by Dennis Crouch
In Commil v. Cisco (Supreme Court 2015), the Supreme Court has held:
A defendant’s “belief” that a patent is invalid does not serve as a defense to charges of inducing infringement of the patent. “The scienter element for induced infringement concerns infringement; that is a different issue than validity.” Of course, if the patent is proven invalid then no liability attaches. Thus, the defense here had asked for a holding that a good-faith-but-incorrect-belief of invalidity serve as a defense.
In what appears to me again as dicta (though powerful dicta), the court also indicated its agreement with the Federal Circuit that inducement requires proof that the accused both (1) knows of the patent-in-suit and (2) knows that the actions induced constitute patent infringement. Although the court initially wrote that this issue “is not in question here,” it then went-on to explain how Global-Tech should be read to require knowledge-of-infringement as a prerequisite to induced infringement liability. “Global-Tech requires . . . proof the defendant knew the acts were infringing. And the Court’s opinion was clear in rejecting any lesser mental state as the standard.”
The court had been encouraged to allow belief-of-invalidity as a defense in order to help stifle “abusive patent assertion.” In a several paragraph statement of dicta, the court explained that it understands the potential problem of frivolous actions, but that district courts are have the tools of addressing the problem. One tool, for instance, is that of sanctioning attorneys through Rule 11 and awarding fees under Section 285. “These safeguards, combined with the avenues that accused inducers have to obtain rulings on the validity of patents, militate in favor of maintaining the separation expressed throughout the Patent Act between infringement and validity.”
All members of the court agreed with notion that inducement does require knowledge of the infringing nature of the accused acts. Justice Scalia joined by Chief Justice Roberts argued in dissent that a would-be defendant who (in good faith but wrongly) figures out that a patent is invalid (though without actually invalidating the patent) should be free to act without concerns regarding inducement. Interesting, the pair note that the majority opinion “increases the in terrorem power of patent trolls.”
= = = = =
This is a split decision for patentees. On the one hand, it pushes away an entire set of defenses to inducement. But, on the other hand, the court solidifies a high wall by requiring proof that an accused inducer have known that the induced acts would constitute infringement of the asserted patent claims. In my view, this requires at least a limitation-by-limitation claim chart or an admission.
I would say it is clear that a defendant’s “belief” that a patent is invalid is no defense to charges of inducing infringement of the patent. Acting in good faith doesn’t mean much. They should have done their research.
Even the Supreme Court here is now saying that if you want to challenge patent validity when sued you could file an IPR or other post-grant PTO proceeding [in which the cost, speed and odds are vastly better].
So how come still less than half of current* patent suit defendants who could do so are still not doing so?
*[most old patent suits filed more than a year before IPR’s became available, like this one, have settled or are ending.]
how come still less than half of current* patent suit defendants who could do so are still not doing so?
1) They have a fantastic non-infringement (or other non-invalidty) defense so why bother?
2) They have a reasonable non-infringement (or other non-invalidity) argument but the validity argument is questionable
3) The invalidity defense is so easy that summary judgment will be faster than a post-grant procedure at the PTO
4) Other strategic reasons (e.g., defendant wants more control over the precise contours of the invalidity argument at trial than in post-grant proceeding, or wishes not challenge validity strenuously, because of potential impact on its own patents).
MM, let me add this to the list,
Judges are likely, I think, to stay an infringement case pending an IPR. This could take years given an appeal of the IPR to Federal Circuit. Thus litigators who prefer to litigate and make a lot of money doing that might be adverse to IPRs out of self interest.
Both Ned and MM provide interesting possible explanations of why IPRs are only filed in response to a minority of patent suits. In response to MM I would only note that:
1. There are statistics that summary judgement based on invalidity in view of prior art is only obtained in a very small percentage of patent suits, and quite often reversed on appeal. [Just as it was by the Fed. Cir. in KSR]
2 Reportedly an unfortunate number of D.C.s will not seriously consider S.J. motions on either non-infringement or invalidity early in the litigation, and too often not until near the trial date after large discovery and trial preparation costs [which forces many defendants into settlements before they can ever obtain the cost-benefit of a S.J.]
