The Supreme Court provided additional guidance on the doctrine of induced infringement when it decided Global-Tech Appliances, Inc. v. SEB S.A., but it still affirmed the Federal Circuit's judgment that the defendant was liable for inducing infringement of SEB's patent. The Court held that 35 USC § 271(b) requires "knowledge" for liability for induced infringement, but found that "willful blindness" can satisfy that requirement.
The Patent At Issue
The SEB patent at issue (U.S. 4,995,312) is directed to a "cool-touch" deep fryer. SEB sold the fryer in the U.S. under its T-Fal brand.
The Conduct At Issue
SEB's competitor Sunbeam Products, Inc. asked Hong Kong manufacturer Pentalpha Enterprises, Ltd., to supply it with deep fryers. (Pentalpha is a wholly owned subsidiary of petitioner Global-Tech Appliances, Inc.)
Pentalpha bought an SEB fryer in Hong Kong and "copied all but its cosmetic features" for Sunbeam. After copying SEB’s design, Pentalpha obtained a "right-to-use" opinion from a U.S. patent attorney, but did not tell the attorney that it had copied SEB’s product. (Appropriately, the Hong Kong product was not marked with the U.S. patent number.) The attorney did not identify SEB’s patent, and issued a clearance opinion letter.
Pentalpha then sold the deep fryers to Sunbeam, which resold them in the United States.
The Federal Circuit Decision
The Federal Circuit read 35 USC § 271(b) as requiring that "the alleged infringer knew or should have known that his actions would induce actual infringements,” including proof that the alleged infringer knew of the patent.
Even though there was no direct evidence that Pentalpha knew of SEB’s patent, the court based liability on evidence that "Pentalpha deliberately disregarded a known risk that SEB had a protective patent." The Federal Circuit held that Pentalpha's deliberate disregard amounted to "a form of actual knowledge."
The Supreme Court Decision
The Supreme Court considered the language of the statute, case law that preceded the statute, and it's 1964 decision in Aro Manufacturing Co. v. Convertible Top Replacement Co.
As noted by the Court, the statute (35 USC § 271(b)) is simple:
(b) Whoever actively induces infringement of a patent shall be liable as an infringer.
But that simple language did not provide guidance on the issue here.
The Court stated that the language of 35 USC § 271(c) is relevant, because before the 1952 Patent Act (which created 35 USC § 271), both "induced" and "contributory" infringement often were referred to as "contributory infringement." That provision of the statute defines contributory infringement as follows:
(c) Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination, or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.
But, the Court found, it suffered from the same ambiguity as §271(b): does the required "knowing" include knowledge of the patent, or just knowledge of the likely use?
The Court found that pre-1952 case law, which presumably was codified in the statute, provided "conflicting signals" as to the level of knowledge of the patent required for induced or contributory infringement. The Court thus resorted to its split decision in Aro, and stood by the majority view that knowledge of the patent was needed for liability.
This did not resolve the issue in Pentalpha's favor, though. While the Court rejected the Federal Circuit's "deliberate indifference" standard, it found liability under a "willful blindness" standard:
1.the defendant must subjectively believe that there is a high probability that a fact exists and 2.the defendant must take deliberate actions to avoid learning of that fact The Court distinguished willful blindness from both recklessness and negligence.
[A] willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts.
[A] reckless defendant is one who merely knows of a substantial and unjustified risk of such wrongdoing,
[A] negligent defendant is one who should have known of a similar risk but, in fact, did not.
Although the Court disagreed with the test applied by the Federal Circuit, it found sufficient evidence to affirm under the willful blindness standard.
Justice Kennedy's Dissent
Justice Kennedy dissented from the majority's decision that "willful blindness" could satisfy the knowledge requirement for induced infringement. Kennedy also believes that the Court should have remanded to the Federal Circuit instead of affirming the decision under a different standard. More notably, Justice Kennedy expressed concern that the Court was "endors[ing] the willful blindness doctrine here for all federal criminal cases involving knowledge." Still, Justice Kennedy implied that liability could have been found under an "actual knowledge" standard, if a jury were to infer knowledge from Pentalpha's conduct.
Distinctions Without A Difference?
At least in this case, we have three different opinions that would have held Pentalpha liable for induced infringement under three separate theories: deliberate indifference, willful blindness, and (inferred) actual knowledge. Is there really a difference, or are the differences just swallowed up by the culpability of the conduct here?
Even the Court's criticism of the Federal Circuit's test is difficult to follow. On the first prong, the Court notes that the Federal Circuit required only "'a known risk' that the induced acts are infringing." How does this differ from it's own requirement for a subject belief of "a high probability that a fact exists"? On the second prong, the Court reads "deliberate indifference" as not requiring any "active efforts," but then what does "deliberate" mean?
While these fine points may not have far-reaching impact in patent law, it could be troublesome if they are applied to criminal cases, as Justice Kennedy warns.