In a case of first impression, the United States Supreme Court held this week that a good-faith belief in a patent’s invalidity is not a defense to a charge of induced infringement. Induced infringement occurs when one party, with knowledge of a patent, actively induces another to perform acts that infringe one or more claims of the patent. To prove inducement, the patentee must show that the accused party knew of the patent and knew that the accused acts constituted patent infringement. In Commill v. Cisco Systems,1 Cisco unsuccessfully sought to introduce evidence of its good-faith belief that Commill’s patent was invalid, to show that it lacked the intent to infringe that inducement requires. On appeal, a panel of the Federal Circuit held that, because it is “axiomatic that one cannot infringe an invalid patent,” a good faith belief in the invalidity of the patent can negate the intent required to find inducement.2
The Supreme Court, in a move that makes inducement easier to prove, held that a good-faith belief in the invalidity of the patent is not a defense to a charge of inducement. The Court reasoned that “[i]nvalidity is an affirmative defense that can preclude enforcement of a patent against otherwise infringing conduct…” and thus “invalidity is not a defense to infringement, it is a defense to liability.” The Court’s opinion is further grounded on the notion that allowing a defendant to avoid liability on a defense of a good-faith (but mistaken) belief in invalidity would undermine the long-standing presumption that an issued patent is valid. Finally, the Court noted that there are ample alternative means to assert invalidity as a defense to an inducement claim – by declaratory judgment, inter partes review, ex parte reexamination, or by raising invalidity as an affirmative defense – such that an accused inducer has other means of recourse.
Inducement charges find use in circumstances where a single entity instructs a multitude of end-users to infringe a patent, as it permits the infringement to be dealt with in a single suit against the inducer rather than forcing a patentee to bring suit against each end user. Such circumstances may occur, for example, where a single entity provides customers with most of a patented device and instructs the customers to complete the production of the device or where the use of a device sold by a single entity would infringe a method claim, and the single entity does not itself perform the method. In Commill, for example, the use of wireless networking equipment sold by Cisco was alleged to infringe Commill’s claims to a method of implementing a short-range wireless network.
Absent inducement, Commill would have had to sue each individual purchaser and user of the Cisco equipment to prevent continued infringement. Inducement may also be the only option where a foreign entity directs infringing products into the United States through others but itself commits no infringing acts in the United States; rather than going after a chain of importers, inducement allows a patentee to attack the manufacturer directly.
Notably, Commill marks the third instance in the last four years in which the Court has addressed inducement. In its 2011 Global Tech. decision,3 the Court addressed the level of intent that must be proven to show inducement – whether the plaintiff must prove a specific intent on the part of the alleged inducer that the patent be infringed, or whether the intent to induce acts that resulted in infringement would suffice. The Court held that to be liable for inducement, the party must know that the induced acts constituted infringement, making inducement more difficult to establish.
Just last year, the Court again addressed inducement, determining that no inducement can occur absent a direct infringer. In Limelight v. Akamai,4 Limelight was accused of inducing infringement of a patent covering methods of mirroring data files on multiple servers to permit simultaneous delivery to large numbers of users without crashing any one server. One of the steps of the method involved tagging specific data to be mirrored; it was uncontested that, rather than perform this step itself, Limelight instructed its customers to do this tagging. In this fashion, no one party performed all of the steps of the method. Akamai sought a ruling that inducement can be found regardless of whether direct infringement under § 271(a) is found. The Supreme Court held that for inducement to occur, there must be a direct infringer, and on remand, the Federal Circuit found no inducement because there was no single entity that directly infringed, either by performing all of the steps itself or by controlling the actions of those who performed method steps.5 As with Global Tech., this ruling raised the bar for proving inducement, making it unavailable where the parties performing the steps have no contractual or other controlling relationship, as is often the case in provider-customer relationships found in today’s high-tech world.
If you have relied on an opinion of invalidity as a means of avoiding inducement liability, you should reconsider the risks of infringement. It is still possible, of course, to rely on invalidity – if the claims are actually invalid, there can be no liability for inducement. Alternatively, parties should consider attacking troublesome patent claims through one of the various forms of post-grant review identified by the Court in Commill or obtaining an opinion based on noninfringement. It is advisable, where a good faith belief in noninfringement is relied upon to negate the intent requirement of inducement, to document the basis for this belief prior to being sued for infringement – at least some courts have refused to consider opinions of counsel obtained after suit was filed.6
6E.g., Dataquill Ltd. v. High Tech Computer Corp., 2011 WL 6013022, at *10 (S.D. Cal.) (denying HTC’s motion for summary judgment based on lack of specific intent to induce infringement where HTC only presented opinions and arguments of its trial counsel rendered after the filing of this lawsuit).