Continuing with its recent interest in Intellectual Property Law, on May 26, 2015 the U.S. Supreme Court issued a decision in Commil USA, LLC v. Cisco Systems, Inc. clarifying that a good-faith belief that a patent is invalid is not a valid defense for a claim of induced infringement.
The Parties, The Issues
Commil owns a patent for a method of implementing short-range wireless networks. Cisco produces and sells wireless network equipment. Commil filed suit claiming that Cisco had directly infringed the patent with its networking equipment and had induced its customers to infringe the patent by selling the infringing equipment for use in an infringing manner. With regard to the inducement charge, Cisco raised a defense that it had a good-faith belief that the patent was invalid.
The Court Rulings
The trial court ruled that Cisco’s evidence of its good-faith belief of the patent’s invalidity was inadmissible. Additionally, the trial court instructed the jury that it could find inducement if Cisco “knew or should have known” that its actions would induce actual infringement. The Court of Appeals for the Federal Circuit held that the trial court erred in excluding Cisco’s evidence of its good-faith belief of the patent’s invalidity and in instructing the jury that Cisco could be liable for induced infringement if it “knew or should have known” that its customers infringed. The Supreme Court, in this case, held that: 1) liability for inducing infringement attaches only if a defendant knows of a patent and that the induced acts constitute infringement; and 2) a defendant’s belief regarding patent validity is not a defense to a claim of induced infringement.
Belief in Non-Infringement of Induced Acts is a Defense to Induced Infringement
Commil argued that only knowledge of the patent should be required for induced infringement, and that the party charged with inducing infringement need not know that the acts it induced would infringe. However, after reviewing direct infringement, induced infringement, and contributory infringement, the Court clarified that induced infringement, like contributory infringement, requires that the defendant not only know of the patent but also that the induced acts constitute patent infringement. Any lesser mental state is insufficient to establish liability for induced infringement. For instance, if a defendant reasonably reads a patent’s claims, and that reading provides a basis for the defendant’s belief that the induced acts do not constitute patent infringement, then the defendant cannot be liable for induced infringement.
Belief in Invalidity of the Patent is Not a Defense to Induced Infringement
With respect to validity, the Court reasoned that because infringement and validity are separate issues, a belief that a patent is invalid cannot be a defense to a claim of induced infringement. The Court explained that a defense of “belief in invalidity” would conflate the issues of infringement and validity, which appear in separate parts of the Patent Act and are separate defenses. Further, the Court reasoned that such a defense would also undermine the presumption that a patent is valid because a defendant could prevail merely by proving that he reasonably believed the patent was invalid, circumventing the higher “clear and convincing” standard of invalidity that must normally be met to rebut the presumption of validity. The Court did acknowledge that if a patent is shown to be invalid, there is no patent to infringe, and so there are no acts that would be an infringement or an inducement to infringe the claims of the invalidated patent. Therefore, as the Court stated, invalidity is a defense to liability, not a defense to infringement. Additionally, the Court pointed to various ways to obtain a ruling that a patent is invalid (namely, a declaratory judgment action (federal court), an inter partes review (Patent Trial and Appeal Board), ex parte reexamination (Patent and Trademark Office), or pleading invalidity as an affirmative defense).
If your customers could be accused of directly infringing a patent based in part on your products or actions, you could be accused of induced infringement. While a good-faith belief that there is no direct infringement of the patent (such as by obtaining a non-infringement opinion of counsel) will protect you from liability, a good-faith belief that the patent is invalid (such as by obtaining an invalidity opinion of counsel) is not enough to provide a similar defense. This is not to say that you should not obtain an invalidity opinion of counsel, if appropriate, but you then need to be prepared to affirmatively challenge the validity of the patent, as discussed above.
The attorneys of Stites & Harbison, PLLC regularly advise clients on infringement and validity of patents, as well as assisting clients with pursuing and defending challenges to issued patents. For questions or comments, please contact one of the authors or any of the other attorneys in our Intellectual Property & Technology Service Group.