First published in LES Insights

Abstract

A Delaware district court declined to overturn a jury’s determination that a company induced infringement even though the company sold its products with the allegedly infringing features disabled. The court found sufficient circumstantial evidence of use of the infringing features in the U.S., including extensive sales, an instruction manual on how to enable an infringing feature, several blog posts showing activation of the infringing features, and documents describing their benefits.

Indirect-infringement liability can pose a risk to companies that have no direct sales in the United States. For instance, overseas sales of products that are incorporated into other products sold in the United States or used by U.S. customers in infringing ways may form a basis for liability. A finding of indirect infringement, however, requires, among other things, proof of underlying direct infringement by another and the accused indirect infringer's knowledge of the asserted patents.

A recent decision by the United States District Court for the District of Delaware shows how circumstantial evidence, when viewed as a whole, can provide enough evidence to prove underlying direct infringement, in support of an indirect-infringement finding. In Riverbed Technology, Inc. v. Silver Peak Systems, Inc.,1 the district court found sufficient circumstantial evidence of use of the infringing features in the U.S. despite the fact that the accused products were sold with the infringing features disabled.

Background

Riverbed and SilverPeak operate in the Wide Area Network ("WAN") optimization market, with Riverbed focusing on branch-office deployments and SilverPeak focusing on datacenter deployments. In 2011, Riverbed sued SilverPeak for the alleged infringement of several patents, but the court stayed Riverbed's claims pending a potential appeal of an inter partes reexamination that found the asserted claims of two of the three Riverbed patents invalid.

Silver Peak counterclaimed, alleging infringement of its own U.S. Patent Nos. 7,945,736 (the "'736 patent") and 7,948,921 (the "'921 patent"). On summary judgment, the court found that Riverbed's accused product infringed the '921 patent. Following trial, a jury found that claim 1 of that patent was not invalid and that Riverbed induced infringement of the same claim. The jury also found that Riverbed contributorily infringed several claims of the '736 patent. Riverbed filed a post-trial motion for judgment as a matter of law, arguing that Silver Peak failed to present sufficient evidence for a reasonable jury to find indirect infringement.

The Riverbed Technology Decision

The court first noted that judgment as a matter of law is a "sparingly invoked remedy" appropriate only if there is insufficient evidence from which a jury reasonably could find liability, after viewing the evidence, and all reasonable inferences drawn therefrom, in a light most favorable to the nonmoving party. With this backdrop, the court turned to Riverbed's arguments.

Riverbed challenged the jury's indirect-infringement findings on two separate grounds: (1) requisite knowledge of the asserted patents and (2) customer use of the accused features in the United States, which Silver Peak relied on as the underlying direct infringement.

On Riverbed's first challenge, the court acknowledged that it was a "very close call" on whether Silver Peak presented legally sufficient evidence for the jury to conclude that Riverbed had the requisite knowledge for indirect infringement. In fact, the jury's determination did not expressly indicate that it found that Riverbed had the requisite knowledge. The court, however, found that the necessary knowledge to support indirect infringement must be implicit in the jury's determination. In particular, the court pointed to evidence of Riverbed's knowledge of the asserted patents as of the date Silver Peak filed its counterclaims; understanding of the accused functionality by at least some of Riverbed's employees; Silver Peak's infringement counterclaims; and Riverbed's choice not to remove, design around, or instruct customers not to use the accused functions. The court concluded that from this evidence, the jury could have concluded that it was more likely than not that Riverbed knew its products infringed and knew that the acts it induced its customers to undertake when using its products would constitute infringement.

Moving to Riverbed's second challenge, the court found that Silver Peak's evidence of direct infringement was "just barely sufficient" to persuade the court not to overturn the jury's verdict. Citing earlier Federal Circuit cases, the court found that circumstantial evidence can be sufficient to prove underlying direct infringement in support of an induced-infringement claim. It was undisputed that Riverbed sells its products with the accused features disabled. Thus, Silver Peak had to show that Riverbed's customers enabled and used the accused features. Silver Peak offered no direct evidence that customers used Riverbed's accused products in an infringing manner in the United States. The court concluded, however, that Silver Peak offered sufficient circumstantial evidence of direct infringement in the United States, including evidence of Riverbed's extensive sales, a community support forum on its U.S. website that showed customers using the infringing features of Riverbed's appliances, a product manual instructing users how to use the infringing features, and Riverbed's documents describing the benefits of the infringing features.

Strategy and Conclusion

The Riverbed Technology decision demonstrates how a company be found liable for indirect infringement through its customers' use, though it sells its products with accused features disabled. Where appropriate, companies may want to consider expressly instructing customers not to use its products in potentially infringing ways and actively monitor its customer-support forums to remove any posts that encourage or direct users how to use its products in potentially infringing ways.