GENERAL MOTORS CORP. v. DEVEX CORP.

JUSTICE MARSHALL, delivered the opinion of the Court.

This case concerns the proper standard governing the award of prejudgment interest in a patent infringement suit under 35 U. S. C. § 284.

I

In 1956 respondent Devex Corporation (Devex) filed a suit for patent infringement against petitioner General Motors Corporation (GMC) in the United States District Court for the Northern District of Illinois.1 Devex alleged that GMC was infringing Reissue Patent No. 24,017, known as the "Henricks" or "Devex" patent. The patent covered a lubricating process used in the cold-forming of metal car parts by pressure.2 On June 29, 1962, the District Court held the Devex patent invalid and entered judgment for GMC. On appeal the United States Court of Appeals for the Seventh Circuit reversed the finding of invalidity and remanded for further proceedings. Devex Corp. v. General Motors Corp., 321 F.2d 234 (1963), cert. denied, 375 U.S. 971 (1964).

The case was then transferred to the United States District Court for the District of Delaware. After a trial the District Court ruled that there had been no infringement. 316 F.Supp. 1376 (1970). The United States Court of Appeals for the Third Circuit reversed, holding that the patent was infringed by GMC's use of certain processes in the production of bumpers and cold-extruded nonbumper parts. 467 F.2d 257 (1972), cert. denied, 411 U.S. 973 (1973).

On remand the case was referred to a Special Master for an accounting. The Special Master ruled that three major divisions of GMC had used infringing processes in the manufacture of bumper parts, and selected a royalty rate "by reference to hypothetical negotiations" that it found would have taken place if GMC had sought to obtain a license from Devex. Special Master's Report, at 71. See 667 F.2d 347, 352 (CA3 1981).3 The District Court modified the royalty rate selected by the Special Master and entered judgment pursuant to 35 U. S. C. § 284, awarding Devex $8,813,945.50 in royalties, $11,022,854.97 in prejudgment interest, and postjudgment interest at the rate allowed by state law. 494 F.Supp. 1369 (1980). The court determined what the annual royalty payments would have been, and calculated prejudgment interest on each payment from the time it would have become due. The Court of Appeals affirmed. 667 F.2d 347 (1981). The court held that "the award of [prejudgment] interest as the yearly royalty payments became due was not an abuse of discretion." Id., at 363. We granted certiorari to consider the standard applicable to the award of prejudgment interest under 35 U. S. C. § 284, 456 U.S. 988 (1982), and we now affirm.

II

Prior to 1946 the provision of the patent laws concerning a plaintiff's recovery in an infringement action contained no reference to interest.4 The award of interest in patent cases was governed by the common-law standard enunciated in several decisions of this Court. E. g., Duplate Corp. v. Triplex Safety Glass Co., 298 U.S. 448 (1936); Tilghman v. Proctor, 125 U.S. 136 (1888). Under the Duplate standard, prejudgment interest was generally awarded from the date on which damages were liquidated, and could be awarded from the date of infringement in the absence of liquidation only in "exceptional circumstances," such as bad faith on the part of the infringer. 298 U. S., at 459.5

In 1946 Congress adopted amendments to the provision of the patent laws governing recovery in infringement actions. Act of Aug. 1, 1946, § 1, 60 Stat. 778, 35 U. S. C. §§ 67, 70 (1946 ed.).6 One of the amended provisions, which has since been recodified as 35 U. S. C. § 284, states in relevant part:

The Courts of Appeals have reached differing conclusions as to whether § 284 incorporates the Duplate standard and more generally as to the standard governing the award of prejudgment interest under § 284.7

We have little doubt that § 284 does not incorporate the Duplate standard. Under that standard, which evolved as a matter of federal common law, prejudgment interest could not be awarded where damages were unliquidated, absent bad faith or other exceptional circumstances. By contrast, § 284 gives a court general authority to fix interest and costs. On the face of § 284, a court's authority to award interest is not restricted to exceptional circumstances, and there is no warrant for imposing such a limitation. When Congress wished to limit an element of recovery in a patent infringement action, it said so explicitly. With respect to attorney's fees, Congress expressly provided that a court could award such fees to a prevailing party only "in exceptional cases." 35 U. S. C. § 285.8 The power to award interest was not similarly restricted.

There is no basis for inferring that Congress' adoption of the provision concerning interest merely incorporated the Duplate standard. This is not a case in which Congress has reenacted statutory language that the courts had interpreted in a particular way. In such a situation, it may well be appropriate to infer that Congress intended to adopt the established judicial interpretation. See, e. g., Herman & MacLean v. Huddleston, 459 U.S. 375, 384-386 (1983); Lorillard v. Pons, 434 U.S. 575, 580-581 (1978). In this case, however, the predecessor statute did not contain any reference to interest, and the 1946 amendments specifically added a provision concerning interest in patent infringement actions. We cannot agree with petitioner that the only significance of Congress' express provision for the award of interest was the incorporation of a common-law standard that developed in the absence of any specific provision concerning interest.

Having decided that § 284 does not incorporate the Duplate rule, we turn to a consideration of the proper standard for awarding prejudgment interest under that provision. Although the language of § 284 supplies little guidance as to the appropriate standard, for the reasons elaborated below we are convinced that the underlying purpose of the provision strongly suggests that prejudgment interest should ordinarily be awarded where necessary to afford the plaintiff full compensation for the infringement.

