Continuing its recent trend of wading into substantive questions of patent law, the Supreme Court announced that it would resolve a question with important implications for many companies, particularly information technology companies, whose products are sold in the United States. The issue at hand is what state of mind is necessary to be liable for actively inducing infringement under 35 U.S.C. § 271(b).
Specifically, the high court has agreed to review the Court of Appeals for the Federal Circuit’s decision in SEB S.A. v. Montgomery Ward & Co., 594 F.3d 1360 (Fed. Cir. 2010), wherein the Federal Circuit held that Pentalpha was liable for inducing infringement under 35 U.S.C. § 271(b), even though Pentalpha was unaware of the asserted patent. The court found that Pentalpha’s “deliberate indifference” as to whether its product might infringe a patent satisfied the requisite state of mind element for actively inducing infringement.
The Federal Circuit’s SEB decision appears to be a change in direction from recent law. In 2005, the Supreme Court held that the necessary state of mind to be liable for induced copyright infringement was "purposeful, culpable expression and conduct" to encourage an infringement. MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 937 (2005). The same year, an en banc Federal Circuit followed the Supreme Court’s lead when deciding the requisite mental state for induced patent infringement, holding that the “plaintiff has the burden of showing that the alleged infringer’s actions induced infringing acts and that he knew or should have known his actions would induce actual infringements” which “necessarily includes the requirement that he or she knew of the patent." DSU Medical Corp., 471 F.3d 1293, 1304 (Fed. Cir. 2006).
In deciding to review SEB, the Supreme Court will now answer the following question: Whether the legal standard for the state of mind element of a claim for actively inducing infringement under 35 U.S.C. § 271(b) is "deliberate indifference of a known risk" that an infringement may occur, as the Federal Circuit held in SEB, or "purposeful, culpable expression and conduct" to encourage an infringement, as the Supreme Court taught in Grokster, 545 U.S. at 937.
This Supreme Court decision will, at best, resolve decades of Federal Circuit schizophrenia on the issue and provide definitive guidance to plaintiff patent holders and defendant companies on the question of induced infringement. And it will, at least, establish law of which we will all need to be aware.