by Dennis Crouch
In the pending appeal of Commil v. Cisco, the Supreme Court is further honing-in on the knowledge aspect of induced infringement. In particular, the court is addressing whether a defendant’s reasonable and good-faith (but ultimately incorrect) belief that a patent is invalid can be used to prove that the defendant did not knowingly induce infringement.
As background, the patent statute indicates that “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” In its 2011 Global-Tech decision, the Supreme Court ruled that inducement requires that the alleged inducer have acted with knowledge that the induced acts constituted patent infringement.
The patentee, Commil, argues that both statute and tradition distinguish between the doctrines of infringement and validity. See 35 U.S.C. 282(b). In Commil’s construct, someone might infringe the patent, but not be held liable if the patent is found invalid or otherwise unenforceable. Applying that distinction directly to Global-Tech knowledge-of-infringement requirement suggests that knowledge-of-invalidity is irrelevant. [I should note that Commil actually suggests that the court should relax its Global-Tech rule to only require knowledge of the patent’s existence and its potential relevance.]
Briefing is ongoing in the case with Cisco having now filed its responsive brief on the merits. Oral arguments are now scheduled for March 31, 2015. The other patent case of the term – Kimble v. Marvel will also be heard that day.
In its brief, Cisco argues that a good-faith but incorrect belief of non-infringement should excuse liability for inducement. [Cisco Merits Brief]. As its central evidence, Cisco points to other language in Global-Tech that provides support for its infringement. In particular, the Supreme Court noted that the case might turn the “probability of wrongdoing.” Further, the doctrinal statement from Global Tech does not merely focus on knowledge of infringement but instead whether the defendant will be “liable as an infringer.” That liability element appropriately sweeps in the potential that the patent is invalid or otherwise not enforceable. For support, Cisco cites to a series of other decisions where the scienter requirement’s purpose is tied to the moral justification of culpability. See, e.g., MGM v. Grokster, 545 U.S. 913 (2005) (copyright inducement). Cisco plays upon the contemporary Supreme Court’s bent toward patent non-exceptionalism by citing to various tort and criminal inducement doctrines whose scienter requirements turn on belief of wrondoing.
Cisco also argues that the invalidity-belief-defense is good policy — especially because so many patents are actually invalid and because willful infringement already allows such a defense. And, as might be expected based upon the Cisco CEO’s recent WSJ editorial, the brief also complains about the problem of patent trolls.
But a recent study shows that a record 5,411 patent infringement cases were filed in 2013, with the number of suits brought by nonpracticing entities growing by almost 20% over the previous year. . . . It is unrealistic to believe that inducement suits are not part of this problem and would not dramatically multiply if Commil obtains the change in law it seeks.
Although Cisco’s legal and policy arguments have merit, I suspect that the hundred-billion-dollar company’s attempt to play the victim here will be unsuccessful. At the very least though, this may be the first time in recent memory that the company has agreed that willful infringement is a ‘wrongdoing.’
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An important subtext here is that the knowledge requirement becomes a critical defense only when it turns out that the patent actually is valid, enforceable, and being practiced based upon the active inducement of the defendant. From a practical standpoint, the belief-of-invalidity-defense could short-circuit inducement cases when the defendant has a solid written opinion of counsel. However, that presumably only saves an inducer from past-infringement and once validity is confirmed, any ongoing acts will lead to liability.