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Supreme Court Rules That Good Faith Belief in Invalidity is Not a Defense to Induced Infringement

May 26, 2015

Overview

Commil USA, LLC v. Cisco Systems, INC. No. 13–896. —Decided May 26, 2015

Kennedy delivered the opinion, joined by Ginsberg, Alito, Sotomayor and Kagan. Thomas joined as to parts II-B and III. Scalia filed a dissenting opinion in which Roberts joined. Breyer did not participate.

Commil, the holder of a patent for a method of im­plementing short-range wireless networks, filed suit, claiming that Cisco, a maker and seller of wireless net­working equipment, had directly infringed Commil's patent in its networking equipment and had induced others to infringe the patent by selling the infringing equipment for them to use. After two trials, Cisco was found liable for both direct and induced infringement. With regard to inducement, Cisco had raised the defense that it had a good-faith belief that Commil's patent was invalid, but the District Court found Cisco's supporting evidence inadmissible. The Federal Circuit affirmed the District Court's judgment in part, vacated in part, and remanded, holding, as relevant here, that the trial court erred in excluding Cisco's evidence of its good-faith belief that Com­mil's patent was invalid.

Held: A defendant's belief regarding patent validity is not a defense to an induced infringement claim. 

(a) While this case centers on inducement liability, 35 U. S. C. §271(b), which attaches only if the defendant knew of the patent and that "the induced acts constitute patent infringement," Global-Tech Appliances, Inc. v. SEB S. A., 563 U. S. ___, ___, the discussion here also refers to direct infringement, §271(a), a strict-liability offense in which a defendant's mental state is irrelevant, and contributory in­fringement, §271(c), which, like inducement liability, requires knowledge of the patent in suit and knowledge of patent infringe­ment, Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U. S. 476, 488 (Aro II).

(b) In Global-Tech, this Court held that "induced infringement . . . requires knowledge that the induced acts constitute patent infringe­ment," 563 U. S., at ___, relying on the reasoning of Aro II, a contrib­utory infringement case, because the mental state imposed in each instance is similar. Contrary to the claim of Commil and the Gov­ernment as amicus, it was not only knowledge of the existence of re­spondent's patent that led the Court to affirm the liability finding in Global-Tech, but also the fact that petitioner's actions demonstrated that it knew it would be causing customers to infringe respondent's patent. Qualifying or limiting that holding could make a person, or entity, liable for induced or contributory infringe­ment even though he did not know the acts were infringing. Global- Tech requires more, namely proof the defendant knew the acts were infringing. And that opinion was clear in rejecting any lesser mental state as the standard.

(c) Because induced infringement and validity are separate issues and have separate defenses under the Act, belief regarding validity cannot negate §271(b)'s scienter requirement of "actively induce[d] infringement," i.e., the intent to "bring about the desired result" of in­fringement. When infringement is the issue, the patent's validity is not the question to be confronted. Otherwise, the long held presumption that a patent is valid, §282(a), would be under­mined, permitting circumvention of the high bar—the clear and con­vincing standard—that defendants must surmount to rebut the pre­sumption. To be sure, if a patent is shown to be invalid, there is no pa­tent to be infringed. But the orderly administration of the patent system requires courts to interpret and implement the statutory framework to determine the procedures and sequences that the par­ties must follow to prove the act of wrongful inducement and any re­lated issues of patent validity.

There are practical reasons not to create a defense of belief in inva­lidity for induced infringement. Accused inducers who believe a pa­tent is invalid have other, proper ways to obtain a ruling to that ef­fect, including, e.g., seeking ex parte reexamination of the patent by the Patent and Trademark Office, something Cisco did here. Creat­ing such a defense could also have negative consequences, including, e.g., rendering litigation more burdensome for all involved.

(d) District courts have the authority and responsibility to ensure that frivolous cases—brought by companies using patents as a sword to go after defendants for money—are dissuaded, though no issue of frivolity has been raised here. Safeguards—including, e.g., sanction­ing attorneys for bringing such suits, see Fed. Rule Civ. Proc. 11— combined with the avenues that accused inducers have to obtain rul­ings on the validity of patents, militate in favor of maintaining the separation between infringement and validity expressed in the Patent Act.

Comment:  This decision is not a big surprise, as the Supreme Court doesn't often grant cert in patent cases to affirm the Federal Circuit. This seems like to be the most practical result, as it is obviously difficult to tell, from the objective evidence, whether a party has or does not really have a good faith belief in invalidity.

 

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