An entity can infringe a patent claim in two different ways, directly and indirectly. Direct infringement occurs when the entity makes, uses, sells, imports or exports all of the elements of a patent claim. Indirect infringement occurs when the entity contributes to the direct infringement of the claim or induces another party to infringe the claim.
An entity does not have to have any actual knowledge of a patent or an intent to infringe the patent to be liable for direct patent infringement. However, the damages can be more severe in such cases.
However, an entity must have a requisite intent to be liable for indirect patent infringement under either a theory of contributory infringement or induced infringement. Unfortunately, certain aspects of the intent requirement were unclear until the Supreme Court issued two recent decisions in Global-Tech Appliances, Inc. et al. v. SEB S.A., 563 U.S. 754, 131 S. Ct. 2060, 179 L. Ed. 2d 1167 (2011) and Commil USA, LLC v. Cisco Systems, Inc., __ U.S. __, 135 S. Ct. 1920, 191 L. Ed. 2d 883 (2015).
Induced Infringement Requires Knowledge that the Induced Acts Constitute Patent Infringement
The dispute in Global-Tech centered on the level of knowledge that an accused infringer must have in order to be liable for induced infringement. The patent owner asserted that a party could be liable for induced infringement if it did not have actual knowledge of the patent-at-issue, but they were deliberately indifferent to a known risk that it was inducing another party to infringe an existing patent. The accused infringer asserted that it had to have actual knowledge of the patent in order to be liable.
The Supreme Court decided that an accused infringer must have knowledge that the induced acts constitute patent infringement, which seemed to favor the position asserted by the accused infringer. In a curious twist, however, the Court determined that the accused infringer was liable for induced infringement because it acted with willful blindness of the fact that it was inducing another party to infringe the patent-at-issue.
The Supreme Court remanded the case back to the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”) to consider the patent owner’s remaining arguments for infringement. The Federal Circuit rejected those arguments on Dec. 28, 2015.
The Intent Requirement Cannot be Negated by a Belief that the Patent is Invalid
When an entity discovers a patent that could be the basis for a future induced infringement claim, the entity can avoid liability by obtaining an opinion from a patent attorney that asserts that the allegedly infringing acts do not actually infringe the patent-at-issue.
Unfortunately, it is not always possible for a patent attorney to find a good-faith argument to support an opinion of non-infringement. In such cases, some attorneys would assert that the patent was not valid in order to defeat a future claim of induced infringement.
Prior to the Commil case, it was believed that either approach was proper. However, the Supreme Court carefully reviewed the text of the statute (35 U.S.C. § 271(b)) that codified the principles of induced infringement before concluding that an entity could not rely upon an invalidity opinion to negate the intent requirement for an induced infringement claim.
Justice Kennedy also Stressed the Need to Sanction Frivolous Patent Lawsuits in Commil
Justice Kennedy noted in the last part of his opinion in Commil that the Court was aware that certain entities were engaged in the business of licensing patents without actually practicing the underlying invention. He indicated that these non-practicing entities may bring frivolous claims from time to time, but that this was not a reason to create a new defense to induced infringement claims.
Instead, he indicated that district courts should sanction such frivolous lawsuits.