In a recent decision, authored by Justice Alito and joined by all the other Justices but Justice Kennedy, the Supreme Court redefined the knowledge requirement for finding induced infringement under 35 U.S.C. § 271(b).  The case—which centered on a patent for an innovative fryer—provided an opportunity for the Court to elucidate what is required for active inducement of infringement:  that the party accused of inducing infringement must have knowledge that the induced acts constitute patent infringement.  The Court then further held that this knowledge requirement could be satisfied by willful blindness, a concept borrowed primarily from criminal law.
 The Court began its analysis of induced infringement with a brief examination of the statute, finding the text “short, simple, and with respect to the question presented in this case, inconclusive.”  The Court did, however, note that the language of § 271(b) included an implied element of intent.  The Court then defined precisely what that intent element necessitates, relying on the 1964 decision in Aro Mfg. Co. v. Convertible Top Replacement Co. (Aro II) to support the determination that knowledge under § 271(b) specifically requires knowledge of the patent.  The Court reasoned that knowledge for contributory infringement under § 271(c), which was specifically addressed in Aro II, was necessarily the same as knowledge for inducement.  Aro II established “that a violator of § 271(c) must know ‘that the combination for which his component was especially designed was both patented and infringed.’”  The Court adopted this knowledge standard to § 271(b), concluding that “induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement.” 
In so deciding, the Court definitively rejected deliberate indifference as the standard for knowledge—the standard the Federal Circuit had relied on in affirming the District Court’s finding of inducement.  The Court nevertheless affirmed the Federal Circuit, however, because it concluded that the knowledge requirement could be satisfied by a showing of willful blindness. Stating that such a proposition was supported both by traditional concepts of culpability and by the precedent, the Court held that “defendants cannot escape the reach of [] statutes by deliberately shielding themselves from clear evidence of critical fact that are strongly suggested by the circumstances.”  The Court acknowledged that willful blindness is principally a criminal law concept, having been endorsed in that context as early as the Court’s decision in 1899 in Spurr v. United States, 174 U.S. 728.  Yet the Court concluded that “[g]iven the long history of willful blindness and its wide acceptance in the Federal Judiciary, we can see no reason why the doctrine should not apply in civil lawsuits for induced patent infringement under 35 U.S.C. § 271(b).” 
Ultimately, the Court provided a two-part test for willful blindness for inducement.  First, a defendant must subjectively believe there is a high probability that a patent exists and would be infringed, and second must take deliberate actions to avoid knowing that fact.  In this case, the facts supported such a finding.  Specifically, the defendant was aware when it copied the plaintiff’s product that the product was an innovation in the U.S. market; defendant decided to copy an overseas model of the product, which it knew would not bear U.S. Patent markings; and the defendant decided not to inform an attorney it hired to give a right-to-use opinion that it copied the plaintiff’s product.  Taken together, the Court concluded the defendants actions were tantamount to “manufacture [of] a claim of plausible deniability in the event that [defendant] was later accused of patent infringement.” 
The Court’s decision provides a definitive—albeit somewhat heightened—standard for proving induced infringement under 35 U.S.C. § 271(b).  It remains to be seen how this subjective standard will be applied going forward. 
For the complete opinion, click here.
 

In an order today, the Supreme Court agreed to hear a case regarding the necessary intent for inducing infringement under 35 U.S.C. § 271(b).  The case is Global-Tech Appliances, Inc. v. SEB S.A., docket number 10-6.  The specific question presented is:

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)? 

The Supreme Court's full order list is here.  The original Federal Circuit opinion under review is here.

SCOTUSblog has the certiorari-stage documents collected here.  The case is set to be argued in the current term, but no schedule has yet been set for briefing on the merits or oral argument.

In Fujitsu et al v. Netgear, the Federal Circuit held compliance with an industry standard can be sufficient evidence to establish patent infringement.  However, this rule only applies when the only way to adhere to the industry standard is to infringe the asserted patent, such that any product that complies with the standard infringes.  In this case, the court determined that a party could comply with the standards at issue without infringing the patents; therefore, direct comparison of the products with the claims was necessary.

More detail after the jump.

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In a recent decision, the Federal Circuit affirmed a district court's grant of summary judgment of obviousness, but vacated and remanded the summary judgment of no contributory or inducing infringement of two other patents in suit related to recordable optical disk drive technology.  

The court relied on copyright cases applying the concept of secondary liability in determining that the district court applied the wrong legal standards for determining contributory infringement and inducement.  Guided by the Supreme Court decisions in Grokster and Sony, the court determined that a component that infringes in larger assembly cannot be insulated from a finding of contributory infringement, otherwise a liability loophole would exist.

Judge Gajarsa dissented.  He argued the majority committed three major missteps with respect to contributory infringement.  First, the alleged infringer did not sell or offer to sell the accused components as required by § 271(c).  Second, the majority used an over-inclusive application of § 271(c) that directly contravened Supreme Court guidance on its interpretation.  Finally, the conduct to which the majority objects related to the design and manufacture of components rather than the act of selling a component as addressed by § 271(c).

More on Ricoh Co. v. Quanta Computer, Inc. after the jump.

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In a decision last week, the Federal Circuit vacated a limited exclusion order issued by the International Trade Commission in the most recent dispute between Qualcomm and Broadcom.  The case involved alleged infringement of one of Broadcom's patents relating to chips for wireless communication, specifically directed toward power saving technology.  Although Qualcomm was the only respondent in the proceeding, the ITC issued a limited exclusion order ("LEO") prohibiting downstream products from being imported if they contained the accused technology. 

