or having reason to know of facts which
would lead a reasonable man to realize” his actions are
unreasonably risky. Id. , at 69 (emphasis added and internal
quotation marks omitted). The Court found that the defendant had
not recklessly violated the Fair Credit Reporting Act because the
defendant’s interpretation had “a foundation in the statutory text”
and the defendant lacked “the benefit of guidance from the courts
of appeals or the Federal Trade Commission” that “might have warned
it away from the view it took.” Id., at 69–70. Nothing in Safeco suggests that we should look to facts that the
defendant neither knew nor had reason to know at the time he
acted.[ 1 ]*

															Section 284 allows district courts to punish the
full range of culpable behavior. Yet none of this is to say that
enhanced damages must follow a finding of egregious misconduct. As
with any exercise of discretion, courts should continue to take
into account the particular circumstances of each case in deciding
whether to award damages, and in what amount. Section 284 permits
district courts to exercise their discretion in a manner free from
the inelastic constraints of the Seagate test. Consistent
with nearly two centuries of enhanced damages under patent law,
however, such punishment should generally be reserved for egregious
cases typified by willful misconduct.

															2

															The Seagate test is also inconsistent
with §284 because it requires clear and convincing evidence to
prove recklessness. On this point Octane Fitness is again
instructive. There too the Federal Circuit had adopted a clear and
convincing standard of proof, for awards of attorney’s fees under
§285 of the Patent Act. Because that provision supplied no basis
for imposing such a heightened standard of proof, we rejected it.
See Octane Fitness, 572 U. S., at ___ (slip op., at
11). We do so here as well. Like §285, §284 “imposes no specific
evidentiary burden, much less such a high one.” Ibid. And
the fact that Congress expressly erected a higher standard of proof
elsewhere in the Patent Act, see 35 U. S. C. §273(b), but
not in §284, is telling. Furthermore, nothing in historical
practice supports a heightened standard. As we explained in Octane Fitness , “patent-infringement litigation has always
been governed by a preponderance of the evidence standard.” 572
U. S., at ___ (slip op., at 11). Enhanced damages are no
exception.

															3

															Finally, because we eschew any rigid formula
for awarding enhanced damages under §284, we likewise reject the
Federal Circuit’s tripartite framework for appellate review. In Highmark Inc. v. Allcare Health Management System,
Inc. , 572 U. S. ___ (2014), we built on our Octane
Fitness holding to reject a similar multipart standard of
review. Because Octane Fitness confirmed district
court discretion to award attorney fees, we concluded that such
decisions should be reviewed for abuse of discretion. Highmark, 572 U. S., at ___ (slip op., at 1).

															The same conclusion follows naturally from our
holding here. Section 284 gives district courts discretion in
meting out enhanced damages. It “commits the determination” whether
enhanced damages are appropriate “to the discretion of the district
court” and “that decision is to be reviewed on appeal for abuse of
discretion.” Id. , at ___ (slip op., at 4).

															That standard allows for review of district
court decisions informed by “the considerations we have
identified.” Octane Fitness, 572 U. S., at ___ (slip
op., at 8) (internal quotation marks omitted). The appellate review
framework adopted by the Federal Circuit reflects a concern that
district courts may award enhanced damages too readily, and distort
the balance between the protection of patent rights and the
interest in technological innovation. Nearly two centuries of
exercising discretion in awarding enhanced damages in patent cases,
however, has given substance to the notion that there are limits to
that discretion. The Federal Circuit should review such exercises
of discretion in light of the longstanding considerations we have
identified as having guided both Congress and the courts.

															III

															For their part, respondents argue that
Congress ratified the Seagate test when it passed the
America Invents Act of 2011 and reenacted §284 without pertinent
change. See Brief for Respondents in No. 14–1513 27 (citing Lorillard v. Pons , 434 U. S. 575, 580 (1978) ).
But the language Congress reenacted unambiguously confirmed
discretion in the district courts. Congress’s retention of §284
could just as readily reflect an intent that enhanced damages be
awarded as they had been for nearly two centuries, through the
exercise of such discretion, informed by settled practices.
Respondents point to isolated snippets of legislative history
referring to Seagate as evidence of congressional
endorsement of its framework, but other morsels—such as Congress’s
failure to adopt a proposed codification similar to Seagate —point in the opposite direction. See, e.g. ,
H. R. 1260, 111th Cong., 1st Sess. §5(e) (2009).

