United States: A Good Faith Belief In The Invalidity Of A Patent May Be Used As A Defense To Allegations Of Induced Infringement

In Commil USA v. Cisco Systems, the US Court of Appeals for the Federal Circuit held that an accused infringer's good faith belief that a patent is invalid may negate the requisite "intent" for induced infringement.

Allegations Regarding Induced Infringement Require Both "Knowledge" and "Intent"

Unlike direct infringement, induced infringement under 35 U.S.C. § 271(b) is not a strict liability tort; it requires that the accused inducer act with knowledge of the existence of the patent and that the induced acts constitute patent infringement. See Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068 (2011).  As the Federal Circuit has explained, "inducement requires that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement." DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006). As we reported in " Navigating The Post-Akamai Landscape: Recent Changes In the Law Of Induced Patent Infringement," IP Law360 (Oct. 9, 2012), there have been significant developments in the law of induced patent infringement in recent years. These developments have clarified the nature of the specific intent requirement, as well as the relationship among the alleged infringers.

The Commil Decision

On June 26, 2013, in Commil USA, LLC v. Cisco Systems, Inc. (Fed. Cir. 2013), the Federal Circuit held that evidence of an accused infringer's good-faith belief of invalidity may negate the requisite intent for induced infringement. Before this decision, it was clear that a good-faith belief of noninfringement is relevant evidence tending to show that an accused infringer lacked the intent required to be held liable for induced infringement. See DSU Med. Corp., 471 F.3d at 1307. Commil extends this concept finding there is no principled distinction between a good-faith belief of invalidity and a good-faith belief of noninfringement for the purpose of whether a defendant possessed the specific intent to induce infringement of a patent.

The Federal Circuit concluded that a district court erred in preventing Cisco from presenting evidence of its good-faith belief that the asserted claims were invalid to rebut Commil's allegations of induced infringement.  Refusing to distinguish between "a good-faith belief of invalidity and a good-faith belief of non-infringement" when determining whether a defendant possessed the specific intent to induce patent infringement, the Federal Circuit wrote:

Citing several district court decisions that reached the same conclusion, the Federal Circuit held that evidence of an accused inducer's good-faith belief of invalidity may negate the requisite intent for induced infringement.

The Federal Circuit also clarified the standard on the intent prong for inducement.  With respect to indirect infringement, the district court had instructed the jury that inducement could be found if "Cisco actually intended to cause the acts that constitute direct infringement and that Cisco knew or should have known that its actions would induce actual infringement." On review, the Federal Circuit found this instruction erroneous as a matter of law. Reasoning that the Supreme Court had expressly distinguished actual knowledge and willful blindness from recklessness and negligence, the Federal Circuit held that the district court's instruction improperly recited a negligence standard whereas inducement requires "knowledge that the induced acts constitute patent infringement" under Global-Tech. Id. at 2068.

Strategies for Addressing Charges of Induced Infringement In Litigation

With this framework in mind, rather than allow plaintiffs an opportunity to create questions of fact regarding "intent" to induce infringement to defeat summary judgment on this issue, defendants may seek preemptively to negate the intent prong. One potential way to do this under Commil, is if the defendant has and documents a good-faith belief that the patent is invalid. This can be done in various ways, including by obtaining an early opinion letter of invalidity. Obtaining an invalidity opinion letter after a notice of the patent is one way to demonstrate that the defendant had a good faith belief in the invalidity of the patent and therefore could not have knowingly and intentionally encouraged infringement.

While a noninfringement opinion can also be useful to negate the intent requirement, a noninfringement opinion may require disclosure of a defendant's technology, trade secrets, and other insights as to how the product at issue operates. In addition, if the inquiry of infringement is a close call, a defendant does not need to necessarily rely on a non-infringement opinion because the Commil opinion provides the flexibility to rely on a good-faith belief either that a patent is invalid or not infringed to negate an intent to induce infringement.

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