On May 31, 2011 the Supreme Court handed down a patent decision applying the doctrine of “willful blindness” in a manner that could have substantial and positive implications for intellectual property plaintiffs. The case is Global-Tech Appliances, Inc. v. SEB S.A., — U.S. — (2011). The specific issue in Global-Tech was what a plaintiff needs to show in order to prove that a defendant “actively induce[d] infringement of a patent” within the meaning of 35 USC § 271(b). In answering that question, the Court held that “willful blindness” to infringement satisfies the requirement of “actual knowledge” of infringement. The Court’s confirmation that willful blindness is actual knowledge is potentially relevant in a variety of contexts. In particular, it may limit copyright defenses under the Digital Millennium Copyright Act (“DMCA”) and Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), which turn in part on whether the defendant has actual knowledge of infringement.
In Global-Tech, Pentalpha Enterprises was commissioned to develop a deep fryer and supply it to Sunbeam, a home appliance company. Pentalpha developed its deep fryer by copying a deep fryer that was patented in the United States by SEB. Pentalpha, however, purchased the SEB unit that it copied in Hong Kong. As a result, the unit lacked U.S. patent markings. Pentalpha later asked its patent counsel to conduct a right-to-use study without telling the counsel that it had copied the fryer’s design from the SEB fryer. The patent counsel did not find the SEB patent, and opined that the Pentalpha fryer was non-infringing. Pentalpha then started supplying its fryer to Sunbeam, which sold the fryer in the United States.
SEB brought suit, alleging among other things that Pentalpha had “actively induced the infringement of a patent” by causing Sunbeam to sell the infringing fryer in the United States. A jury found for SEB, and the Federal Circuit upheld the award, finding that although there was no direct evidence that Pentalpha knew its fryer was infringing, there was sufficient proof that it had deliberately disregarded the risk that it was.
The Supreme Court affirmed by a vote of 8-1. Writing for the majority, Justice Alito began by concluding that induced infringement under § 271(b) of the Patent Act requires actual knowledge that the induced acts constitute patent infringement. The Court then went on to hold that a defendant who makes himself “willfully blind” to that knowledge has the requisite actual knowledge. The Court explained that in criminal law, defendants that “shield themselves from clear evidence of critical facts” are “just as culpable as those who have actual knowledge.” Given the long history and wide acceptance of the willful blindness doctrine, the Court saw “no reason why the doctrine should not apply in civil lawsuits for induced patent infringement.” The Court then defined willful blindness as having two elements: the defendant must (1) “subjectively believe that there is a high probability that a fact [i.e., infringement] exists” and (2) take “deliberate actions to avoid learning of that fact.” Justice Kennedy dissented alone on this point, contending that willful blindness should not be treated as a form of actual knowledge.
Applying its standard to the facts of the case, the Court held that the jury “could have easily found” that Pentalpha made itself willfully blind “to the infringing nature of the sales it encouraged Sunbeam to make.” The Court emphasized that Pentalpha chose to copy a foreign SEB fryer when it knew that fryer would not bear a U.S. patent mark, and that Pentalpha did not tell its patent counsel that it had copied the SEB fryer when it sought a right-to-use opinion. The Court also pointed out that Pentalpha was fully aware that the SEB fryer was a popular product and incorporated “advanced technology,” which indicated that Pentalpha knew that it could profit from infringement. The Court concluded that “[t]aken together, this evidence was more than sufficient” to demonstrate that Pentalpha was willfully blind to the infringing nature of Sunbeam’s sales.
Although lower courts have previously recognized that “[w]illful blindness is knowledge,” in infringement suits, e.g., In re Aimster, 334 F.3d 643, 650 (7th Cir. 2003) (Posner, J.), the Global-Tech decision strongly reaffirms the importance and robustness of the willful blindness doctrine. Actual knowledge is a common requirement of various intellectual property doctrines. Consequently, Global-Tech’s equation of willful blindness with actual knowledge, makes willful blindness relevant to those doctrines as well. In particular, actual knowledge plays a central role in two frequently invoked defenses to copyright infringement.
First, the DMCA offers a safe harbor to service providers for infringement that takes place by reason of storage of material at the direction of users. But that safe harbor does not apply where the service provider has “actual knowledge that the material or an activity using the material on the system” is infringing. 17 U.S.C. § 512(c)(1)(A). Second, under the Sony doctrine, a creator of a device that facilitates copyright infringement by others, but which also has substantial non-infringing uses, can be liable for that infringement if it has actual knowledge of specific infringement by endusers. Sony, 464 U.S. at 442.
The equation of actual knowledge and willful blindness in Global-Tech, seems relevant to these defenses. For example, under the DMCA, defendants frequently argue that they lack the requisite actual knowledge to deprive them of safe harbor because, even if they are aware of infringement on their network, they do not know the specific material that is being infringed. However, a defendant who takes deliberate steps to avoid learning of the infringement would still seem to have actual knowledge under Global-Tech. Thus, evidence that a defendant prevented itself from learning the contents of files at issue by using encryption, or by refusing to apply a filter, may be probative of actual knowledge under a willful blindness formulation.
Similar considerations apply under Sony.
Defendants frequently argue that they are entitled to the Sony defense because, although they have generalized knowledge of infringement, they do not have actual knowledge of specific infringement. But, particularly with infringement over electronic networks, where a defendant service provider may (or could) obtain information about infringing activity, the willful blindness concept may provide a basis for liability. A defendant that suspects infringement but takes steps to avoid learning what end-users are doing would be willfully blind under Global-Tech.
The Court’s application of the willful blindness standard is also instructive. The Court found it important that Pentalpha could have learned of the patented status of SEB’s fryer, but chose not to. And it emphasized that Pentalpha made this decision while knowing that it would likely be profitable to sell a fryer like SEB’s. This combination of a refusal to investigate in the face of knowledge that infringement would be profitable is a common one. In many cases it is clear that defendants are aware that they would profit from infringement (e.g., because infringing material would attract users to their website).
Under Global-Tech, that knowledge can support an inference that a defendant chose to remain willfully blind to the details of infringement. Defendants may try to argue that Global-Tech is limited to the patent context in which it was decided or that specific provisions of the Copyright Act compel a different conclusion in a copyright context. But the Court’s reliance on its decision in Grokster, as well as on general principles of culpability, suggest that it was thinking more broadly. Likewise, the Court’s willingness to read willful blindness into a statutory provision suggests that the Court understands the doctrine to be an important background concept that Congress presumed to incorporate in enacting legislation.
It will take time for the full ramifications of Global-Tech’s willful blindness analysis to work through the courts, but the Supreme Court’s strong endorsement of the doctrine suggests that it will have an increasingly important role to play.