															Respondents also seize on an addition to the Act
addressing opinions of counsel. Section 298 provides that “[t]he
failure of an infringer to obtain the advice of counsel” or “the
failure of the infringer to present such advice to the court or
jury, may not be used to prove that the accused infringer willfully
infringed.” 35 U. S. C. §298. Respondents contend that
the reference to willfulness reflects an endorsement of Seagate ’s willfulness test. But willfulness has always been
a part of patent law, before and after Seagate . Section 298
does not show that Congress ratified Seagate ’s particular
conception of willfulness. Rather, it simply addressed the fallout
from the Federal Circuit’s opinion in Underwater Devices
Inc. v. Morrison-Knudsen Co. , 717 F. 2d 1380
(1983), which had imposed an “affirmative duty” to obtain advice of
counsel prior to initiating any possible infringing activity, id. , at 1389–1390. See, e.g., H. R. Rep. No.
112–98, pt. 1, p. 53 (2011).

															At the end of the day, respondents’ main
argument for retaining the Seagate test comes down to a
matter of policy. Respondents and their amici are concerned
that allowing district courts unlimited discretion to award up to
treble damages in infringement cases will impede innovation as
companies steer well clear of any possible interference with patent
rights. They also worry that the ready availability of such damages
will embolden “trolls.” Trolls, in the patois of the patent
community, are entities that hold patents for the primary purpose
of enforcing them against alleged infringers, often exacting
outsized licensing fees on threat of litigation.

															Respondents are correct that patent law reflects
“a careful balance between the need to promote innovation” through
patent protection, and the importance of facilitating the
“imitation and refinement through imitation” that are “necessary to
invention itself and the very lifeblood of a competitive economy.” Bonito Boats, Inc. v. Thunder Craft Boats, Inc. , 489
U. S. 141, 146 (1989) . That balance can indeed be disrupted
if enhanced damages are awarded in garden-variety cases. As we have
explained, however, they should not be. The seriousness of
respondents’ policy concerns cannot justify imposing an artificial
construct such as the Seagate test on the discretion
conferred under §284.

															*  *  *

															Section 284 gives district courts the
discretion to award enhanced damages against those guilty of patent
infringement. In applying this discretion, district courts are “to
be guided by [the] sound legal principles” developed over nearly
two centuries of application and interpretation of the Patent Act. Martin , 546 U. S., at 139 (internal quotation marks
omitted). Those principles channel the exercise of discretion,
limiting the award of enhanced damages to egregious cases of
misconduct beyond typical infringement. The Seagate test, in
contrast, unduly confines the ability of district courts to
exercise the discretion conferred on them. Because both cases
before us were decided under the Seagate framework, we
vacate the judgments of the Federal Circuit and remand the cases
for proceedings consistent with this opinion.

															It is so ordered. Notes 1 * Respondents invoke a
footnote in Safeco where we explained that in considering
whether there had been a knowing or reckless violation of the Fair
Credit Reporting Act, a showing of bad faith was not relevant
absent a showing of objective recklessness. See 551 U. S., at
70, n. 20. But our precedents make clear that “bad-faith
infringement” is an independent basis for enhancing patent
damages. Aro Mfg. Co. v. Convertible Top Replacement
Co. , 377 U. S. 476, 508 (1964) ; see supra, at 2–5,
9–10; see also Safeco , 551 U. S., at 57 (noting that
“ ‘willfully’ is a word of many meanings whose construction is
often dependent on the context in which it appears” (some internal
quotation marks omitted)). SUPREME COURT OF THE UNITED STATES

															_________________

															Nos. 14–1513 and 14–1520

															_________________

															HALO ELECTRONICS, INC., PETITIONER

															14–1513 v. PULSE ELECTRONICS, INC.,
et al.

															STRYKER CORPORATION, et al.,
PETITIONERS

															14–1520 v. ZIMMER, INC., et al.

															on writs of certiorari to the united states
court of appeals for the federal circuit

															[June 13, 2016]

															Justice Breyer, with whom Justice Kennedy and
Justice Alito join, concurring.

