In order to prove induced infringement, a patentee must prove that an alleged infringer possessed actual knowledge that the induced acts would constitute infringement or was willfully blind towards this fact. An alleged infringer’s good faith belief that the patent was invalid may negate a finding of inducement.

Commil USA, LLC v. Cisco Systems, Inc., No. 2012-1042 (Fed. Cir. June 25, 2013).

The defendant obtained a partial reversal of a district court’s judgment that it had directly and indirectly infringed a patent. While affirming the district court’s judgment on issues of direct infringement and patent validity, the Federal Circuit reversed the judgment on the induced infringement claim, holding that the district court erred by: (1) giving an erroneous jury instruction that allowed the jury to find induced infringement based on negligence; and (2) precluding the defendant from presenting evidence of its good faith belief that the patent in suit was invalid.

Prior to trial, the defendant proffered evidence to support its good faith belief that the patent was invalid. Plaintiff filed a motion in limine to exclude the evidence, which the district court granted. On appeal, the Federal Circuit held that excluding this evidence was error. The Federal Circuit noted that although its prior opinions had not yet addressed the issue, a good faith belief of patent invalidity may negate the requisite intent for induced infringement and, therefore, evidence of such good faith should be allowed on the induced infringement claim.

At trial, the district court instructed the jury that it could find induced infringement if Cisco “actually intended to cause the acts that constitute direct infringement and that [it] knew or should have known that its actions would induce actual infringement.” On appeal, the Federal Circuit held that the knowledge requirement for inducement could be satisfied by proving actual knowledge that the induced acts would constitute infringement or willful blindness towards that fact. The Court held that the jury instruction was inconsistent with this standard because it could sustain a finding of inducement on mere recklessness or negligence.

The jury found in plaintiff’s favor on the issues of patent validity and direct infringement, but in the defendant’s favor on the issue of induced infringement. Following the trial, the district court granted the plaintiff’s motion for a partial new trial – on issues relating to induced infringement and damages (but not patent validity and direct infringement) – based on a finding that defense counsel had made certain prejudicial statements during the first trial. A second trial was then held on induced infringement and damages. On appeal, the defendant challenged the district court’s grant of a partial new trial on the issues of only induced infringement and damages, which resulted in separate trials on validity/direct infringement (the first trial) and induced infringement (the second trial). The Federal Circuit found that, based on the record, the district court did not abuse its discretion in granting a new trial, and that separate trials on invalidity and induced infringement did not violate the Seventh Amendment because the defendant’s good-faith belief that the patent was invalid was separate and distinct from the issue of whether the patent was in fact valid. Thus, the Federal Circuit remanded the case for a new trial on the issues of induced infringement and damages, because those were the only issues impacted by the district court’s errors that the Federal Circuit had found.

A copy of the opinion can be found here.