Commil USA, LLC v. Cisco Sys., Inc.

Addressing the knowledge requirement as part of the prima facie case for induced infringement, the U.S. Court of Appeals for the Federal Circuit vacated a jury’s finding of infringement by inducement, finding negligence and recklessness do not amount to the knowledge required for inducement and that a good-faith belief of invalidity may negate the requisite intent for induced infringement. Commil USA, LLC v. Cisco Sys., Inc., Case No. 12-1042 (Fed. Cir. June 25, 2013) (Prost, J.) (Newman, J. concurring-in-part, dissenting-in-part) (O’Malley, J., concurring-in-part, dissenting-in-part).

Commil sued Cisco for direct and induced infringement of a wireless communication patent. A first jury trial resulted in findings of validity, direct infringement, and damages. The jury did not find induced infringement. After the verdict, Commil moved for a new trial, and the trial court granted a partial re-trial on induced infringement and damages—the two issues Commil did not win in the first trial. After a second trial, a second jury found induced infringement and awarded Commil roughly $64 million.

Cisco appealed a number of issues, including a jury instruction on the knowledge element of inducement and the trial court’s exclusion of evidence that Cisco held a good-faith belief that the patent was invalid.

Regarding the jury instruction, the Federal Circuit analyzed the Supreme Court’s ruling in Global Tech. The Federal Circuit found that Global Tech did not permit a finding of inducement based on recklessness or negligence. The Federal Circuit found that the jury instruction permitted a finding of inducement on those grounds and was, thus, erroneous as a matter of law.

The Federal Circuit also considered whether a good-faith belief of invalidity may negate the requisite intent for induced infringement. The Court stated that “no principled distinction” existed between a good-faith belief of non-infringement and a good-faith belief in invalidity insofar as specific intent is concerned. The Court thus found that a good-faith belief of invalidity may negate intent for inducement purposes. Vacating the verdict, the Court found that either belief may negate the specific intent to encourage another’s infringement.

Judge Newman dissented, likening induced infringement to tort liability. She equated a mistaken, albeit good-faith, belief in invalidity with a mistake of law. Just as a mistake of law does not absolve a tortfeasor, a mistaken belief that a patent is invalid (a question of law) similarly cannot absolve a party from induced infringement. In other words, “whether there is infringement in fact does not depend on the belief of the accused infringer that it might succeed in invalidating the patent.” In response, the majority sidestepped Judge Newman’s dissent in a footnote, saying it “does little more than construct a straw man and set him ablaze.”

Judge O’Malley dissented from the majority’s upholding of the district court’s grant of a partial retrial on issues Commil lost and from the majority’s refusal to address Cisco’s argument that Commil failed to identify a direct infringer in alleging induced infringement.