3. If neither party request a stay, or the request is not granted, why cannot the IPR proceed in parallel with the non-infringement case and get decided by the PTAB well before the trial date?
4. If the invalidity argument is weak, is not that all the more reason NOT to “save it for the jury” and use it in an IPR, unless there is really a good chance of finding a better invalidity defense in discovery?
Regarding stays, B&B Hardware holds that a judgment in a DC will be collateral estoppel in the PO. According to the case law, collateral estoppel applies when a DC judgment is final — regardless of the appeal. Thus, due to the subtantive advantages of an IPR regarding claim construction and burden of proof, defendants would want to halt the DC case so as to prevent the possibility of an adverse district court judgment disrupting their IPR.
When a comment featuring a classic Saturday Night Live Akroyd moment is censored, you know that you are wound more than just a little too tight.
Lighten up Prof.
Richard Pryor had some “classic” bits, too. So did George Carlin.
What’s funny in one context does not necessarily carry over into contexts remotely removed from the original context. That’s especially true where the humor flows from the “shocking” break of an understood norm (e.g., “respected” newscasters on TV saying nasty things to each other) and doubly so where it wasn’t really that clever in the first place.
Lighten up Francis.
Laughter is the sound of surprise…
Interesting. Kennedy wrote the lone dissent in Global-Tech, saying that the majority substituted “willful blindness” for knowledge (there was no direct evidence that Pentalpha had knowledge of the patent). Then he writes the majority opinion in Commil “reaffirming” Global-Tech as background to reject good faith belief as to invalidity. Quite a swing.
Much more litigation to come.
Steve, and it is sad but interesting that the only Justice not to join in Kennedy’s idea that one must prove that the inducer knew that what it was inducing was patent infringement was Thomas.
7-1 against commons sense. Breyer did not participate.
Where is your concurring opinion Justice Thomas? We could have used it.
Breyer did not participate.
I thought I read something somewhere about Breyer having a pretty solid batting average this term.
Batting average… For which team?
Tell me again what President Clinton’s released papers said about Justice Breyer (hint: the same thing about the other two Justices that make up the dwindling “Stevens direct rewrite of the words of Congress in a constitutionally directed statutory law power allocation”).
Batting average… For which team?
Team Breyer. All I’m saying is that he’s been with the majority relatively frequently this past term (or so I remember reading somewhere …?).
“All I’m saying”
is NOT a response to my post. Clearly, I know what you said – and added a substantive point to it.
Do you need a refresher course in how dialogues are supposed to work?
One suspects that Thomas stuck with the language of the statute, which is silent about knowledge or intent. He is not big on legislative history. Since (a) is strict liability, he would see no reason for (b) not to be. If that is his analysis, why stick his neck out as being that strict a textualist?
Erik, and he might actually have read this: link to papers.ssrn.com
Sichelman, Ted M., Brief of Law Professors, as Amici Curiae, in Support of Respondent in Global-Tech Appliances v. SEB. San Diego Legal Studies Paper No. 11-047. Available at SSRN:
“Opinions from the Supreme Court and lower courts from the mid-19th century through the passage of the 1952 Act repeatedly held that aiding and abetting direct patent infringement solely required specific intent merely to further the acts that constituted direct infringement, and did not require knowledge of the patent-in-suit. Because Congress codified this precedent, the Supreme Court should not find that Section 271(b) requires the inducer to know of the applicable patent.”
Great post Edward. I would be interested in Prof. Sichelman vs. Lemley on this issue. I’d bet that Lemley supports this decision and would claim it is not judicial activism.
I’d like to see what Sichelman has to say about Lemley’s view on this issue. Maybe Prof. Sichelman might start to understand why those that actual practice patent law dislike Lemley’s views and believe they are judicial activism.
Troll.
Supreme Court now talks about trolls. Fortune, IIRC, called Commil a troll, even though it has won jury verdicts and had its patent confirmed in reexamination.
