Supreme Court, May 26, 2015
The U.S. Supreme Court held that defendant’s belief regarding patent validity is not a defense to an induced infringement claim on Commil’s appeal of the ruling of the Federal Circuit that the trial court erred in excluding evidence of Cisco’s good-faith belief that Commil’s patent was invalid.
In the first part of the opinion, the Court reaffirmed the holding of Global-Tech Appliances, Inc. v. SEB S. A., 563 U. S. ___ (2011) by agreeing with the Federal Circuit’s ruling that the District Court erred in instructing the jury that Cisco could be liable for induced infringement if it “‘knew or should have known’” that its customers infringed. The Court held that liability for induced infringement can only attach if the defendant knew of the patent and knew as well that “the induced acts constitute patent infringement.” Thus, the liability for induced infringement cannot be found in cases where the defendant did not have knowledge of the patent or in cases where the defendant “should have known” of patent.
With respect to the main issue on appeal, whether a defendant’s belief regarding patent validity is a defense to a claim of induced infringement, the Court reasoned that the language of the statute, the precedents from analogous holdings, and the separation of the legal concepts of validity and infringement under the law show that belief in invalidity is no defense to a claim of induced infringement.
In particular, the Court reasoned that 35 U.S.C. § 271(b) of the Patent Act requires that the defendant “actively induce[d] infringement” and that the language requires intent to “bring about the desired result,” which is infringement. The Court further reasoned that because infringement and validity are separate issues under the Patent Act, belief regarding validity cannot negate the scienter required under §271(b). In its analysis, the Court cited to various case law that held validity and infringement are separate issues. For example, in Cardinal Chemical Co. v. Morton Int’l, Inc., 508 U. S. 83 (1993), the Court explained, “A party seeking a declaratory judgment of invalidity presents a claim independent of the patentee’s charge of infringement.”
The Court also reasoned that allowing this new defense would also undermine a presumption (of validity) that is a “common core of thought and truth” reflected in this Court’s precedents for a century. Radio Corp. of America v. Radio Engineering Laboratories, Inc., 293 U. S. 1, 8 (1934). The Court further reasoned that because invalidity is not a defense to infringement, it is a defense to liability, a belief as to invalidity cannot negate the scienter required for induced infringement. In addition, the Court weighed practical reasons not to create a defense based on a good-faith belief in invalidity including the fact that accused inducers who believe a patent is invalid have various proper ways to obtain a ruling to that effect and that creating a defense of belief in invalidity can render litigation more burdensome by incentivizing accused inducers to put forth a theory of invalidity and myriad of arguments.
The Court cited to examples from analogous legal precedents to justify the holding that infringement may be induced where the defendant had a good faith belief in the invalidity of the patent. In one example, the Court put forth that “an act may be ‘intentional’ for purposes of civil liability, even if the actor lacked actual knowledge that her conduct violated the law.” Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, L. P. A., 559 U. S. 573, 582– 583 (2010). In another example, a trespass “can be committed despite the actor’s mistaken belief that she has a legal right to enter the property.” Jerman, supra, at 583 (citing Restatement (Second) of Torts §164, and Comment e (1963–1964)).
The Court also addressed the potential for frivolous claims caused by allowing a claim for inducement where a defendant has a good faith belief that patent was invalid by first acknowledging that no issue of frivolity was raised by the parties in this case, nor does it arise on the facts presented to this case Court. The Court reasoned that frivolous claims ban be dissuaded by other mechanisms such as Rule 11 and the procedures to invalidate a patent under the Patent Act.
The Dissent, which was written by Justice Scalia and with whom Chief Justice Roberts joined, agreed with the Court’s rejection of the main argument advanced by Commil and the United States, that induced infringement under 35 U. S. C. §271(b) does not “requir[e] knowledge of the infringing nature of the induced acts.” However the Dissent disagreed with the Court’s holding that a good-faith belief in a patent’s invalidity is not a defense to induced infringement.