U.S. Supreme Court Sets Standard for Inducing Patent Infringement
On May 31, 2011, the U.S. Supreme Court ruled by 8 votes to 1 that a party may be held liable for inducing patent infringement if it can be shown that the party was “willfully blind” to whether its acts constituted infringement. (See Global-Tech Appliances, Inc., Et Al. V. Seb S. A., ”Global-Tech”). The U.S. Patent Act states that “[w]hoever actively induces infringement of a patent shall be liable as an infringer” (35 U.S.C. §271(b)). The Court held in Global-Tech that §271(b) of the Patent Act requires that a defendant have knowledge that “the induced acts constitute patent infringement.”
In Global-Tech, a maker of home appliances, SEB, invented a “cool-touch” deep fryer and obtained a patent covering the fryer. One of the defendants, Pentalpha (a subsidiary of Global-Tech Appliances, Inc.), deliberately copied SEB’s fryer, except for merely cosmetic features, and supplied the infringing fryers to resellers. The defendant was charged with “actively inducing … purchasers of [the] fryers to sell or offer to sell them in violation of SEB’s patent rights.”
Prior to supplying the infringing fryers, the defendant hired a patent attorney to conduct a “right-to-use” study to determine whether the defendant could lawfully supply the fryers. The defendant did not inform the attorney that it had blatantly copied the SEB fryer, and the attorney did not uncover SEB’s patent in the study. After being found liable for inducing patent infringement, the defendant appealed on the grounds that it did not actually know of SEB’s patent when it began distributing the fryers.
On appeal, the Federal Circuit affirmed the district court on the grounds that knowledge of infringement can be ascertained by a deliberate indifference to a “known risk” that a patent exists. By copying the SEB fryer, and withholding that fact to its patent attorney, the Federal Circuit concluded that the standard had been met.
The Supreme Court rejected the standard applied by the Federal Circuit, but affirmed its judgment under a new and different standard. The Court held that knowledge that induced acts constitute patent infringement can be inferred by a finding of “willful blindness.” The Court concluded that willful blindness can be found when a “defendant … subjectively [believes] that there is a high probability that a fact exists.” Secondly, the defendant “must take deliberate actions to avoid learning of that fact.”
In the decision, the Supreme Court concluded that willful blindness is an “appropriately limited scope that surpasses recklessness and negligence.” Despite the lower “known risk” and “deliberate indifference” standard applied by the Federal Circuit, the Supreme Court held that the evidence in the case supported a finding that the defendant “subjectively believed there was a high probability that SEB’s fryer was patented, that [the defendant] took deliberate steps to avoid knowing that fact, and that it therefore willfully blinded itself to the infringing nature of [the] sales.” The Supreme Court concluded that the defendant's only motive was to “manufacture a claim of plausible deniability in the event that [it] was later accused of patent infringement.” Thus, the knowledge requirement of 35 U.S.C. §271(b) was imparted to the defendant.
It is advisable for clients who may be faced with a charge of inducing patent infringement to obtain an opinion of patent counsel. Clients are advised to disclose to your lawyer all relevant facts that are necessary for a complete and competent right to use search. Doing so will be useful to combat any future charges of inducing patent infringement, such as based on willful blindness.
Click here for a copy of the opinion.