Supreme Court To Review Standard For Proving Induced Patent Infringement


Written by Brandon Baum (Partner at Mayer Brown and Practice Center Contributor) and Matt Watts[1].

The state of mind requirement for proving induced patent infringement under 35 U.S.C. §  271(b) has been the subject of recent and, according to some, inconsistent opinions from the Federal Circuit. On October 12, 2010, the Supreme Court granted certiorari in Global-Tech Appliances, Inc. v. SEB S.A., WL 2629783 (2010), presumably to resolve the confusion.

Section 271(b) states: “[w]hoever actively induces infringement of a patent shall be liable as an infringer.”  While there are many factual scenarios under which a patentee might pursue an inducement claim rather than or in addition to a direct infringement claim, it is frequently invoked where the act of direct infringement is performed by the end-user of a product.  Under Section 271(b), the patentee need not sue the many end-users of a product who directly infringe, but instead may pursue the entity that sold the product to the end-users.

Section 271(b) does not specify a state of mind requirement, but the case law has established two separate but interrelated requirements.  The first is that the accused infringer must have knowledge of the patent; the second is that the accused infringer must have the “specific intent” to induce infringement.

In the 2006 case of DSU Medical Corp. v. JMS Co., Ltd., 471 F.3d 1293 (Fed. Cir. 2006) (“DSU”), an en banc Federal Circuit purported to resolve definitively the requisite intent to prove induced infringement.  However, the language in the opinion left room for disagreement.  DSU began by reaffirming the principle that “mere knowledge of possible infringement by others does not amount to inducement; specific intent and action to induce infringement must be proven.”  Id. at 1305.  The court rejected the patentee’s argument that the inducer need only intend to cause the acts of the third party that constitute direct infringement, because (as any first-year law student knows) that would be general intent, not specific intent.  Instead, the court explained that “inducement requires evidence of culpable conduct, directed to encouraging another’s infringement, not merely that the inducer had knowledge of the direct infringer’s activities.”  Id. at 1306.

Unfortunately, the DSU court went on to explain what it meant by the term specific intent: “[t]he plaintiff has the burden of showing that the alleged infringer’s actions induced infringing acts and that he knew or should have known his actions would induce actual infringements.” Id. at 1304 (emphasis added).  Again, any first-year law student knows that “should have known” is the standard for negligence, not specific (or even general) intent.  While it might have been argued that DSU’s “should have known” standard applied only to the “knowledge of the patent” requirement, not the “specific intent to induce infringement” requirement, the DSU opinion precludes this distinction by stating that the “requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent.”  Id. at 1304 (emphasis added).  Thus, DSU’s  two requirements–knowledge and specific intent–are inextricably intertwined.

This brings us to the underlying case of SEB S.A. v. Montgomery Ward & Co., Inc., 594 F.3d 1360 (Fed. Cir. 2010) (“SEB”).  In SEB, the accused infringer, Pentalpha, reverse-engineered SEB’s patented fry cooker, copied the design, and began selling a competing fryer.   Although Pentalpha obtained a “right to use” opinion that its fry cooker did not infringe any patents, it did not inform opinion counsel that it had copied the SEB product, and thus opinion counsel never considered the patent-in-suit.  At trial and on appeal, Pentalpha argued that there was no evidence that it had actual knowledge of the patent before the suit was filed, and therefore it was not liable for pre-filing inducement.  However, the Federal Circuit was clearly troubled by evidence of Pentalpha’s “willful blindness,” i.e., copying the SEB product, while failing to inform opinion counsel of having done so.  Analogizing to non-patent cases involving the “deliberate indifference” standard, the Federal Circuit found “sufficient support for the conclusion that Pentalpha deliberately ignored the risk that SEB had a patent that covered its deep fryer.”  As a result, it is not clear whether the state of mind for induced infringement under Section 271(b) requires a showing that the accused infringer acted with “deliberate indifference” or “specific intent.”

It is this inconsistency that the Supreme Court has undertaken to address, framing the question in its order granting the cert. petition as follows:

Whether the legal standard for the state of mind element of a claim for actively inducing infringement under 35 U.S.C. § 271(b) is “deliberate indifference of a known risk” that an infringement may occur, as the Court of Appeals for the Federal Circuit held, or “purposeful, culpable expression and conduct” to encourage an infringement, as this Court taught in MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 937, 125 S.Ct. 2764, 2780, 162 L. Ed. 2d 781, 801 (2005)?

For those who believe that the Supreme Court relishes the opportunity to knock the Federal Circuit around a bit (e.g., Justice Scalia’s remark during the KSR argument, “[t]his is gobbledygook.”), oral argument should be entertaining.  In the meantime, practitioners should be cautious before relying on a legal standard for inducement under Section 271(b) that is anything less than “specific intent.”

[1] Matt Watts is a 2010 graduate of UC Hastings, where he was a top student in Prof. Baum’s Patent Litigation class.

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