The SCOTUSBlog spoke of “frivolous claims” implying that Commil’s claims were frivolous because it was a troll.
It is time that we all grow up. There are bad patents. There are frivolous claims. But a market for patents and patent licensing are important for innovation because without such a system, startups would not be funded.
People who cover this up, who deny that startups are a source of innovation if not the only source of innovation, are, IMHO, substantially harming not only the patent system, but America.
I agree Ned and I think there are some preliminary studies on innovation that suggest that the destruction of our patent system is hurting innovation.
But, big picture, the SCOTUS is a slave to big international corporations, and the Googles want a different patent system that only serves their interests.
I don’t know what can stop it at this point. You guys have been making fun of me for many years because I said this was coming. I don’t see it stopping. The patent system is like our bridges there is no one to speak for it.
It might make sense for a history lesson of why the fed. cir. was formed and the profound effect that patent law had on innovation in the 1980’s.
(Tech workers: get ready for not being able to move companies.)
“Scotus is a slave to big international corporations…”
What? I have never seen any evidence of that. With their lifetime appointments and power, I have a hard time anyone on the Supreme Court gives a dang what any corporation thinks.
Remember: this is a win for patent owners!
Did you notice what happened to anti-trust law? One example of many.
You are clearly missing the nuanced points, Go. Not surprising really given your predilections and cheerleading tendencies.
Sadly, Ned’s cries fall a little shallow, given his own repeated windmill chasing against certain types of innovation that he Beliebs fall outside of some “chosen special status.”
Night Writer indeed has been consistent and strong in his views (even as many view those views as “too strong”).
It comes to simply recognizing that the patent system has been under attack – from both the Left and from the Right. United in “desired ends,” and just not critically evaluating the means to those ends, the formerly strong U.S. patent system is cracking, and “all of a sudden” those cracks “bother” Ned, when these really are NOT unforeseen consequences.
Someone says the SCOTUS is a “slave” to big corporations and I’m the one missing the nuanced points. If you say so.
Yes.
Perhaps you need to pay better attention to the rest of the comments made, instead of being so eager to take an opposing viewpoint (just because you like to cheerlead that side).
Go, did you bother to address the substance of my response? No. Please review what the SCOTUS did in anti-trust law then get back to me.
(Why is it that you anti-patent people are incapable of responding to the substance of posts? Could it be that you don’t have a real position, but only propaganda and activist judges? Yes.)
Night,
Respectfully, I’m not going to review the entire history of anti-trust law to make your point for you. If you think some decision(s), presumably pro-business, show that the Supreme Court is a ‘slave,’ it is up to you to explain why.
Go, not really. It is pretty well settled that the SCOTUS changed anti-trust law on their to accommodate multi-national corporations. (I can tell you this is what I was taught in law school.)
If you are going to comment on the character of the SCOTUS, it is really up to you to educate yourself on the history of the SCOTUS.
And, come on, when a SCOTUS justice starts writing about trolls that are terrorizing our land, we know we are entering judicial activism land.
…at the very least it reflects the saturation of the propaganda (which any objective critically minded person can readily see).
NW: You guys have been making fun of me for many years because I said this was coming.
I’m pretty sure that’s not the reason people have been making fun of you for years.
there are some preliminary studies on innovation that suggest that the destruction of our patent system is hurting innovation.
Classic! First, you push to expand patents into areas of knowledge which the system is totally unequipped to handle. The wealthy attorneys and grifters who can smell an opportunity a mile away rush in to the skim the cream and get even richer, as they always do. Then, when the system is on its knees and the absurdity of what’s taken place is evident to everyone, you whine that the solution is (wait for it) more patents that are easier to enforce. Seriously?
Next you’ll be telling us that we’d all be better off if patent granting was “privatized.”
the Googles want a different patent system
News flash: so do a lot of ordinary people who write software, and for very good reasons. The more you focus on “the Googles” and “paid bloggers” and “Obama”, the more obvious it is that you have no clue about what is happening and why. This is why people “make fun of you.” But you’ve been told all this before and nothing seems to matter.
