Commil USA, LLC v. Cisco Sys., No. 2012-1042, 2013 U.S. App. LEXIS 12943 (Fed. Cir. June 25, 2013)

Commil sued Cisco for alleged infringement of U.S. Patent No. 6,430,395, which describes techniques for maintaining a mobile device’s wireless connection as it moves across a wireless network (handing off the signal between different base stations). After trial in May 2010, the jury returned a verdict finding the patent valid and Cisco liable for direct infringement but not inducement, awarding Commil $3.7 million. However, the Court found that Cisco’s counsel made a number of prejudicial comments during trial and granted a motion for a partial new trial on induced infringement. The second trial in April 2011 resulted in a jury verdict finding Cisco liable for indirect infringement and awarding $63.7 million. Cisco appealed on a few grounds, with a key issue being the district court’s refusal to permit evidence regarding its good-faith belief the patent was invalid in order to rebut Commil’s allegations of inducement.

On appeal, the Federal Circuit noted that it has previously held a good-faith belief of non-infringement can be evidence that a defendant lacked the intent required for a finding induced infringement (citing DSU Med. Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1307 (Fed. Cir. 2006) (en banc)). The Court saw "no principled distinction" between a good-faith belief of invalidity or non- infringement as a defense to inducement allegations, and therefore held that evidence of a defendant’s good-faith belief of invalidity can negate the requisite intent for induced infringement. The Court was careful to note that while evidence of a good faith belief of invalidity "should be considered by the fact-finder," it does not mean that such a belief precludes a finding of inducement, or that a belief of validity is a criterion of infringement.

The Federal Circuit also held that indirect infringement issues can be "separate and distinct" from direct infringement or validity, and therefore found the district court’s partial trial on indirect infringement did not run afoul of Rule 59 or the Seventh Amendment. The Court noted that a partial trial on inducement would be analogous to cases where it ordered a partial trial on just infringement issues after upholding a verdict on validity or where it affirmed infringement but ordered a new trial on willfulness issues.