United States: US Supreme Court To Review Whether A Reasonable Belief Of Patent Invalidity Is A Defense To Induced Infringement

On December 5, 2014, the US Supreme Court granted a writ of certiorari to review the Federal Circuit's holding in Commil USA LLC v. Cisco Systems, Inc., 720 F.3d 1361, 1367 (Fed. Cir. 2013) that a defendant's reasonable belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b). Commil, 2014 WL 318394 (U.S.). This will be an important decision further defining the types of evidence permissible for defending claims of induced infringement, which are asserted often in patent cases, and can have wide reaching consequences.

Section 271(a) of the Patent Act provides that "whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States ... infringes the patent." 35 U.S.C. § 271(a). Under Section 271(a), a "direct infringer's knowledge or intent is irrelevant" to liability. Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2065 n.2 (2011). Thus, a good faith belief that one is not infringing or that a patent is invalid is not a defense to a claim of direct infringement. 35 U.S.C. 271(b), on the other hand, provides liability for inducing patent infringement. Under Section 271(b), "[w]hoever actively induces infringement of a patent shall be liable as an infringer." The Supreme Court has held that Section 271(b) requires "at least some intent," including knowledge of, or willful blindness concerning, the patentee's exclusive rights. Global-Tech, 131 S. Ct. at 2068.

In Commil USA LLC v. Cisco Systems, Inc., 720 F.3d 1361, 1367 (2013), the Federal Circuit held for the first time that "a good-faith belief of invalidity may negate the requisite intent for induced infringement." Therefore, under the Federal Circuit's ruling in Commil, evidence of a good-faith belief of invalidity should be considered by the fact-finder in determining if a party has the required intent for induced infringement. Id. at 1368-69. Presumably, this would allow a defendant to introduce evidence such as testimony from employees of the defendant regarding a good-faith belief of invalidity of the patent, opinions of counsel regarding invalidity and the institution of reexamination or inter partes review proceedings by the United States Patent Office.

The Federal Circuit's majority opinion, which Judge Prost and Judge O'Malley joined, observes that, under Federal Circuit precedent, "a good-faith belief of non-infringement is relevant evidence that tends to show that an accused inducer lacked the intent required to be held liable for induced infringement." Id. at 1367-68. The majority explains that, because "[i]t is axiomatic that one cannot infringe an invalid patent," there should be "no principled distinction between a good-faith belief of invalidity and a good-faith belief of non-infringement for the purpose of whether a defendant possessed the specific intent to induce infringement of a patent." Id. Judge Newman dissented on this point finding inter alia that infringement and validity are distinct issues and that a good-faith belief in invalidity cannot negate liability for infringement of a valid patent. Id. at 1373-74.

Commil petitioned for rehearing, as well as for rehearing en banc, which was denied with five of eleven judges dissenting from the decision. Judge Reyna, joined by Judges Rader, Newman, Lourie and Wallach, issued a lengthy dissent from the denial of rehearing en banc. Commil, 737 F.3d 699, 700 (Fed. Cir. 2013).

Commil filed a petition for a writ of certiorari to the Supreme Court on January 23, 2014 raising the issue of whether a good-faith belief that a patent is invalid is a defense to inducement liability under Section 271(b). Commil, 2014 WL 281332 (U.S.). In its writ, Commil essentially makes three arguments. Commil first argues that the Federal Circuit's decision is contrary to legal precedent that has treated infringement and invalidity as separate and distinct issues. 2014 WL 281332 at *11-12. Pointing to the statutory presumption of validity under 35 U.S.C. § 282, Commil argued that the language of 35 U.S.C. § 271(b) and its legislative history do not mention or consider the issue of invalidity. Id. Second, Commil argues that the Federal Circuit's decision will erode patent rights. Id. Commil reasoned that, under the Federal Circuit's decision, "[w]here a defendant has a mistaken belief of invalidity, the patentee will now be deprived of any remedy for infringement under § 271(b) even if, for example, (1) the patent is valid; (2) the defendant knew about the patent; (3) the defendant intentionally took actions that caused a third party to infringe the patent; and (4) the defendant intended to cause that infringement." Id. Third, Commil analogizes to tort law arguing that a good faith mistake of law, e.g., good faith belief that a valid patent is invalid, does not absolve a tortfeasor of liability for a tort (e.g., patent infringement).

In its opposition, Cisco reiterated the Federal Circuit's reasoning in Commil, arguing that the decision is the result of the application of the Supreme Court's decision in Global-Tech Appliances, Inc. et al. v. SEB S.A., 131 S.Ct. 2060, 2068 (2011). In Global-Tech, the Court required that a defendant have "knowledge that the induced acts constitute patent infringement" for a finding of induced infringement. Commil, 2014 WL 1309334 at *1, 4. Cisco further argued that a defendant cannot have knowledge that the induced acts constitute infringement, as required under Global-Tech, where it has a reasonable belief that the patent is invalid. Id. at 1, 9-10. With regard to the erosion of patent rights, Cisco contends that Commil's argument would apply equally to the defense of a good faith belief of noninfringement, which has been recognized as a defense to induced infringement for years. Id. at 12. Finally, Cisco argues that the issue is not yet ripe for the Supreme Court to decide. Id. at 13-14. Cisco filed its own writ of certiorari with regard to other issues, which was denied.

The federal government weighed in on Commil's petition, recommending that the Supreme Court grant certiorari to decide whether the Federal Circuit erred in holding that a defendant's reasonable belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b). In its brief, the government largely repeated Commil's arguments. However, the government spent considerable time in its brief suggesting, albeit subtly, that the Supreme Court had not decided the intent required for induced infringement in its Global-Tech decision. Despite the Supreme Court's statement that "we now hold that induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement" in Global-Tech, 131 S.Ct. at 2068, the government states in its brief that "Global-Tech does not clearly resolve, however, whether the defendant must additionally possess actual knowledge that the induced conduct constitutes infringement." Commil, 2014 WL 5299431 at *9. The government's brief seems to suggest that the Supreme Court should reconsider the contours of the intent requirement for induced infringement, in addition to considering whether the Federal Circuit erred in holding that a defendant's belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b).

The impact of the Supreme Court's upcoming decision, which can be expected by the end of June 2015, will be significant in defining the scope of evidence that can be relied upon for defending against claims of induced infringement. If the decision in Commil is upheld by the Supreme Court, defendants will have an additional defense, but until the decision issues, there will be uncertainty as to whether a good-faith belief in invalidity will be a proper defense. The Dentons Patent Litigation and Inter Partes Review (IPR) team will monitor and keep you apprised as this area of law develops in the course of this and other important decisions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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