In one of its only pro-patentee decisions in recent years, the Supreme Court held last week that an accused infringer’s good-faith belief of patent invalidity is not a defense to a claim of inducing infringement. Even though the court reaffirmed that a good-faith belief of non-infringement is a defense to inducement, the court’s decision benefits patent owners, including so-called patent trolls.
A patent grants its owner the right to prevent others from making, using, selling, offering for sale and importing the patented invention in the U.S., as well as the importation into the U.S. of goods manufactured overseas using a patented process.
A direct infringer is someone who engages in one of the prohibited acts (making, using, selling, etc.). There is no requirement that the accused direct infringer was even aware of the patent, let alone knew that they were infringing.
Patents can be used to protect not only products and other tangible goods, they can also be used to protect methods. In Commil USA, LLC v. Cisco Systems, Inc., the patent at issue claimed a method of implementing short-range wireless networks (a “method of communicating between mobile units and [a] Base Station”). For many patented methods, especially those related to computer software and hardware, manufacturers often are not direct infringers. Though the manufacturer is selling hardware or software specifically designed (e.g., programmed) to perform the patented method, only the end-users (i.e., customers) are direct infringers when they use the manufacturer’s product to perform the patented method. The patent owner would have a direct infringement claim against end-users, but pursuing each such end-user is almost always impractical — and, perhaps, unwise if the end-users are potential customers of the patent owner.
In addition to direct infringement, liability can also arise for indirect patent infringement; namely, contributory infringement1 and active inducement of infringement. In particular, 35 U.S.C. § 271(b) states: “Whoever actively induces infringement of a patent shall be liable as an infringer.” A claim for inducement of infringement often provides a means for patent owners to pursue actions against manufacturers (and others) who themselves are not direct infringers.
Unlike direct patent infringement, however, infringement by inducement requires that the accused infringer not only knew of the patent, but also knew that the induced acts were infringing. As the Supreme Court previously held in Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. ___ (2011), mere negligence or recklessness is not enough. Actual knowledge of the infringement is necessary, although the requisite knowledge may be established under the “willful blindness” doctrine:
- the accused indirect infringer must subjectively believe that there is a high probability that a fact (infringement) exists, and
- the accused indirect infringer must have taken deliberate actions to avoid learning of that fact.
Id. As a result, even if the accused indirect infringer knew of the patent, he is generally not liable for indirect infringement if he had a good-faith belief that the acts he was inducing (e.g., a customer’s use of a product) do not infringe. “[A] good-faith belief of non-infringement is relevant evidence that tends to show that an accused inducer lacked the intent required to be held liable for induced infringement.” Commil USA, LLC v. Cisco Systems, Inc., 720 F.3d 1361, 1368 (Fed. Cir. 2013). Typically, such a good faith belief of no infringement can be established by reliance on a competent opinion of counsel that there is no infringement.2
In Commil, the Court of Appeals for the Federal Circuit (CAFC) took the Supreme Court’s holding in Global-Tech one step further, holding that, not only is good-faith belief of non-infringement often enough to negate induced infringement, but also a good-faith belief that the patent in question is invalid:
It is axiomatic that one cannot infringe an invalid patent. Accordingly, one could be aware of a patent and induce another to perform the steps of the patent claim, but have a good-faith belief that the patent is not valid. Under those circumstances, it can hardly be said that the alleged inducer intended to induce infringement. Thus, a good-faith belief of invalidity is evidence that may negate the specific intent to encourage another’s infringement, which is required for induced infringement.
Id. (citations omitted).
The Supreme Court vacated the CAFC’s decision, holding that a belief in patent invalidity is not a defense to a claim of induced infringement. The majority based this conclusion upon a characterization of non-infringement and invalidity as two separate defenses under the Patent Act, as well as their conclusion that belief that allowing a belief in invalidity to be a defense to induced infringement would undermine the presumption that a patent is valid. The court also reaffirmed the holding from Global-Tech that inducement requires more than simply knowledge of the patent—it also requires proof that the accused infringer knew that the induced acts were infringing.
In distinguishing between infringement and validity, the court noted that these are “separate matters under patent law,” that “appear in separate parts of the Patent Act.” 2015 U.S. LEXIS 3406, 17 (U.S. 2015). The court further noted that noninfringement and invalidity are identified as “two separate defenses” in 35 U.S.C. §§282(b)(1) and (2). Id. at 18. Thus, the majority concluded that, “[w]ere this Court to interpret §271(b) as permitting a defense of belief in invalidity, it would conflate the issues of infringement and validity.” Id.3
As for undermining the presumption of validity, the court, departing from most of its recent patent decisions that have tended to limit patent protection, stated that the validity presumption “is a ‘common core of thought and truth’ reflected in this Court’s precedents for a century.” Id. The majority pointed out that “if belief in invalidity were a defense to induced infringement, the force of that presumption would be lessened to a drastic degree, for a defendant could prevail if he proved he reasonably believed the patent was invalid.” Id.
The majority also cited practical reasons as to why a belief in invalidity should not be a defense to a claim of induced infringement, including the ability of accused infringers to challenge validity by way of a declaratory judgment action, inter partes review at the Patent Office, and raising the affirmative defense of invalidity if sued for inducing infringement. Id. at 20-21. In addition, the majority also noted that making invalidity a defense to induced infringement would make patent litigation “more burdensome” in that “[e]very accused inducer would have an incentive to put forth a theory of invalidity and could likely come up with myriad arguments,” and that “the jury would be put to the difficult task of separating the defendant’s belief regarding validity from the actual issue of validity.” Id. at 21. Of course the court’s decision actually gives accused infringers reason to put forth even more arguments as to invalidity, and juries are already tasked with separating the defendant’s belief regarding infringement from the actual issue of infringement.
Justice Scalia, in a strongly worded dissent (in which Chief Justice Roberts joined), disagreed. His dissent notes that “[b]ecause only valid patents can be infringed, anyone with a good-faith belief in a patent’s invalidity necessarily believes the patent cannot be infringed.” Id. at 25. Therefore, since “it is impossible for anyone who believes that a patent cannot be infringed to induce actions that he knows will infringe it,” a “good-faith belief that a patent is invalid is therefore a defense to induced infringement of that patent.” Id. Justice Scalia also asserted that this defense would not undermine the presumption of validity, since the accused inducer’s good-faith belief that the patent is invalid does not somehow call into question the validity of the patent. A defendant who would succeed using this defense “merely avoids liability for a third party’s infringement of a valid patent, in no way undermining that patent’s presumed validity. successfully.” Id.at 26. Finally, Justice Scalia points out that the majority’s decision “increases the in terrorem power of patent trolls.” Id. at 27.
With the ink barely dry on the court’s opinion, it is worth thinking briefly about the practical impact of the decision on both plaintiffs/patent owners and alleged infringers.
First, this decision further highlights the desirability of obtaining patents that will provide a viable avenue for a claim of direct infringement against competitors rather than having to rely solely on indirect infringement. Though this may not always be possible, particularly for software-related inventions, prevailing on an allegation of direct infringement does not require proof that the accused infringer was even aware of the patent.
Second, for those seeking to avoid infringement liability, the decision in Commil reinforces the desirability of obtaining, when possible, a competent opinion of counsel regarding noninfringement and invalidity of any potentially problematic patents. Such opinions continue to be useful not only for preventing a finding of willful infringement, but a good-faith reliance on a competent noninfringement opinion can also preclude a finding of indirect infringement.