Commil USA, LLC v. Cisco Systems, Inc. (No. 13-896)

On March 31, 2015, the Supreme Court heard oral argument in Commil USA, LLC v. Cisco Systems, Inc. (No. 13-896), which relates to whether a defendant can be liable for inducing infringement if the defendant had a good faith belief that the asserted patent is invalid. Under 35 U.S.C. § 271(b), one is liable for inducing infringement if it knowingly induced infringement and possessed specific intent to encourage another’s infringement. Inducement differs from direct infringement under 35 U.S.C. § 271(a) in that direct infringement is a strict liability offense, whereas inducement includes an additional intent requirement. Courts have traditionally held that an alleged inducer’s good faith belief that it (or the party it is inducing) is not infringing the asserted patent is a defense to an inducement claim. Under this theory, if the inducer does not believe it is infringing, it cannot have a specific intent to encourage another party to infringe.

Commil raises the question of whether the alleged inducer’s good-faith belief that the patent is invalid also serves as a defense to inducement liability. In the court below, the Federal Circuit for the first time answered this question in the affirmative. However, infringement and invalidity have traditionally been viewed as separate issues, such that using invalidity as a defense to infringement would conflate two issues that are generally separate. In addition, the Patent Act states that all issued patents carry a presumption of validity. Allowing an accused infringer to avoid inducing infringement based on its good faith belief that the patent is invalid would seem to undercut the statutory presumption of validity.

During oral argument, Justice Scalia likened inducement to aiding and abetting, which requires wrongful intent, suggesting that a belief that the patent is invalid may negate the wrongful intent. Justice Kagan also suggested that infringement and invalidity are two sides of the same coin, such that if a good faith belief of non-infringement is sufficient to defeat inducement liability, a good faith belief of invalidity should also be sufficient. On the other hand, Justice Sotomayor questioned how the presumption of validity can be reconciled with a defense based on a good faith belief of invalidity, suggesting that there may be a split among the justices.

This case is potentially very important for defendants facing claims of inducing infringement. If the Federal Circuit decision is upheld, defendants would have a strong new weapon for avoiding liability for inducement. When defendants receive notice accusing them of inducing infringement of another’s patent, in addition to conducting a non-infringement analysis, they may also want to consider seeking an invalidity opinion of counsel to undercut a potential inducement claim.