Keep up the great work.
Oh come on MM, you can do better than that. Only about 10 ad hominine attacks and 3 red herrings in that response. I guess it is getting towards the end of your workday.
He only has a short script to work from.
Ned: People who … deny that startups are a source of innovation
I’m not aware of anyone denying that “startups” (whatever that refers to) are “a source” of innovation.
if not the only source of innovation
Startups are just one source of innovation. Any suggestion to the contrary is ridiculous.
Also, patents are just one of many different means for promoting innovation. As you are surely aware, depending on the innovation, patents may not be the best means for promoting or protecting that innovation. On the contrary, they may be the absolute worst means.
Did you read Big Q and Li’l Steve’s hilarious article on Uber’s absurd valuation, by the way? You can cut the cognitive dissonance with a knife.
On big Q and Uber, no, I will take a look.
You are right that innovation occurs in big companies as in small. It is just that small companies need patents, while many big companies do not. They compete on price, quality and the like. Big Pharma is an exception to this rule.
It would be helpful, MM, to keep the focus on the problems in patent law, and there are many. Junk patents, ambiguous claims, ambulance chasing litigators, are the problems we can all agree vex the patent system. But crippling the ability of legitimate patent holders to make money off their patents if their startup business goes belly up is not in the best interest of any of us. That is what the patent system is all about. It is there to spur innovation, not to protect vested business arrangements and markets by making it virtually impossible for the small fry to enforce.
crippling the ability of legitimate patent holders to make money off their patents if their startup business goes belly up is not in the best interest of any of us.
Seems to me that if a “small business” with a “valuable” patent goes belly up, it’s in “everyone else’s” best interest for the patent to go belly up (or at least be “devalued”) right along with the failed business. That greatly reduces the cost required for more skilled people to step in and practice the teaching in the patent, which in turn should lead to a product/service that is less expensive for consumers, i.e., “everyone else.”
All this assumes, of course, that the service/product being protected by the patent is a service/product that consumers seek, as opposed to a money-making scheme that solely or primarily benefits only the business/patent owner.
MM, I think you have it backwards.
The ability to offer an exclusive license may actually be the best way to get new technology to market. Compulsory licensing to all comers is not very attractive as one’s investments in developing products based on the patent are not protected.
On Uber, Gene does not seem to be a fan — essentially calling the folks at Uber privateers — of private data.
I think Gene is dead wrong on this issue.
Malcolm and others having cognitive dissonance…?
Accuse Others Of That Which Malcolm Does
“On the contrary, they may be the absolute worst means.”
That’s a pretty bold (and rather unsubstantiated) statement.
Let’s see your “data.”
Nice write-up on ScotusBlog by Ronald Mann:
link to scotusblog.com
Justice Kennedy’s opinion in Commil USA v. Cisco Systems managed to pull off a hard trick: getting a majority of the Justices to ignore the explicit language of an opinion so recent that all of those who signed it are still on the Court.
Fox News and patents.
J. Newman really bent over backwards in the underlying dissent to make the point that infringement and validity are wholly separate issues. I think Ned’s 7A argument is on her radar . . .
This decision again highlights the fundamental flaw in the Global Tech decision. Infringement does not require any knowledge of the patent or any degree of bad intent. Knowledge of the patent and intent are relevant only to willfulness.
Induced infringement only requires intent that the third party commit an act of infringement. The only intent that should be required of the inducer is that it intend the third party to commit an act that is infringing. Knowledge of the patent and intent should not be any more a part of inducement than it is of infringement. The inducer’s knowledge, if any, of the patent should be a factor solely for willfulness.
The standard for infringement should be consistent regardless of the type of defendant. Increasing the burden of proof for induced infringement creates an unintended burden on patentees seeking to enforce their patents against inducers. Like the single infringer rule, this heightened scienter requirement creates loopholes for infringers to profit from exploiting a patented invention without compensating the inventor or patent holder.
