Induced Infringement Intent Requirement Not Countered by a Good-Faith Belief of Patent Invalidity

On May 26, 2015, the Supreme Court reversed the Federal Circuit in Commil USA, LLC v. Cisco Systems, Inc., No. 12-1042 (May 26, 2015), and held that a defendant’s belief regarding the validity of a patent is not a defense to induced infringement. Justice Kennedy authored the opinion of the 6-2 majority.

Before addressing the issue presented in Commil, the Court reaffirmed its holding in Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011). Generally, induced infringement occurs where a defendant “actively induces infringement” and requires intent to bring about infringement. The Court rejected an argument made under Global-Tech that mere knowledge of a patent is sufficient to establish intent, emphasizing that the key is proving knowledge that the induced acts constitute patent infringement, a more stringent standard.

With that backdrop, the Court turned to whether a defendant’s belief of patent invalidity can negate the intent requirement. It cannot. The Court explained that the “scienter” element concerns infringement, which is not the same as validity. Because infringement and validity are separate issues, a defendant’s belief of patent invalidity does not negate or rebut the defendant’s knowledge of or intent to cause infringement. Prior decisions of the Court, the structure of the Patent Act, and the statutory presumption of validity were offered in support of the line drawn between infringement and validity. The Court also noted practical reasons for its ruling, including the availability of other avenues for invalidating patents and the simplification of the issues to be resolved by juries in litigation.

Justice Scalia dissented, noting that only valid patents can be infringed and that “[t]o talk of infringing an invalid patent is to talk nonsense.” The Federal Circuit’s Judge Rich once made a similar statement (though advancing the opposite argument): “The single instruction to the jury that invalid claims cannot be infringed” is “a nonsense statement.” Spectra-Physics, Inc. v. Coherent, Inc., 827 F.2d 1524, 1535 (Fed. Cir. 1987). The Commil majority acknowledged that the point “is in one sense a simple truth, both as a matter of logic and semantics,” but dismissed the argument in favor of the established burdens of proof that create “orderly administration of the patent system.”

All in all, patentees concerned about the difficulty of proving that a defendant did not believe in a patent’s validity should be relieved. At the same time, the Court’s clarification regarding the relatively onerous Global-Tech standard means there is still a hurdle to proving induced infringement. While the Court did not address whether its ruling applies to contributory infringement, it noted in the background section that, “[l]ike induced infringement, contributory infringement requires knowledge of the patent in suit and knowledge of patent infringement.”

Another point of interest is what effect, if any, this ruling will have on the application of sanctions (under Fed. R. Civ. P. 11) and attorney fee awards (pursuant to 35 U.S.C. § 285). Though acknowledging that an issue of frivolity was not raised, the Court discussed the existence of companies that use patents primarily to obtain licensing fees, even where their infringement claims are poorly investigated and/or “frivolous.” The Court stressed that “district courts have the authority and responsibility to ensure frivolous cases are dissuaded.” The extent to which district courts act in response to this admonition is something to watch for.