David R. Todd
Shareholder at Workman Nydegger
posted on 13 August 2011 | 0 Comments
On May 31, 2011, the U.S. Supreme Court decided Global-Tech Appliances, Inc. v. SEB S.A. At issue in Global-Tech was the mens rea (i.e., state of mind) required for a finding of “active inducement” under 35 U.S.C. § 271(b).
There has been confusion surrounding this issue for a number of years. In Hewlett-Packard Co. v. Bausch & Lomb, Inc., 909 F.2d 1464, 1469 (Fed. Cir. 1990), the Federal Circuit held that “intent to cause the acts which constitute the infringement is a necessary prerequisite to finding active inducement.” A few months later, in Manville Sales Corp. v. Paramount Systems, Inc., 917 F.2d 544, 553-54 (Fed. Cir. 1990), the Federal Circuit reversed a finding of active inducement against officers of a corporation because the lower court had also found that the officers had a “‘good faith belief’ based on advice of counsel” that there was no infringement. The court stated that “[i]t must be established that the defendant possessed specific intent to encourage another’s infringement,” i.e., that the defendant “knew or should have known his actions would induce actual infringements.” Id. at 553. After Manville, there was some confusion as to whether the Manville standard was meant to replace or merely to supplement the Hewlett-Packard standard. Insituform Technologies, Inc. v. CAT Contracting, Inc., 385 F.3d 1360, 1378 (Fed. Cir. 2004) (“[T]here is a lack of clarity concerning whether the required intent must be merely to induce the specific acts or additionally to cause an infringement.”).
In DSU Medical Corp. v. JMS Co., 471 F.3d 1293, 1304-06 (Fed. Cir. 2006), the Federal Circuit adopted the “knew or should have known” standard en banc, stating that an “intent to cause the acts that constitute the infringement” is necessary but insufficient and that it must also be shown that the accused inducer “knew or should have known his actions would induce actual infringements.” The DSU court further stated that “[t]he requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent.” Id. at 1304. The DSU court affirmed the jury’s verdict of no inducement because there was evidence that the defendant believed that there was no infringement.
In Global-Tech, the defendant (Pentalpha) copied all but the cosmetic features of the patent owner’s product and then retained an attorney to conduct a right-to-use study without telling him that it had copied directly from the patent owner’s design. The attorney failed to discover the patent owner’s patent and issued an opinion letter stating that Pentalpha’s product did not infringe any of the patents that he had found. Pentalpha then sold the products to Sunbeam, which resold them in this country. The jury found Pentalpha liable for actively inducing Sunbeam’s infringement, even though Pentalpha did not know about the patent owner’s patent. Pentalpha appealed, arguing that it did not have the requisite state of mind to be liable for active inducement.
The Supreme Court noted that it had previously decided that the state of mind required for “contributory infringement” under 35 U.S.C. § 271(c) required “knowledge of the existence of the patent that is infringed,” reasoned that “the same knowledge is needed for induced infringement under § 271(b),” and therefore held that active inducement “requires knowledge that the induced acts constitute patent infringement.” The Court further held that “willful blindness” is sufficient to demonstrate such knowledge. The Court explained that willful blindness is present if the defendant “subjectively believes” that there is a “high probability” of infringement and that the defendant takes “deliberate steps” to “avoid learning” of that fact. Under the facts of the case, the Court held that even though Pentalpha did not know about the patent, there was substantial evidence to support a finding of willful blindness and therefore substantial evidence to support the verdict of active inducement. The Court held that Pentalpha had waived any right to a new trial based on its newly articulated standard.