Wednesday, June 26, 2013

The Federal Circuit Opens the Door to an Additional Defense to Inducement

It is well established law that liability for inducement requires the specific intent to induce another to infringe.  It is also well established law that a defendant may rely on a good faith belief that the there is no patent infringement to defeat the intent element.  See DSU Medical Corp. v. JMS Co. Ltd., 471 F. 3d 1293 (Fed. Cir. 2006) (en banc).  What was not clear from the Federal Circuit's precedent, was whether a defendant’s good faith belief that the patent in question was invalid could also be used as evidence to overcome an allegation of inducement.  That question has now been answered.  In Commil USA v. Cisco Systems 2012-1042 (Fed. Cir. June 25, 2013), the majority held that “evidence of an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement.”  Opinion at  11.  This holding, however, does not establish a bright line defense, as the Court went on to say “[t]his is, of course, not to say that such evidence precludes a finding of induced infringement. Rather, it is evidence that should be considered by the fact-finder in determining whether an accused party knew  ‘that the induced acts constitute patent infringement.’” Id. (citations omitted).
Judge Newman was on the three judge panel and issued a strong dissent.  A small snippet from her dissenting opinion captures the theme:
A good-faith belief of patent invalidity may be raised as a defense to willfulness of the infringement, but it is not a defense to the fact of infringement. Patent invalidity, if proved, eliminates an invalid patent and thus is a total defense to infringement. However, a “good-faith belief” in invalidity does not avoid liability for infringement when the patent is valid.1 No rule eliminates infringement of a valid patent, whether the infringement is direct or indirect. Newman Dissent at 2
The practical impact of this decision is significant.   Evidence that a party believed a patent was invalid, such as an opinion of counsel of invalidity or a well-founded reexamination request, is now clearly admissible evidence that can be presented not only to defend against willfulness (a damages issue), but also to defeat a showing of liability when the theory of infringement rests on inducement.

4 comments:

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  2. Note - The Supreme Court reversed this decision in Commil USA, Inc. v. Cisco Systems, Inc., 575 U.S. ____, (2015), and expressly held the a good faith belief of invalidity is NOT a defense to inducement.

    See a discussion of this case by my Andrews Kurth colleagues at https://www.andrewskurth.com/insights-1220.html

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