															I agree with the Court that In re Seagate
Technology, LLC , 497 F. 3d 1360 (CA Fed. 2007) (en banc),
takes too mechanical an approach to the award of enhanced dam-ages.
But, as the Court notes, the relevant statutory provision, 35
U. S. C. §284, nonetheless imposes limits that help
produce uniformity in its application and maintain its consistency
with the basic objectives of patent law. See U. S. Const.,
Art. I, §8, cl. 8 (“To promote the Progress of Science and
useful Arts”). I write separately to express my own understanding
of several of those limits.

															First, the Court’s references to “willful
misconduct” do not mean that a court may award enhanced damages
simply because the evidence shows that the infringer knew about the
patent and nothing more. Ante, at 11.
“ ‘[W]illfu[l]’ is a ‘word of many meanings whose construction
is often dependent on the context in which it appears.’ ” Safeco Ins. Co. of America v. Burr , 551 U. S. 47
, 57 (2007). Here, the Court’s opinion, read as a whole and in
context, explains that “enhanced damages are generally appropriate
. . . only in egregious cases .” Ante, at 8–9 (emphasis added); ante, at 11 (Enhanced
damages “should generally be reserved for egregious cases typified by willful misconduct” (emphasis added)). They amount to a
“ ‘punitive’ ” sanction for engaging in conduct that is
either “deliberate” or “wanton.” Ante, at 8; compare Aro
Mfg. Co. v. Convertible Top Replacement Co. , 377
U. S. 476, 508 (1964) (“bad-faith infringement”), and Seymour v. McCormick , 16 How. 480, 488 (1854)
(“malicious pirate”), with ante, at 10–11, and n. 1
(“objective recklessness”). The Court refers, by way of example, to
a “ ‘wanton and malicious pirate’ who intentionally infringes
another’s pat-ent—with no doubts about its validity or any notion
of a defense—for no purpose other than to steal the patentee’s
business.” Ante , at 9. And while the Court explains that
“intentional or knowing” infringement “may” warrant a punitive
sanction, the word it uses is may , not must . Ante , at 10. It is “circumstanc[e]” that transforms simple
knowledge into such egregious behavior, and that makes all the
difference. Ante , at 11.

															Second, the Court writes against a statutory
background specifying that the “failure of an infringer to obtain
the advice of counsel . . . may not be used to prove that
the accused infringer wilfully infringed.” §298. The Court does not
weaken this rule through its interpretation of §284. Nor should it.
It may well be expensive to obtain an opinion of counsel. See Brief
for Public Knowledge et al. as Amici Curiae 9
(“[O]pinion[s] [of counsel] could easily cost up to $100,000 per
patent”); Brief for Internet Companies as Amici Curiae 13
(such opinions cost “tens of thousands of dollars”). Such costs can
prevent an innovator from getting a small business up and running.
At the same time, an owner of a small firm, or a scientist,
engineer, or technician working there, might, without being
“wanton” or “reckless,” reasonably determine that its product does
not infringe a particular patent, or that that patent is probably
invalid. Cf. Association for Molecular Pathology v. Myriad Genetics, Inc. , 569 U. S. ___, ___ (2013) (slip
op., at 13) (The “patent[’s] [own] descriptions highlight the
problem[s] with its claims”). I do not say that a lawyer’s informed
opinion would be unhelpful. To the contrary, consulting counsel may
help draw the line between infringing and noninfringing uses. But
on the other side of the equation lie the costs and the consequent
risk of discouraging lawful innovation. Congress has thus left it
to the potential infringer to decide whether to consult
counsel—without the threat of treble damages influencing that
decision. That is, Congress has determined that where both “advice
of counsel” and “increased dam-ages” are at issue, insisting upon
the legal game is not worth the candle. Compare §298 with §284.

															Third, as the Court explains, enhanced damages
may not “serve to compensate patentees” for infringement-related
costs or litigation expenses. Ante, at 3–4. That is because
§284 provides for the former prior to any enhancement. §284
(enhancement follows award of “dam-ages adequate to compensate for
the infringement”); see ante, at 4. And a different
statutory provision, §285, provides for the latter. Ibid. ; Octane Fitness, LLC v. ICON Health & Fitness,
Inc. , 572 U. S. ___, ___–___ (2014) (slip op., at 7–8)
(fee awards may be appropriate in a case that is
“ ‘exceptional’ ” in respect to “the unreasonable manner
in which [it] was litigated”).

