Inducement of Patent Infringement
The United States Supreme Court Decides on the Requirements for Showing Inducement of Patent Infringement
35 USC § 271(b) provides that
“Whoever actively induces infringement of a patent shall be liable as an infringer”.
This provision raises the question as to what is meant by “actively induce”. In its decision of May 31, 2011 in Global-Tech Appliances v. SEB S.A., the United States Supreme Court held that for a party to be liable as one who actively induces infringement it must be shown that that party knew that the induced act constituted patent infringement, but went on to hold that such a party cannot avoid this knowledge requirement by an act of willful blindness.
In the case before it, SEB was the owner of a patent for a fryer that maintained a cool external surface. A subsidiary of Global-Tech had purchased one of the patented fryers in Hong Kong and, in the language of the Supreme Court, “copied all but the fryer’s cosmetic features”. The fryer bought in Hong Kong was made for sale in a foreign market and therefore it did not bear any markings indicating that it was the subject of a U.S. Patent. Global-Tech’s subsidiary requested a patent attorney to carry out a freedom to use search, but did not tell the patent attorney that it had copied SEB’s fryer. The freedom to use search did not locate the the SEB patent. Global Tech sold copied fryers to various parties who resold them in the United States. There was no evidence that Global-Tech had actual knowledge of the SEB patent. SEB sued Global Tech for inducement to infringe its patent.
The Court of Appeals for the Federal Circuit affirmed a district court finding of induced infringement on the ground that although prior case law held that “inducement requires a showing of ‘specific intent’ to encourage another’s infringement” and that in the case before it there was no direct evidence that the alleged inducer knew of the existence of the patent in question, such intent could be found to exist where there was a deliberate disregard of a known risk that a patent might be infringed. The circumstances of the case showed that Global-Tech had deliberately taken this risk.
The Supreme Court granted certiorari to review the question of whether a “deliberate disregard” of the known risk of infringement is sufficient to meet the “inducement” requirement set out in the statute.
In its May 31st decision, the Supreme Court was unanimous in holding that the Federal Circuit had applied the wrong test. Nevertheless on the facts of the case it agreed that induced infringement had been shown. Seven other Justices joined in the opinion of Justice Scalia that the acts in question were sufficient to support a finding of induced infringement. Justice Kennedy would have remanded the case for further consideration of whether circumstantial evidence in the case could have led to an inference that Global Tech knew the fryer to be patented.
Writing for the majority, Justice Salia noted that the statute was itself ambiguous, but held that the Court should follow its 1964 decision in a contributory infringement case, Aro Mfg Co v. Convertible Top Replacement Co that for indirect infringement to occur, the alleged infringer had to have knowledge that the acts to which it contributed or which it induced were infringements of a patent. The court felt that the Federal Circuit’s test of “deliberate disregard of the existence of a patent” moved too far away from that knowledge requirement and too close to a recklessness or negligence standard. However, the Court noted that in many areas of criminal law one could not avoid a knowledge requirement be being “deliberately blind” to certain facts. Such deliberate blindness was tantamount to actual knowledge. The same should apply here. In the present case the fact that the defendant’s product had been copied from the plaintiff’s product, and the fact that it failed to tell this to the attorney who gave it a freedom to use opinion provided sufficient evidence of willful blindness.