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Article: February 2015: Patent Litigation Update

Business Litigation Reports

Supreme Court to Review Good Faith Defense to Patent Inducement Claims. Last month in Commil USA, LLC v. Cisco Systems, Inc., 720 F.3d 1361 (Fed. Cir. 2013), cert. granted in part, No. 13-896, 2014 WL 318394 (U.S. Dec. 5, 2014), the Supreme Court granted review of the Federal Circuit’s decision in Commil USA, LLC v. Cisco Sys., 720 F.3d 1361 (Fed. Cir. 2013). The Court will address whether the Federal Circuit erred in holding that a defendant’s belief that a patent is invalid is a defense to induced infringement under § 271(b). This is the latest in a line of decisions originating from DSU Medical Corp. v. JMS Co., 471 F.3d 1293 (Fed. Cir. 2006). In that case, the Federal Circuit resolved a split in its precedent over the level of intent required to establish active inducement in patent infringement cases. Prior to DSU, the Federal Circuit applied both a general and specific intent standard. Under its general intent standard, the Court required that a defendant intend to engage in acts (such as selling a potentially infringing component of an infringing product) that ultimately resulted in direct infringement, apparently without regard to whether the defendant knew its acts would result in direct infringement. Under its specific intent standard, the Court required an additional showing that the defendant actually knew or should have known that its acts would result in direct infringement. In DSU, the Federal Circuit decided, en banc, to apply the specific intent standard. The Federal Circuit also held that an accused infringer’s good faith belief of non-infringement can be used to establish of a lack of intent. In DSU, an opinion of counsel was successfully used to establish that an accused infringer had a good faith belief that the accused products did not infringe, and could therefore not be held liable for inducement.

In Commil, the Federal Circuit expanded the boundaries of this “good faith belief” to include invalidity. Specifically, the Federal Circuit found that a good faith belief that the asserted patent was invalid (for example, by relying on an opinion of counsel) could provide a basis for negating intent. Reasoning that “one cannot infringe an invalid patent,” the majority concluded that one could have knowledge of the existence of a patent and induce others to infringe it, yet still lack the intent for induced infringement through a “good-faith belief that the patent is not valid.” The Federal Circuit made clear that a finding of a good faith belief of invalidity does not preclude a finding of induced infringement, but is evidence that should be considered by the fact-finder.

Following a denial by the Federal Circuit to reconsider its decision, Commil, the patentee, filed a petition for writ of certiorari in January 2014. Last month, the U.S. Supreme Court granted certiorari on the first issue presented in Commil’s petition: whether the Federal Circuit erred in holding that a defendant’s belief that a patent is invalid is a defense to induced infringement under § 271(b). In its petition, Commil argued that the decision created a new good faith defense that would “dramatically weaken the Patent Act’s provision of liability for inducing infringement.” Commil also protested that the decision would dramatically increase the costs of litigation and make it too easy for defendants to escape patent infringement claims.

Cisco, the defendant, countered that there is no principled distinction between a good faith belief of non-infringement and a good faith belief of invalidity. Because a good faith belief of non-infringement negates intent under DSU Medical Corp. v. JMS Co., the same principle should apply to a good faith belief of invalidity.

The solicitor general, after being asked by the Supreme Court to weigh in on Commil’s petition, filed an amicus brief in October 2014 agreeing with Commil that the opinion warranted review because “that holding is inconsistent with the Patent Act’s text and structure, and it may undermine Section 271(b)’s efficacy as a means of deterring and remedying infringement.”