Bose v. SDI: Post-verdict intent

Bose Corporation v. SDI Technologies, Inc. (Fed. Cir. 2014) (nonprecedential) 13-1347.Opinion.3-12-2014.1
Panel: Chen, Clevenger (author), Hughes

Despite being nonprecedential, this opinion is interesting because it’s the first time to my knowledge that the Federal Circuit has endorsed a “points in time” approach to an intent-based patent infringement doctrine such as inducement.

Background: Bose alleged that SDI indirectly infringes Patent No. 7,277,765, relying on both inducement and contributory infringement theories.  The district court granted summary judgment of noninfringement in SDI’s favor based a failure to meet the claim limitations as construed (for 144 of the accused products) and on a lack of intent to infringe (for the remaining product).

Intent to infringe: On appeal, the Federal Circuit reversed the district court’s grant of summary judgment as to the inducement issue. (It affirmed, however, the court’s ruling of noninfringement with respect to the other 144 products on claim construction grounds).

On the issue of intent, the Federal Circuit agreed that there were periods of time during which SDI might have possessed the requisite level of intent, and thus summary judgment as to those periods was inappropriate.  First, between the time when SDI learned of the patent and May 22, 2009, when it received an opinion of counsel, SDI may have possessed the requisite intent – that was an issue for the jury to decide:

Where the record reveals no basis for a good-faith belief sufficient to thwart liability, summary judgment of no liability cannot stand. Whether SDI had such a good-faith
belief prior to receiving the opinion of counsel is a triable issue for the jury to consider. Therefore the summary judgment incorrectly absolves SDI of liability from December 10, 2008 until May 22, 2009, when SDI received the opinion of counsel.

Slip Op. at 18.  The CAFC did conclude that for the period after SDI received the letter, it could not be liable for inducement, particularly since Bose never challenged the competency of the counsel who drafted the letter or even entered it into evidence despite possessing a copy.

But, the CAFC declined to extend that conclusion into the future – specifically, to the period after judgment would be rendered in this case:

Bose further argues that the District Court improperly allowed the opinion of counsel to absolve SDI of potential post-verdict liability. The District Court found that the patent’s validity and the iW1 device’s infringement were both triable issues for the jury. A jury could, at trial, find the patent not invalid and infringed. In this scenario, SDI’s opinion of counsel would not shield it from postverdict liability because SDI could not credibly argue that it maintained its good-faith belief of invalidity following a verdict to the contrary. The summary judgment improperly absolved SDI of potential post-verdict liability.

Slip Op. at 18.  This move is significant because it’s the first time that I’m aware of that the Federal Circuit has considered the state of mind of the accused infringer at various time periods when evaluating intent (rather than adopting some sort of “omniscient being” standpoint) or adopted a post-verdict theory that intent must follow (which both I and Tim Holbrook have argued is the right way to think about intent in inducement cases).  Here, I think the court gets the reasoning exactly right.

15 thoughts on “Bose v. SDI: Post-verdict intent

  1. and asking weather the client, on initial consultation, was really genuinely persuaded

    Hearsay anyone…?

  2. “In this scenario, SDI’s opinion of counsel would not shield it from postverdict liability because SDI could not credibly argue that it maintained its good-faith belief of invalidity following a verdict to the contrary.”

    While that statement may or may not be correct in this specific instance, as a general proposition I find the statement humorous, coming as it does from the CAFC: invalidity hinges on claim construction, and in the post-Cybor era in which we (still) live, claim construction is never settled until the CAFC hears the appeal.

    Moreover, the PTO still uses the BRI standard in the various post-grant proceedings before it, which under Fresenius can trump a court’s finding of non-invalidity.

    So yes, even after a trial court verdict finding a patent not invalid, an accused infringer *can* still credibly maintain a good-faith belief of invalidity.

    1. I think that’s a good point. Two questions come to mind, and I would appreciate any comments/thoughts on the matter:

      1. Can the “good faith” basis be maintained through appeal, or just post-verdict? Should it be?

      2. If only post-verdict liability is in play, does the patentee have to bring a new suit to find liability and collect damages for that post-verdict infringement? Presumably, the verdict is for “non-infringement” in the first case due to the pre-suit “good faith” basis that was maintained, but no longer can, so how could damages be assessed in the first case for post-verdict inducement where “non-infringement” was the verdict? New case?

    2. Good Faith?

      I think not. Until the Federal Circuit finally decides an IPR, the ruling of the court is entitled to respect.

  3. OT, but Hal Wegner recently published an absolutely SCATHING report on the abysmal productivity of the examining corp. – definitely worth a thread on its own ‘merits.’

