After taking a significant interest in patent law last term, the U.S. Supreme Court has again waded into the patent waters, this time to decide, as a matter of first impression, whether a good faith belief that a patent is invalid is a defense to inducement liability under 35 U.S.C. § 271(b). On May 26, 2015, the Court, in a 6-2 decision, ruled that such a defense does not exist.
Section 271(b) states that “[w]hoever actively in- duces infringement of a patent shall be liable as an infringer.” A finding of inducement requires an un- derlying act of direct infringement. It further requires that the accused inducer had knowledge of the existence of the infringed patent and, as recently held by the Supreme Court in Global-Tech Appli- ances Inc. v. SEB S.A., “knowledge that the induced acts constitute patent infringement.” It is not enough that an inducer intentionally causes an- other to engage in conduct that happens to amount to infringement; it must know, either actually or through willful blindness, that the intended conduct constitutes patent infringement.
In Commil USA LLC v. Cisco Systems Inc., a di- vided U.S. Court of Appeals for the Federal Circuit panel held that “evidence of an accused inducer’s good-faith belief of invalidity may negate the requi- site intent for induced infringement.” Commil had alleged that Cisco, through sales of Wi-Fi access points and controllers, induced its customers to in- fringe Commil’s patent related to a method of providing handoffs of mobile devices from one base station to another. After a jury trial, Cisco was found liable for inducement. Cisco appealed to the Federal Circuit on multiple grounds, most notably, that the district court erroneously precluded Cisco from presenting evidence of its good faith belief of invalidity to show that it lacked the requisite intent to induce infringement.
In concluding that the district court erred in exclud- ing Cisco’s evidence of its good faith belief of invalidity, the Federal Circuit noted that, while not having previously addressed the question with re- spect to a good faith belief of invalidity, it was well- established that “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.” The court saw no principled distinction between a good faith belief of invalidity and a good faith belief of non- infringement. Accordingly, because “one cannot infringe an invalid patent,” an alleged inducer could hardly be said to have intended to induce infringe- ment of a patent that it in good faith believed was invalid. (Of course, because there can be no liability for infringement of an invalid patent, an alleged in- ducer’s good faith belief of invalidity only matters when it is incorrect.)
Both parties petitioned the Supreme Court for re- view of various parts of the Federal Circuit opinion, and the Supreme Court granted certiorari on this issue alone. Essentially, the Court was tasked with clarifying the meaning of “infringement” as used in § 271(b) and the Global-Tech holding. Does “knowledge that the induced acts constitute patent infringement” mean “knowledge that the induced conduct would result in liability for infringement” or “knowledge that the induced conduct meets all the limitations of a patent claim regardless of ulti- mate liability?”
As an initial matter, the Court, in an opinion deliv- ered by Justice Kennedy, reaffirmed its explicit holding in Global-Tech “that liability for induced infringement can only attach if the defendant knew of the patent and knew as well that ‘the induced acts constitute patent infringement.’” In other words, mere knowledge of the patent alone is not enough. Interestingly, though it was not the question before the Court, Commil (supported by the Government) devoted more than half of its brief arguing that sat- isfaction of the intent requirement requires merely that an alleged inducer have knowledge of a patent and its potential relevance to the alleged inducer’s activities (such as through a notice letter from the patentee alleging infringement). Under this view, a defendant’s subjective beliefs about any potential defenses, including both invalidity and non- infringement, are irrelevant to the intent analysis. The Court, along with dissenting Justice Scalia and Chief Justice Roberts, squarely rejected this theory as contrary to the clear language and sound ra- tionale of Global-Tech.
Moving to the question before it, the Court held that a defendant’s belief regarding patent validity is not a defense to a claim of induced infringement. The Court reasoned that a belief of invalidity cannot ne- gate the scienter required under § 271(b) – intent to “bring about the desired result,” i.e., infringement – because infringement and validity are separate and distinct legal issues that are to be determined inde- pendently. In particular, the Court noted that infringement and validity appear in separate parts of the Patent Act and non-infringement and invalidity are listed as two separate defenses. Each bears its own burdens, presumptions and evidence. Inter- preting § 271(b) as permitting a defense of belief in invalidity would, according to the Court, conflate the two legal issues. The Court further reasoned that such a defense would also drastically under- mine the statutory presumption of patent validity, which requires invalidity to be proven by clear and convincing evidence and not by an accused infring- er’s own subjective belief. Judge Scalia disagreed. In his dissenting opinion, he wrote, “An alleged in- ducer who succeeds in this defense does not thereby call a patent’s validity into question. He merely avoids liability for a third party’s infringement of a valid patent, in no way undermining that patent’s presumed validity.”
Underlying the Court’s ruling is the notion that a patent claim can be infringed regardless of its valid- ity, the difference being that infringement of a valid claim results in liability while infringement of an invalid claim does not. The Court explained that questions of infringement and validity require “a determination of the procedures and sequences that the parties must follow to prove that act of wrongful inducement and any related issues of patent validi- ty” and that “the allocation of the burden to persuade on these questions, and the timing for the presentations of the relevant arguments, are con- cerns of central relevance to the orderly administration of the patent system.” As such, “in- validity is not a defense to infringement, it is a defense to liability.” If a patent is indeed invalid, and is proven to be so under proper procedures, there is no liability even for an infringed patent.
Justice Scalia, in his dissent, responded to this rea- soning by noting that “[i]nfringing a patent means invading a patentee’s exclusive right to practice his claimed invention.” Because only valid patents confer this right to exclusivity, only valid patents can be infringed. And because only valid patents can be infringed, “anyone with a good-faith belief in a patent’s invalidity necessarily believes the pa- tent cannot be infringed. And it is impossible for anyone who believes that a patent cannot be in- fringed to induce actions that he knows will infringe it.”
Cisco had made a similar argument that Global- Tech and § 271(b) require specific, culpable intent, i.e., knowledge of wrongdoing or unlawful conduct in violation of a patentee’s rights. There is nothing wrong or unlawful about practicing an invalid pa- tent claim. It follows, then, that an alleged inducer with a reasonable, good faith belief that a patent claim is invalid cannot be found to have induced infringement because it would not have knowingly and intentionally encouraged wrongful conduct in violation of the patentee’s rights. In this regard, dis- tinctions between a good faith belief of invalidity and a good faith belief of non-infringement do not matter. The Court, however, drew from the laws of trespass and tortious interference with a contract, for the proposition that an act may be “intentional” for purposes of civil liability, even though that actor lacked actual knowledge that its conduct violated the law. Similarly, under the Court’s ruling, an accused infringer may be found liable for induced in- fringement even if it has no knowledge that the acts it induced violate a patentee’s rights.
Overall, the Supreme Court’s Commil decision may be a mixed result for accused infringers. On the one hand, they may no longer rely on a good faith belief in invalidity as a defense to a claim of inducement. On the other hand, the Court reaffirmed its holding in Global-Tech that inducement requires knowledge of the patent and knowledge that the induced acts meet each and every limitation of the asserted pa- tent claims.