The U.S. Court of Appeals for the Federal Circuit overturned a jury verdict of vicarious liability based on inducement because the plaintiff failed to meet its underlying burden to prove direct infringement. ACCO Brands, Inc. v. ABA Locks Manufacturer Co., Ltd., Case No. 06-1570 (Fed. Cir., Sept. 12, 2007) (Lourie, J.). A manufacturer, ABA Locks, and distributor, Belkin Components, were sued for selling products that allegedly infringe ACCO’s patents, which claim a locking system designed to prevent the theft of personal computers. The district court construed an essential element of the asserted claims relating to a method by which ACCO’s patented locks are used. At trial, under this construction, Belkin’s products were found to be capable of both infringing and non-infringing uses. The jury held that the defendants had willfully induced infringement of the asserted claims. ABA Locks appealed.

In revising, the Federal Circuit explain that in order to prevail, ACCO must establish that direct infringement has occurred and that the defendants knowingly induced the direct infringement with specific intent to encourage the direct infringement. Upon review, the Court determined that ACCO failed to prove its case, specifically in meeting the threshold requirement of showing direct infringement.

The Court was not moved by ACCO’s reliance on the testimony of its expert as evidence that the accused product was capable of infringing use. The Court found Dr. Dornfeld’s testimony that the infringing use was the “natural and intuitive way to employ the device” to be unpersuasive in light of the existence of the product’s non-infringing use—especially as the non-infringing use had been explicitly identified in Belkin’s sales materials.

A patentee must “either point to specific instances of direct infringement or show that the accused device necessarily infringes the patent in suit … hypothetical instances of direct infringement are insufficient to establish vicarious liability.” The Court noted that anecdotal testimony or surveys of Belkin’s customers that Belkin encouraged the infringing use might have helped ACCO’s position.

Practice Note: This decision is merely a reminder that allegations of vicarious infringement must be clearly and objectively substantiated with evidence of the underlying direct infringement.