That is not to say that I disagree with this decision. I agree with the majority position: an incorrect belief in invalidity is not a defense to induced infringement. Infringement and invalidity are wholly different legal questions.
Finally, once again the “trolls” are being used as an excuse to weaken patents. Trolls are the natural result of more fundamental problems with the patent enforcement systems. It is simply too expensive for many small patentees, whether individuals or small-to-medium size businesses, to enforce their patents against large serial infringers. This devalues those patents to the point that the trolls can purchase them at prices that make the patent assertion business model economically viable.
Scott: .once again the “trolls” are being used as an excuse to weaken patents. Trolls are the natural result of more fundamental problems with the patent enforcement systems.
Scott, please identify the “fundamental problems” and your proposed solutions. I assume one of the “fundamental problems” you refer to is the granting of patents on information and information-processing logic but perhaps you have other ideas.
It is simply too expensive for many small patentees
Are you suggesting that the notorious individuals who have been clapping most loudly for patent expansion over the past decade or two are financially unable to bring a patent lawsuit? I’d love to see your evidence for that.
trolls can purchase them at prices that make the patent assertion business model economically viable
This is nonsense. The “patent assertion business model” is “economically viable” because patent assertion entities have nothing to lose except junky patents (which, in many cases, are near expiring) and because our broken patent system presently awards low-level “innovators” who contribute nothing except wordsmithing and dreams of new “functionalities” to the “art fields” (in reality, litigation targets providing actual goods and services) they seek to plunder.
I did identify a fundamental problem, the cost of patent enforcement against large entities with deep pockets. Read the comment.
You obviously don’t have much experience with small entities that operate on shoe string budgets. I don’t know who you’re referring to, but it’s not the small patentees that I’m talking about.
Are you really trying to imply that patent assertion entities have no risks or costs other than the loss of junk patents? Do they not have legal costs? If they go to trial, do they get their expert witnesses for free?
Your contempt for the patentees who end up selling their patents is too broad-brushed and in many cases entirely misplaced. Trolls aren’t the only entities with the kind of patents you describe.
Scott: You obviously don’t have much experience with small entities that operate on shoe string budgets.
I have run businesses of my own that operate on a shoestring budget for decades. My friends have businesses that operate on a shoestring budget and they’ve managed those businesses for decades. Number of patents applied for: zero.
I don’t know who you’re referring to
Really? You aren’t aware of any “little guys” who are, in fact, just bottom feeding patent attorneys trying to “get rich off the Internet”? Seriously? You were born yesterday or something?
it’s not the small patentees that I’m talking about.
Immediately upthread you wrote: It is simply too expensive for many small patentees
Are you really trying to imply that patent assertion entities have no risks or costs other than the loss of junk patents? Do they not have legal costs?
You must be pulling my leg. You’re kidding, right?
Trolls aren’t the only entities with the kind of patents you describe.
No doubt about that. But they are the only entities whose primary (if not sole) source of income is the assertion of those kind of patents. And the kind of patents I’m talking about promote precisely zero “progress” in any technology. Instead, they promote “progress” in litigation tactics and business schemes. Now go ahead and tell me that’s the kind of “progress” that the patent system was designed to promote. Tell me how it’s “discrimination” to suggest that junky patents on information and logic be expunged from the system.
Define “technology” in a non-circular manner.
Use any type of sentences – as long as you be inte11ectually honest.
And your assertion that they “have nothing to lose except junky patents” actually supports my assertion that the patents they obtain are almost completely devalued allowing them to buy them for pennies on the dollar. Not all of the patents they hold are invalid.
your assertion that they “have nothing to lose except junky patents” actually supports my assertion that the patents they obtain are almost completely devalued
No, it doesn’t support that assertion at all.
But please tell everyone: where is your evidence for this “complete devaluation” of valid, eligible patents? What does “complete devaluation” mean? Do you have specific examples and numbers you want to share with everyone?
