A split Federal Circuit Court of Appeals panel has determined that an accused inducer’s good-faith belief in the invalidity of a patent may negate the requisite intent for induced infringement. Commil USA, LLC v. Cisco Sys., Inc., No. 2012-1042 (Fed. Cir., decided June 25, 2013). The court determined that while a federal district court properly granted a motion for a new trial limited to induced infringement and damages, it improperly instructed the jury on re-trial as to induced infringement, allowing the jury “to find induced infringement based on mere negligence where knowledge is required.” A dissenting judge would have ruled that the “fact of infringement does not depend on whether the inducer’s view of patent validity is held in good faith or bad faith.”
At issue was a patent involving wireless communications. Accused infringer Cisco Systems was unable to prevail on claims of patent invalidity and was found liable for direct infringement during a 2010 jury trial. The jury awarded patent holder Commil $3.7 million in damages. During a second trial in 2011, limited to indirect infringement and damages, Commil again prevailed and was awarded $63.7 million in damages, $10.3 million in prejudgment interest and $17,738 in costs. On appeal, Cisco challenged the jury instruction on inducement and also claimed that the trial court erroneously precluded it from “presenting evidence of its good-faith belief of invalidity to show that it lacked the requisite intent to induce infringement of the asserted claims.”
The Federal Circuit agreed, citing Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011), for the proposition that induced infringement “requires knowledge that the induced acts constitute patent infringement.” The court also rejected its own precedent “to the extent our prior case law allowed the finding of induced infringement based on recklessness or negligence,” as inconsistent with Global-Tech. Finding the lower court’s error prejudicial, the court remanded the case for a third trial, limited to induced infringement and damages. While dissenting Judge Pauline Newman agreed that a partial retrial was within the district court’s discretion and agreed with the remand, she rejected as “contrary to the principles of tort liability, codified in the inducement statute,” the majority’s view that a belief in invalidity can negate infringement, and she disputed Global-Tech’s relevance.