Good faith belief of patent invalidity not a valid defence to induced infringement

Author: Kevin Winters (Trainee Solicitor Shepherd and Wedderburn, Edinburgh)

Commil USA, LLC v Cisco Systems, Inc 575 U.S. __ (2015)

Journal of Intellectual Property Law & Practice (2015) doi: 10.1093/jiplp/jpv131, first published online: August 20, 2015

The United States Supreme Court has held that it is no defence to induced infringement that the alleged infringer had a good faith belief that the patent was invalid.

Legal context C

Commil USA, LLC (‘Commil’) claimed that Cisco Systems Inc (‘Cisco’) had induced other parties to infringe Commil’s rights under 35 U.S.C. §271 (b) of the Patent Act through the selling of infringing wireless equipment to other parties.

Facts

Commil USA, LLC, originally brought proceedings against Cisco Systems, Inc, for both direct and induced infringement of its patent for a method of implementing short-range wireless networks. Cisco Systems, Inc, made and sold wireless equipment.

In the District Court, Cisco objected to the instruction given to the jury concerning Cisco's alleged induced infringement. The court directed the jury that they could find Cisco guilty of induced infringement if “Cisco actually intended to cause the acts that constitute … direct infringement and that Cisco knew or should have known that its actions would induce actual infringement”.

After the jury found Cisco liable for induced infringement, the US Supreme Court gave its ruling in Global-Tech Appliances Inc v SEB SA 563 US __ (2011), holding that in an action for induced infringement it must be shown that the alleged inducer knew that induced acts were infringing. Cisco therefore argued that the District Court's instruction to the jury was wrong, as it did not indicate that knowledge of the inducement was necessary. Cisco appealed the decision to the US Court of Appeals for the Federal Circuit (CAFC) which held that the District Court had acted erroneously in its instruction to the jury. This component of the case is to be the subject of a new trial, with the knowledge element to be added to the jury's directions.

At issue before the Supreme Court was the District Court's refusal to allow Cisco to adduce evidence that it had a ‘good faith’ belief that Commil's patent was invalid. The CAFC considered that the District Court erred in finding Cisco's evidence inadmissible, on the basis that such ‘evidence of an accused inducer's good-faith belief of invalidity may negate the requisite intent for induced infringement’. The Supreme Court agreed to consider the question whether a good faith belief in invalidity was a defence to induced infringement.

Analysis

The Supreme Court held that Cisco's ‘good-faith’ belief in the invalidity of Commil USA's patent was no defence to a claim of induced infringement, on the following grounds:

Infringement and invalidity are separate issues

The court pointed out that infringement and validity under the Patent Act 35 U.S.C. are treated as separate issues: non-infringement and invalidity are distinct defences which are available to defendants to raise either individually, or together. The court took the view that, if it were to interpret the terms of the legislation so to allow a defence of belief in patent invalidity, it would combine the two issues.

Preserving the presumption of patent validity

There was concern expressed that, if the court allowed a good-faith belief of invalidity to exist, this would destabilize the presumption in US patent law that a patent is valid. This presumption removes the need for plaintiffs to prove that their patent is valid before they bring a claim. If belief in invalidity was to be a defence to induced infringement, the court felt that the presumption of validity would be lessened, allowing a defendant to avoid liability for infringement if it could demonstrate a reasonable belief that the patent was invalid. This was deemed to be contrary to the ‘clear and convincing’ standard set by Congress that must be met to rebut the presumption.

The need to avoid negative consequences

The court believed that the creation of a defence of belief in invalidity would have a negative impact on litigation. The availability of the defence for a claim of infringement wold incentivize would-be infringement inducers to argue a theory of invalidity, the truth of which a court would find more difficult to ascertain than matters concerning patent infringement. The result of this would be that those accused of inducing infringement would be able to rely more easily on a defence of belief of invalidity, more than non-infringement. The court was also wary of the impact such a defence would have on juries, requiring the separation of a belief of patent validity from validity itself.

Practical concerns

It was pointed out that alleged inducers of patent infringement, who believe that a patent is invalid, already have a variety of ways to obtain evidence of this. They can approach a federal court to declare the patent invalidity, raise the affirmative defence of invalidity, pursue ex parte re-examination of the patent by the Patent and Trademark Office or seek inter partes review of the patent at the Patent Trial and Appeal Board.

Practical significance

This case sends an important message to would-be infringement inducers of patents: ignorance of patent validity is no defence to a claim of induced infringement. The court appears to have no appetite to create new avenues to establish patent invalidity beyond those already available, nor to disrupt the underlying presumption of validity. Organizations involved in the creation and selling of products and services that risk inducing patent infringement cannot rely on their belief that a patent is invalid—they will have to challenge the validity of the patent head-on if they are to escape liability for inducement.

The court then made brief comments in respect of patent trolls, and their often frivolous claims of patent infringement. While alleged inducers may not be able to rely on a defence of a belief in patent invalidity, the court did encourage them to use the avenues available to certify invalidity. Furthermore, it also emphasized the role of the district courts in sanctioning attorneys that raise frivolous claims, and award attorney's fees in certain circumstances.

This decision appears to have either raised an inconsistency in the court's jurisprudence, or qualified the law on knowledge and patent infringement. In Global-Tech, the court held that in an action for induced infringement of a patent, a defendant must know that its acts constitute infringement. However, in the present case, the Supreme Court held that the knowledge element for induced infringement concerns infringement and not validity, as such a good faith belief that a patent was invalid did not vitiate knowledge of induced infringement. The question arises: how is an inducer who believes a patent to be invalid, to know that what it is doing will be patent infringement? Given that it is unlikely that the Supreme Court will answer this question in the near future, alleged inducers would be well advised to ensure a patent's invalidity to avoid being embroiled in a claim for induced infringement.