I have no trouble admitting that $50 million is a greater number than $50,000 or $10,000. But $10,000 is not “complete devaluation”. In fact, it’s a heck of a lot of money for nearly everyone in the US and a fortune for most of the world’s population. You think the idea of an “app” that “automatically” tells me when a parking space has opened up in the shopping mall is worth more than that? In the 21st century?
It’s worth what the market will bear.
Don’t like it? Don’t use it.
Once again the invitation is extended: stop using any form of the innovations that you would deny protection to (the Amish still have a room set aside for you).
Steve, Global-Tech merely followed Aro II, a 5-4 decision where the Supreme Court acknowledged substantial doubt as it was the declared intent of congress not to change the law, but the law they passed seemed to require the decision.
The Court in Global-Tech said they were not asked to overturn Aro II.
Why? — it was clearly wrong.
Now, we have to go to congress to get things fixed. They should listen if the case is present properly and the entire bar gets behind it.
Who’s Steve?
I take it you agree with my underlying point this line of cases being wrong. I hope we can get the reform that is needed.
Wouldn’t the dissent’s reasoning then also mean that unconstitutional statues cannot be violated, and thus one could not induce/solicit their violation?
[…] So what’s the upshot? Well, other than the words “patent troll,” the Cisco ruling is unlikely to move the needle much when it comes to patent policy. As respected patent scholar, Dennis Crouch, notes at PatentlyO: […]
“As respected patent scholar, Dennis Crouch, notes at PatentlyO:
This is a split decision for patentees … ”
link to fortune.com
D so famous. Lol. We’re going to see him in the washington times shortly.
Scalia is correct: “It follows, as night the day, that only valid patents can be infringed. To talk of infringing an invalid patent is to talk nonsense.” Thus, he bases his opinion on a oft-stated maxim that an invalid patent cannot be infringed. Though he might mention policy, his position flows from prior case law.
The decision, wrong as it is based on precedent, or right as it is based on policy, provides certainty and a good argument in favor of reexams and IPR.
Maxims are often short-hand for larger truths. Once a patent is invalidated, it cannot be infringed because there is nothing to infringe. However, a party’s self-serving belief that a patent should be invalidated is not the same as invalidating it. Scalia’s opinion would conflates infringement with willfulness, an error in the case law that does not need to be extended any further.
How can a person have knowledge that certain acts constitute infringement if they believe no valid patent is being infringed? One may argue that in order to have actual knowledge that “the acts constitue infringement” that a court must make that determination and his a defendant does not have that knowledge until after it have been determined by a court. Otherwise I am not sure what it means to have actual knowledge that the alleged acts constitute infringement.
There is an analogue to trespass, my dear namesake.
The intent is to the act itself. Did you mean to go on that land? It matters not if you were mistaken as to whose land it was.
Let’s not forget that inducement is holding someone liable who did not actually infringe. For this to be justifiable, courts have (and will continue) to require some form of scienter. Inducement still requires knowledge of a patent.
So, to complete the analogy, you’d have to know that the land was private property…just, your personal opinion that the deed was faulty in some way isn’t going to save you when your theory is debunked in court.
go authur, the scienter required before ’52 was that the inducer instructed the person performing the process or making the infringing combination, article or composition about what and how, etc., or provided, as in Quanta, the very means to perform the patent process.
Historically, the person charged with inducement did not have to know about the patent. Patent infringement across the board was strict liability.
Congress did not intend to change the law of infringement when enacting the ’52 act. It intended to codify it.
Q: Is the land yours?
A: no.
Q: Did you intend to step on the land?
A: yes.
Case closed.
Well, that’s not the law. Globaltech and many others.
I guess i assumed you were talking about inducement, which may not be the case
What part o the word “analogue” are you having trouble understanding?
>I may add, however, that if the desirability of the rule we adopt were a proper >consideration, it is by no means clear that the Court’s holding, which increases >the in terrorem power of patent trolls, is preferable. The Court seemingly >acknowledges that consequence in Part III of its opinion.
>For the foregoing reasons, I respectfully dissent
So, what evidence does J. Scalia have for “trolls”? This just keeps getting weirder and weirder. A life lesson in the fall of a civilization.