On May 26, 2015, the Supreme Court ruled in Commil USA, LLC v. Cisco Sys., Inc. that an alleged infringer's belief regarding patent validity cannot be used as evidence in a defense to an induced infringement claim. In so doing, the Supreme Court also further clarified and cemented its decision in Global-Tech. v. SEB S.A. regarding the requisite intent for induced infringement.
The patent at issue concerned Commil USA's method patent for providing faster and more reliable communications in short-range wireless networks through the use of multiple wireless base stations that permit a user to move around a large area while maintaining connection to the network. Commil alleged that Cisco induced others to infringe its patent by selling networking equipment that performed the same functions. A jury ultimately found Cisco liable to Commil for induced infringement and awarded Commil $63.7 million in damages. During the proceedings, the district court excluded evidence showing Cisco had a good-faith belief that Commil's patent was invalid for the purpose of negating Cisco's intent to commit induced infringement.
Cisco appealed the decision, and the Federal Circuit ruled that the district court erroneously excluded evidence of Cisco's good-faith belief that Commil's patent was invalid. The Federal Circuit reasoned that evidence of an infringer's good-faith belief that a patent is invalid negates the requisite intent for induced infringement, which is whether the infringer knew that his actions would induce actual infringement. Commil appealed, and the issue presented to the Supreme Court was whether knowledge of, or belief in, a patent's validity is required for induced infringement.
The Supreme Court's Decision
The Supreme Court began its analysis by reaffirming its decision in Global-Tech Appliances, Inc. v. SEB S.A., namely, that mere knowledge of the patent is insufficient to establish induced infringement. Instead, induced infringement occurs only if the alleged infringer knew of the patent and knew that the induced acts constitute patent infringement.
The Court, however, reasoned that the intent for induced infringement relates to the intent toinfringe, not any intent or knowledge relating to the patent's validity. Accordingly, a good-faith belief that the patent is invalid does not negate a finding of induced infringement.
The Court ruled that the differences between infringement and invalidity are axiomatic in patent law – challenging the validity of a patent and infringement of a patent have long been alternative grounds for a defendant to prevail in a patent infringement action. Allowing a defendant to use its reasonable belief as to a patent's validity to challenge infringement would severely undermine Congress' statutory directive that all patents are "presumed valid." Semantically, infringement and validity are two distinct legal theories with different burdens of proof requiring different forms of evidence.
Moreover, the Supreme Court reasoned that, as a practical matter, creating a defense to infringement based on a party's belief of invalidity would increase the burdens and costs associated with patent litigation. Because it is more difficult to decide a patent's validity than whether or not it has been infringed, every accused infringer would have an incentive to advance a theory of invalidity and seek to prevail on its belief that the patent was invalid, which would require extensive discovery. Juries would also face the difficult task of separating the defendant's belief of a patent's validity when deciding infringement from the actual issue of the validity. The Court further reasoned that tort and criminal law have long rejected the defense of ignorance of the law or "I thought it was legal," and likewise, such a defense fails in patent law. Finally, the Court concluded that a good-faith belief in a patent's invalidity as a defense to infringement is unnecessary to curb frivolous infringement lawsuits as district courts and accused infringers have numerous tools at their disposal to dissuade frivolous lawsuits, including sanctions, an award of attorney's fees to the prevailing party, and U.S. Patent and Trademark Office proceedings to have the patent declared invalid.
Justice Scalia's Dissent
In his dissent, Justice Scalia argued that the Court's semantic distinction between belief of a patent's validity and intent to infringe was not persuasive – a person with a good-faith belief that the patent is invalid and therefore, impossible to infringe, cannot induce actions he knows will infringe that patent. Justice Scalia further observed that the fact that invalidity and infringement are distinct legal issues is merely a truism, and this distinction does not persuasively address whether a determination of infringement overlaps with considerations related to the patent's validity.
Finally, Justice Scalia stated that the majority's "weakest argument" was that there exist "practical reasons" for declining to create a defense to infringement based on a good-faith belief of invalidity. First, Scalia argued that the Supreme Court's duty is to interpret the Patent Act rather than create common law defenses to a statutory cause of action, and the Patent Act requires knowledge of infringement to which a good-faith belief of invalidity would be a defense. Second, Scalia maintained that the Supreme Court's ruling increases the "in terrorem power of patent trolls" as indicated by the Supreme Court's reassurances towards the end of its decision in which it pointed out the various tools at the district court's and accused infringer's disposal to combat frivolous infringement lawsuits.
Even though invalidity remains a defense to the ultimate liability for patent infringement, an accused infringer cannot use invalidity or a good-faith belief of invalidity to negate its intent to induce infringement. Another key point from the Court's decision is that mere knowledge of the patent is insufficient to establish intent for induced infringement. Instead, satisfying the intent requirement for induced infringement requires proof that the accused infringer knew of the patent and knew that the induced acts constitute patent infringement.