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Induced Infringement Requires Specific Intent to Encourage Another’s Infringement

December 13, 2006

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Last Month at the Federal Circuit - January 2007

Judges: Rader (author), Schall, Linn

[Appealed from: N.D. Cal., Judge Jensen]

In DSU Medical Corp. v. JMS Co., Nos. 04-1620, 05-1048, -1052 (Fed. Cir. Dec. 13, 2006), the Federal Circuit affirmed the district court’s ruling that ITL Corporation Pty, Ltd. (“ITL”) was not liable for contributory infringement because it did not contribute to acts of infringement in the United States. In an en banc section of the opinion, the Court also addressed the requisite intent required for a finding of induced infringement.

DSU Medical Corporation and Medisystems Corporation (collectively “DSU”) own U.S. Patent No. 5,112,311 (“the ’311 patent”) and have an exclusive license to U.S. Patent No. 5,266,072 (“the ’072 patent”), both of which are directed to a guarded, winged-needle assembly intended to prevent accidental needle-stick injuries. Specifically, the ’311 patent claims a “slotted, locking guard for shielding a needle, and a winged needle assembly including a needle, a winged needle hub, and a slotted, locking guard.”

ITL, an Australian company, manufactures the allegedly infringing device in Malaysia and Singapore, marketing its product under the name “PlatypusTM Needle Guard.” The Platypus needle guard is a small piece of plastic in the form of an open clamshell. During use, the halves of the clamshell close to form the needle guard. Under the terms of the ’311 patent as construed by the district court, the Platypus needle guard only infringes in its closedshell configuration. JMS Company, Limited (“JMS”) is a Japanese medical supply company that distributes Platypus needle guards worldwide.

DSU sued JMS and ITL for infringement of the ’311 and the ’072 patents. Following a claim construction hearing, the district court granted SJ of noninfringement on multiple claims. The district court also granted SJ of infringement of claims 46, 47, 49, 52, and 53 of the ’311 patent. After a jury trial, the district court entered a final judgment finding claims 46, 47, and 50-52 of the ’311 patent were invalid as obvious, but that JMS infringed claims 49, 53, and 54 of the ’311 patent and that ITL was not liable for contributory infringement. DSU appealed, and JMU and ITL cross-appealed.

On appeal, the Federal Circuit affirmed the trial court’s holding that ITL was not liable for contributory infringement. The Federal Circuit noted that ITL only contributed to placing the Platypus needle guards into the infringing closed-shell configuration in Malaysia, not in the United States. Explaining that 35 U.S.C. § 271(c) has a territorial limitation requiring contributory acts to occur in the United States, the Court stated that it could not reverse a jury verdict of noninfringement on mere inferences that the Platypus needle guard units sold in the United States were put into the infringing closed-shell configuration. The Court found that the record did not show that the Platypus needle guards ITL shipped into the United States in the open-shell configuration were ever put into an infringing configuration, i.e., closedshell. As a result, the trial court did not abuse its discretion in denying DSU’s motion for new trial on ITL’s contributory infringement.

Next, DSU argued that the district court erred in instructing the jury that the alleged inducer, JMS, must have the specific intent to encourage another’s infringement, and not merely knowledge of the acts alleged to constitute infringement. The Federal Circuit addressed this portion of the opinion en banc. Noting that the Supreme Court in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 125 S. Ct. 2764, 2779 (2005), “validate[d] this court’s articulation of the state of mind requirement for inducement” in the copyright context, the Court held that liability for inducement requires more than just intent to cause the acts that produce direct infringement, but also “an affirmative intent to causedirect infringement.” Slip op. at 18. In other words, the Court explained, inducement requires that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another’s infringement. Accordingly, the Federal Circuit upheld the district court’s instruction, finding that liability for inducement requires “evidence of culpable conduct, directed to encouraging another’s infringement, not merely that the inducer had knowledge of the direct infringer’s activities.” Id.

Chief Judge Michel and Judge Mayer, in concurring opinions, wrote separately to state that they did not consider it necessary to address the issue of intent en banc. Because there was no actual conflict in the Court’s existing case law, there was no need for the full court to intervene. Such intervention should be reserved for “real conflicts” and “cases of exceptional importance.” Finally, they wrote to make clear that the Federal Circuit did not set forth a new standard regarding what satisfies the “knowledge of the patent” requirement in cases filed under 35 U.S.C. § 271(b).