Grant of certiorari in Global-Tech Appliances, Inc. v. SEB S.A. suggests that relaxed liability standard for induced infringement may be thrown into the fire.
On October 12, 2010, the Supreme Court once again accepted review of a question of patent law, central to the operation of the United States patent enforcement regime, when it granted certiorari in Global-Tech v. SEB, No. 10-6. The appeal is likely to decide what level of intent is required to support a judgment of induced infringement. In SEB v. Montgomery Ward & Co., 549 F.3d 1360 (Fed. Cir. 2010), the Federal Circuit appeared to have relaxed its holding in DSU Medical Corp. v. JMS Co., Ltd., 471 F.3d 1293 (Fed. Cir. 2006) (requiring a patent infringement plaintiff to show that the alleged infringer knew or should have know that his actions would, in fact, result in direct infringement). In SEB, however, the Federal Circuit sustained a finding of induced infringement respecting a fryer on a showing of “deliberate indifference” to potential patent rights could be sufficient to satisfy the knowledge requirement of an inducement charged. The brief seeking the writ of certiorari urged that the Federal Circuit had failed to clarify its own law on the state of mind requirement for an inducement claim under 35 U.S.C. § 271(b), but also that the Federal Circuit’s decision in SEB conflicted with the rationale and purpose of the Supreme Court’s holding in MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 936 (2005) (copyright infringement case in which the Court held that “clear expression or other affirmative steps taken to foster infringement,” is required for establishing liability for the resulting acts of infringement by third parties). Specifically, the question raised on review is whether the legal standard for the “state of mind” element for a claim of induced infringement is “deliberate indifference of a known risk” that an infringement may occur (as held in SEB) or a more stringent standard of proof, requiring “purposeful, culpable expression and conduct” to encourage an infringement (analogous to the Federal Circuit’s holding in DSU Medical).
This appeal, therefore, presents an important issue for resolution and once again indicates the Supreme Court’s willingness to wade into significant patent law questions, where the Court of Appeals charged with the exclusive, primary appellate jurisdiction over patent law questions has appeared to have resolved an issue. Resolving the necessary level of proof respecting the liability threshold for the indirect infringement of inducement has far-reaching, practical consequences. If “deliberate indifference” to potential patent rights is the standard, suppliers of products for use in methods of manufacture or business methods may face greater exposure of liability though ignorant of existing patent rights. That standard may impose a higher duty of care to examine and understand potential patent rights, and that, in turn, may increase costs to suppliers.
We are watching the developments in this case closely and will, from time to time, report on significant events, including when the Supreme Court renders its decision. The policy issues at stake in this appeal are of significant importance to marketplace competitors as well as the patent bar. In a subsequent Alert, we will outline some of those issues in greater detail.