Active Inducement of Infringement: A Good Faith Belief in Invalidity is Not a Defense

On May 26, 2015, the U.S. Supreme Court issued its opinion in Commil USA, LLC v. Cisco Systems, Inc., (Case No. 13-896, May 26, 2015). A copy of the slip opinion may be found here

Active Inducement of Infringement: A Good Faith Belief in Invalidity is Not a Defense 

U.S. Patent Law recognizes both direct and indirect patent infringement.  Direct infringement is committed by someone who makes, uses, sells, offers to sell or imports a claimed invention. Direct infringement is a strict liability offense. One can directly infringe a patent despite being unaware of it.

The Patent Statute defines two types of indirect infringement: Contributory Infringement, and Active Inducement of Infringement.  In order for a party to be liable for either type of indirect infringement, there must be a direct infringer.  Contributory infringement occurs when someone offers to sell, sells, or imports a component of a patented invention or a material or apparatus used for practicing the invention knowing that it is especially adapted to infringe the patent, wherein the component, material, or apparatus is not a staple of commerce with substantial non-infringing uses.

Active inducement of infringement occurs when a party, with knowledge of a patent, induces a third party to commit acts that the party knows will infringe the patent.  Commil at 6.  In Commil the Federal Circuit held that because one cannot infringe an invalid patent, proof of a good faith belief in the invalidity of a patent can be used to rebut a claim of active inducement of infringement. Id. at 4. 

The Supreme Court reversed for several reasons.  First, the majority held that “because infringement and invalidity are separate issues under the [Patent] Act, belief regarding validity cannot negate the scienter required” for active inducement of infringement.  Id. at 9.  The majority noted that infringement and invalidity appear in separate parts of the Patent Act and that they are listed as two different defenses. Slip Opinion at 10.  The Court also held that if a good faith belief in patent invalidity were an accepted defense to a claim of active inducement of infringement, the presumption of validity provided by the Patent Act would be undermined.  Id.  The majority further held that “invalidity is not a defense to infringement, it is a defense to liability.  And because of that fact, a belief as to invalidity cannot negate the required scienter for induced infringement.”  Slip Opinion at 11.

Chief Justice Roberts and Justice Scalia dissented in Commil. They rejected the idea that infringement and invalidity are separable for purposes of establishing the requisite scienter for active inducement of infringement.  Dissent at 1-2.  They also disagreed that permitting a defendant to argue that it had a good faith belief in the invalidity of a patent would undercut the statutory presumption of validity, opining that under such a rule the defendant “merely avoids liability for a third party’s infringement of a valid patent, in no way undermining the patent’s presumed validity.”  Dissent at 2.

Implications for the Doctrine of Willful Infringement

If taken at face value, the majority’s reasoning in Commil arguably suggests that a good faith belief in invalidity should not be a defense to a charge of willful infringement.  Upon a finding of patent infringement, the Patent Statute allows a trial court to award “enhanced” damages, but provides no standard for determining when enhancement is warranted.  35 U.S.C. § 284.  The Federal Circuit has long held that “an award of enhanced damages requires a showing of willful infringement.”  In re Seagate Tech., LLC 497 F.3d 1360, 1368 (Fed. Cir. 2007) (emphasis added).  Contrary to the Supreme Court’s holding in Commil, for purposes of establishing willful infringement, the Federal Circuit has held that infringement and invalidity are intertwined, which is consistent with its opinion in Commil

Accordingly, to establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.

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The state of mind of the accused infringer is not relevant to this objective inquiry. If this threshold objective standard is satisfied, the patentee must also demonstrate that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer.

Id. at 1371 (emphasis added).  Under Seagate the scienter required for willful infringement is that the accused infringer knew or should have known of an objectively high likelihood that the asserted patent was infringed and valid. 

The reasoning of the Commil majority seems equally applicable to the doctrine of willful infringement.  While the term “willful infringement” is a creation of case law and not the Patent Statute, it is difficult to see a principled difference between the scienter requirements of willful infringement and active inducement of infringement or why invalidity should be relevant to one and not the other.  Accused infringers often obtain opinions from patent attorneys to rebut a charge of willful infringement, and under Seagate, those opinions may rely on non-infringement and/or invalidity.  The Commil decision could call reliance on invalidity into question.  We will have to wait and see if an aggrieved patent holder raises the issue and how the courts handle it.