															I describe these limitations on enhanced damages
awards for a reason. Patent infringement, of course, is a highly
undesirable and unlawful activity. But stopping infringement is a
means to patent law’s ends. Through a complex system of
incentive-based laws, patent law helps to encourage the development
of, disseminate knowledge about, and permit others to benefit from
useful inventions. Enhanced damages have a role to play in
achieving those objectives, but, as described above, that role is
limited.

															Consider that the U. S. Patent and
Trademark Office estimates that more than 2,500,000 patents are
currently in force. See Dept. of Commerce, Patent and Trademark
Office, A. Marco, M. Carley, S. Jackson, & A. Myers, The USPTO
Historical Patent Files: Two Centuries of Invention, No. 2015–1,
p. 32, fig. 6 (June 2015). Moreover, Members of the Court have
noted that some “firms use patents . . . primarily [to]
obtai[n] licensing fees.” eBay Inc. v. MercExchange,
L. L. C. , 547 U. S. 388, 396 (2006) (Kennedy,
J., concurring). Amici explain that some of those firms
generate revenue by sending letters to “ ‘tens of thousands of
people asking for a license or settlement’ ” on a patent
“ ‘that may in fact not be warranted.’ ” Brief for
Internet Companies as Amici Curiae 12; cf. Letter to Dr.
Thomas Cooper (Jan. 16, 1814), in 6 Writings of Thomas Jefferson
295 (H. Washington ed. 1854) (lamenting “abuse of the frivolous
patents”). How is a growing business to react to the arrival of
such a letter, particularly if that letter carries with it a
serious risk of treble dam-ages? Does the letter put the company
“on notice” of the patent? Will a jury find that the company
behaved “recklessly,” simply for failing to spend considerable
time, effort, and money obtaining expert views about whether some
or all of the patents described in the letter apply to its
activities (and whether those patents are even valid)? These
investigative activities can be costly. Hence, the risk of treble
damages can encourage the company to settle, or even abandon any
challenged activity.

															To say this is to point to a risk: The more that
busi-nesses, laboratories, hospitals, and individuals adopt this
approach, the more often a patent will reach beyond its lawful
scope to discourage lawful activity, and the more often
patent-related demands will frustrate, rather than “promote,” the
“Progress of Science and useful Arts.” U. S. Const., Art. I,
§8, cl. 8; see, e.g. , Eon-Net LP v. Flagstar
Bancorp , 653 F. 3d 1314, 1327 (CA Fed. 2011) (patent
holder “acted in bad faith by exploiting the high cost to defend
[ patent] litigation to extract a nuisance value settlement”); In re MPHJ Technnology Invs., LLC , 159
F. T. C. 1004, 1007–1012 (2015) (patent owner sent more
than 16,000 letters demanding settlement for using “common office
equipment” under a patent it never intended to litigate); Brief for
Internet Companies as Amici Curiae 15 (threat of enhanced
damages hinders “collaborative efforts” to set “industry-wide”
standards for matters such as internet protocols); Brief for Public
Knowledge et al. as Amici Curiae 6 (predatory patent
practices undermined “a new and highly praised virtual-reality
glasses shopping system”). Thus, in the context of enhanced
damages, there are patent-related risks on both sides of the
equation. That fact argues, not for abandonment of enhanced
damages, but for their careful application, to ensure that they
only target cases of egregious misconduct.

															One final point: The Court holds that awards of
enhanced damages should be reviewed for an abuse of discretion. Ante , at 12–13. I agree. But I also believe that, in
applying that standard, the Federal Circuit may take advantage of
its own experience and expertise in patent law. Whether, for
example, an infringer truly had “no doubts about [the] validity” of
a patent may require an assessment of the reasonableness of a
defense that may be apparent from the face of that patent. See ante , at 9. And any error on such a question would be an
abuse of discretion. Highmark Inc. v. Allcare Health
Management System, Inc. , 572 U. S. ___, ___, n. 2 (2014)
(slip op., at 4, n. 2) (“A district court would necessarily abuse
its discretion if it based its ruling on an erroneous view of the
law” (internal quotation marks omitted)).

															Understanding the Court’s opinion in the ways
described above, I join its opinion.