Both the background and language of § 284 provide evidence of this fundamental purpose. Under the pre-1946 statute, the owner of a patent could recover both his own damages and the infringer's profits. See Aro Mfg. Co. v. Convertible Top Co., 377 U.S. 476, 505 (1964); n. 4, supra. A patent owner's ability to recover the infringer's profits reflected the notion that he should be able to force the infringer to disgorge the fruits of the infringement even if it caused him no injury. In 1946 Congress excluded consideration of the infringer's gain by eliminating the recovery of his profits, Aro Mfg. Co., supra, at 505, the determination of which had often required protracted litigation. H. R. Rep. No. 1587, 79th Cong., 2d Sess., 1-2 (1946); S. Rep. No. 1503, 79th Cong., 2d Sess., 2 (1946); 92 Cong. Rec. 9188 (1946) (remarks of Sen. Pepper). At the same time, Congress sought to ensure that the patent owner would in fact receive full compensation for "any damages" he suffered as a result of the infringement. See H. R. Rep. No. 1587, supra, at 1 ("any damages the complainant can prove"); S. Rep. No. 1503, supra, at 2 (same). Accordingly, Congress expressly provided in § 284 that the court "shall award the claimant damages adequate to compensate for the infringement." (Emphasis added.)9

The standard governing the award of prejudgment interest under § 284 should be consistent with Congress' overriding purpose of affording patent owners complete compensation. In light of that purpose, we conclude that prejudgment interest should ordinarily be awarded. In the typical case an award of prejudgment interest is necessary to ensure that the patent owner is placed in as good a position as he would have been in had the infringer entered into a reasonable royalty agreement.10 An award of interest from the time that the royalty payments would have been received merely serves to make the patent owner whole, since his damages consist not only of the value of the royalty payments but also of the forgone use of the money between the time of infringement and the date of the judgment.

This very principle was the basis of the decision in Waite v. United States, 282 U.S. 508 (1931), which involved a patent infringement suit against the United States. The patent owner had been awarded unliquidated damages in the form of lost profits, but had been denied an award of prejudgment interest. This Court held that an award of prejudgment interest to the patent owner was necessary to ensure "complete justice as between the plaintiff and the United States," id., at 509, even though the statute governing such suits did not expressly provide for interest. Just as § 284 provides that the court shall award "damages adequate to compensate for the infringement," the statute at issue in Waite provided that the patentee shall receive "reasonable and entire compensation." 35 U. S. C. § 68 (1940 ed.). In addition, § 284 contains a specific provision concerning interest. Waite thus provides strong support for our conclusion that prejudgment interest should ordinarily be awarded under § 284.

We do not construe § 284 as requiring the award of prejudgment interest whenever infringement is found. That provision states that interest shall be "fixed by the court," and in our view it leaves the court some discretion in awarding prejudgment interest. For example, it may be appropriate to limit prejudgment interest, or perhaps even deny it altogether, where the patent owner has been responsible for undue delay in prosecuting the lawsuit.11 There may be other circumstances in which it may be appropriate not to award prejudgment interest. We need not delineate those circumstances in this case. We hold only that prejudgment interest should be awarded under § 284 absent some justification for withholding such an award.

III

Because we hold that prejudgment interest should ordinarily be awarded absent some justification for withholding such an award, a decision to award prejudgment interest will only be set aside if it constitutes an abuse of discretion. The District Court held that GMC infringed Devex's patent over the course of a number of years and awarded Devex a reasonable royalty as compensation. While GMC contends that Devex was guilty of causing unnecessary delay, the District Court rejected this contention when it concluded that "Devex has done no worse than fully litigate its claims achieving a large judgment in its favor" and awarded Devex costs on the basis of this conclusion. 494 F. Supp., at 1380.12 On these facts, we agree with the Court of Appeals that the award of prejudgment interest was proper.

Accordingly, the judgment of the Court of Appeals for the Third Circuit is

Affirmed.

JUSTICE STEVENS, concurring.

The 1946 amendments to the patent laws replaced the Duplate standard with a presumption favoring the award of prejudgment interest in the ordinary case. As the Court correctly holds, however, § 284 does not automatically require an "award of prejudgment interest whenever infringement is found." Ante, at 656. In exercising its discretion to deny such interest in appropriate cases, the trial court may properly take into account the nature of the patent and the strength of the defendant's challenge.

In other contexts we have noted the public function served by patent litigation. In Lear, Inc. v. Adkins, 395 U.S. 653, 670 (1969), Justice Harlan, writing for the Court, explained:

Hence, a patent challenge in the courts permits a more informed decision regarding the merits of a particular patent. And, as we have long recognized, "[i]t is as important to the public that competition should not be repressed by worthless patents, as that the patentee of a really valuable invention should be protected in his monopoly . . . ." Pope Manufacturing Co. v. Gormully, 144 U.S. 224, 234 (1892).

Of course, the general public interest in patent litigation does not justify denial of prejudgment interest in the typical case in which infringement is found. Wisely today the Court does not attempt to define precisely the category of cases in which an infringer, although ultimately unsuccessful in litigation, may have been sufficiently justified in its challenge to a particular patent to make it appropriate for the district court to exercise its discretion to deny prejudgment interest. But the existence of that category of cases should not be overlooked.