Earlier today, the U.S. Supreme Court held that a defendant’s belief regarding patent invalidity is not a defense to induced infringement. Commil USA, LLC v. Cisco Sys., Inc., Case No. 13-896, slip op. (S. Ct. May 26, 2015). A claim of induced infringement may arise, for example, where a manufacturer (i.e., an accused inducer) sells a product to a third party whose use of that product is alleged to constitute direct infringement. Under 35 U.S.C. § 271(b), induced infringement requires that the defendant knows of the patent and knows that the induced acts constitute patent infringement. Pursuant to the Supreme Court, and because 35 U.S.C. § 271(b) concerns only infringement, an alleged infringer’s belief concerning the separate issue of invalidity “cannot negate the scienter required” by the statute.
Plaintiff and patent-owner Commil USA, LLC (“Commil”) holds a patent for a method of implementing short-range wireless networks. Cisco Systems, Inc. (“Cisco”) made, used, and sold certain networking equipment. Commil sued Cisco for both direct and induced infringement. A jury sitting in the U.S. District Court for the Eastern District of Texas found Commil’s patent valid and directly infringed by Cisco.
Although Cisco originally prevailed on the question of induced infringement, the District Court granted a new trial on that issue. Notably, before that second trial, Cisco sought ex parte reexamination of the validity of Commil’s patent before the U.S. Patent and Trademark Office. And, the U.S. Patent and Trademark Office confirmed the validity of all reexamined claims.
At the second trial, Cisco argued that it could not be subject to liability for induced infringement because it had a good-faith belief that Commil’s patent was invalid and, thus, did not know that the induced acts constituted patent infringement. The District Court excluded Cisco’s proffered evidence in support of that argument and the jury found Cisco liable for induced infringement.
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Cisco appealed to the United States Court of Appeals for the Federal Circuit on several grounds, including the District Court’s decision to exclude evidence concerning Cisco’s belief of patent invalidity. The Federal Circuit reversed the District Court and held that evidence of a good-faith belief of invalidity “may negate the requisite intent for induced infringement.”
The Supreme Court granted certiorari on this single issue and, as it has frequently done, vacated the Federal Circuit’s holding and remanded the case for further proceedings. Justice Thomas joined only part of, Justices Scalia and Roberts dissented from, and Justice Breyer took no part in the Opinion of the Court.
Commil argued that induced infringement only requires knowledge of the patent (and not, too, knowledge of infringement). And, the United States government’s amicus brief argued the same. The Supreme Court disagreed, citing to and reiterating its holding in Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011), that liability for induced infringement requires knowledge both of the patent and that the induced acts constitute infringement.
The Supreme Court then addressed whether a defendant’s belief regarding patent validity may be a defense to induced infringement. The Supreme Court answered this question with an unequivocal “no” – emphasizing that questions of infringement and validity are different issues, noting that infringement and validity appear in separate parts of the Patent Act, and stating that noninfringement and invalidity are listed as two distinct statutory defenses to an infringement claim. The Court further noted that allowing such a defense would undermine the long-standing precedent that a patent is presumed valid. The Court stressed that accused inducers have several available options to explore a belief of invalidity, such as filing a declaratory judgment action, seeking review before the U.S. Patent and Trademark Office (such as inter partes review or, as Cisco did here, ex parte reexamination), and raising the affirmative defense of invalidity.
The Court further noted contrasting “negative consequences” of allowing a defendant’s belief of patent validity to serve as a defense to induced infringement. One such consequence, the Court explained, is an increased burden of litigation as the parties and courts would be faced with myriad invalidity arguments from every accused inducer (and associated increases in discovery costs and the
number and complexity of issues for trial). Finally, the Court noted that multiple other areas of the law similarly provide that an act may be intentional even without actual knowledge of whether the accused conduct violates the law, including claims for tortious interference and trespass. Here, too, the Supreme Court found that the reasoning of “I thought it was legal” provides no defense.