    In small part:

    The question has been raised for the Michelle Lee Administration: Where on the PTO “Dashboard” of seventeen (17) different metrics for success does one find the total pendency of 1.1 million applications?

    Nowhere!

    On the one hand, the PTO has touted as a prime goal cutting the backlog of overall pendency yet nowhere in its “Top 17” metrics is the total backlog mentioned.

    1. Link?

      Is this what you’re talking about? link to tinyurl.com

      This seems to address only the rate at which -new- cases are examined, which of course neglects the large amount of time that examiners spent reviewing RCEs. Doesn’t seem very scathing at all to me. After all, few applications will receive only one review, so of course examiners must spend time doing things other than reviewing new cases.

      Personally, I don’t think that a low no. of new cases being examined amounts to poor productivity, as examiners have a work quota to abide. Rather, a low no. of new cases being examined appears to me to be a symptom of too many applicants not knowing when to give up or appeal and instead filing an RCE.

      1. RH,

        Please pay attention: the “Doesn’t seem very scathing at all to me” is out of place and mis-aimed. It was Hal’s email that was scathing to the Office’s (in)action.

        symptom of too many applicants not knowing when to give up or appeal

        LOL – your lack of paying attention and your attempt to blame the applicants paints you as an examiner.

        I will repeat then for your benefit the only advice you need: Do the Fn job right the first time.

        If I have an Office Action that is not done well, my advice to the client (who makes the decision in the end) will reflect that the rejection is shoddy. Most likely this will mean a reply and more action. Whether the path of more action involves an appeal or an RCE will be dependent on a number of factors. When an Office Action has high quality, the applicant is so informed and only a very very very few will decide to throw more money down the prosecution path.

        But the bottom line here is that poor examination (at any of the decks of the Titanic known as the USPTO) will result in the backlog not being addressed.

        It is NO ACCIDENT that if one takes a look at the (in)famous “Quality” graph of the Reject-reject-reject era, flip it upside down and superimpose it (with appropriate time delay), that the graph mirrors the growth in backlog on any of the decks of unfinished work of the USPTO.

        Wake up.

        1. Your hostility paints you as an unaccomplished prosecutor of patent applications. If you try harder to apply for patentable inventions, you might relieve yourself of some of your self-loathing.

          1. LOL – and your error in how I am painted paints you as an unaccomplished examiner (pardon the redundancy).

            There is no self-loathing here, as I love my work and the value I bring to my clients.

            But keep flailing there RH, maybe you will even pick up a soundbyte that fits the situation.

            LOL – what a tool.

    2. anon, one also has to point out that the PTO has no actual measure of patent quality, which is a listed item in their strategic plan.

      As I have said before, the hue and cry, far and wide, is that the PTO is issuing large numbers of very low quality patents. The president himself has been forced to respond and ask the PTO to do something.

      Without THIS ultimate measure, the PTO can pump out the patents in the millions and still not be doing a good job. Remember the lesson of Hiawatha, who was able to shoot more arrows that anyone else, few if any hitting the target?

      1. Ned,

        You should recall that my position has been – and still is – that examination of either a rubber stamp of Reject-Reject-Reject or Accept-Accept-Accept is not acceptable.

        When I say “Do the Fn job right the first time,” I do not mean “Just give out patents.”

        You should also realize that the hue and cry of runaway patent grants is a fallacy and a boogeyman tied to the “Troll” boogeyman. If you look at the actual grant rate as a percentage of grants that graph only provides that we have returned to the historical average (with a possible minimal bump as a residual of the Just Say No era). There is in fact no ‘explosion’ of bad patents – notwithstanding the propaganda pieces coming out of the Oval (Offal?) Office. See the GAO report.

        Do not be a tool, Ned.

        1. The PTO may not have control over what it issue because of the Fed. Cir.

          However, not examining patents for clear claims is a known problem. We just had the example of the patent in suit against Google where the term added to distinguish over the art was not used in the spec and what it meant was unclear in context.

          This is what I mean.

  4. Doesn’t this make the intention of the company in procuring counsel is the key factual question?

    Imagine the jury watching trial counsel calling up a member of his own firm and asking weather the client, on initial consultation, was really genuinely persuaded by that lawyer that the patent might be invalid. Then through the initial evaluation, he will ask, how the client felt about how it was going.

    That intrudes on the attorney-client relationship and really creates a harmful dynamic in the adversarial common law system.

    Anyway, the trial should turn mostly on invalidity since the final remaining product sounds like it does infringe. That’s a public good that improves the quality of patents, so let’s look forward to the jury getting it right.

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