On appeal, the Federal Circuit affirmed various findings of the ITC, including the finding that the patent was not invalid and that Qualcomm did not directly infringe the patent.  However, the court vacated and remanded on the issue of induced infringement because the ITC applied the pre-DSU Medical standard for induced infringement.  Also, the Federal Circuit held that the ITC exceeded its authority in issuing an LEO for downstream products against parties who are not brought as respondents in this case.

More on Kyocera Wireless Corp. v. Int'l Trade Comm'n after the jump.

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In a recent decision, the Federal Circuit affirmed the International Trade Commission's finding of noninfringement with respect to one patent but reversed and remanded on another.  At issue was whether the defendant had imported chipsets that infringed five of the plaintiff's patents in violation of 19 U.S.C. § 1337.  The action was dismissed with regard to two of the patents, as any action related to those two patents must occur in Federal Court in California due to a forum selection clause.  Another patent is the subject of a separate appeal after an exclusion order was entered.  The Commission adopted an administrative law judge's determination of noninfringement with respect to the remaining two asserted patents.  

The Federal Circuit affirmed the determination of noninfringement for one patent, holding the patentee had presented insufficient evidence to show the accused devices necessarily infringed, and the patentee did not provide evidence of specific instances of direct infringement.  The court disagreed with the ALJ's claim construction with respect to the second patent.  The administrative law judge misinterpreted expert testimony on whether a control signal was required to be changeable and accordingly the court vacated the noninfringement finding with regard to one of the eight accused chips, but affirmed the finding of noninfringement with regard to the other seven even under the revised construction.

More on Broadcom Corp. v. Int'l Trade Comm'n after the jump.

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In a recent decision, the Federal Circuit affirmed a jury's finding of infringement of two patents and the related injunction, but reversed the district court's claim construction and the concomitant finding of infringement regarding a third patent.  The court affirmed the district court's injunction despite the fact that the patentee licensed, rather than manufactured, the claimed inventions.  The injunction was affirmed largely due to the "structural nature of a design win market" typified in nascent technology designs where there are multiple standards competing for market domination, and the fact that the injunction did not take effect for 20 months after the jury verdict to permit time to develop and implement a design-around.  

In addition, the Federal Circuit rejected the defendant's contention that In re Seagate changed the evidentiary burden for proving intent in the context of inducing infringement.  The defendant argued that after Seagate, opinion of counsel evidence was no longer relevant to the question of intent for inducing or contributory infringement.  The court held the intent necessary for an inducement finding may still be inferred from "all the circumstances."  This has two requirements, as described in DSU Medical:  (1) the defendant intended to cause the acts that constitute direct infringement, and (2) the defendant knew or should have known its action would cause the direct infringement.  The court observed opinion of counsel evidence may reflect what the accused infringer knew or should have known, it remains relevant to the second prong of this analysis.  Further, the court stated it would be "unfair to allow opinion-of-counsel evidence to serve an exculpatory function . . . and not yet permit patentees to indentify failures to procure such advice as circumstantial evidence of intent to infringe."  

Here, the accused infringer obtained an invalidity opinion, but declined to waive privilege.  The Federal Circuit held it was not error for the district court to instruct the jury that the lack of an opinion could be relevant to the issue of intent.  The court also instructed the jury, consistent with Knorr-Bremse, that the lack of opinion was not grounds to assume the opinion would be unfavorable.  As such, the instructions as a whole comported with Federal Circuit precedent, and the instructions were proper.

More detail of Broadcom Corp. v. Qualcomm Inc. after the jump.

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In a decision yesterday, the Federal Circuit affirmed a district court's grant of judgment as a matter of law based on lack of standing for one patent and non-infringement of a second patent.  A jury awarded $1,538,056,702 in damages for infringement, but, as a result of the JMOL, the district court set aside the damages award.

The Federal Circuit affirmed.  The court agreed with the district court that the jury lacked substantial evidence to find the claims of the first patent in suit encompassed work that was solely owned by the plaintiff based on a Joint Development Agreement.  Instead, the court held that, in accordance with the terms of the agreement, the patent-in-suit was jointly owned by the plaintiff and a third party not involved in the suit.  Thus, the plaintiff lacked standing to sue in the absence of the other joint owner.

The court likewise affirmed the district court's finding that there was insufficient evidence of direct infringement to support the jury's determination of inducing infringement of the second patent.  There was no evidence that the accused method had actually been practiced by the accused product, and the plaintiff's expert testimony was to speculative to support a conclusion that the accused product necessarily infringed.

More detail of Lucent Techs., Inc. v. Gateway, Inc. after the jump.

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In a recent decision, the Federal Circuit held that a district court erred in its construction of several claim terms in a patent, and as a result, vacated the district court's summary judgment of noninfringement and no invalidity.  The court affirmed the district court's decisions regarding several other issues, including laches, inequitable conduct, and inventorship.

One of the claim terms at issue was in the preamble of the claims.  The court noted that "if [the preamble term] is reasonably susceptible to being construed to be merely duplicative of the limitations in the body of the claim (and was not clearly added to overcome a rejection), we do not construe it to be a separate limitation."

More detail of Symantec Corp. v. Computer Assocs. Int'l, Inc. after the jump.

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Today, the Federal Circuit held that hypothetical instances of direct infringement are not enough to establish that a party induced direct infringement of a patent.  Instead, there must be evidence of instances of actual infringement in order to establish infringement was induced if there are both infringing and non-infringing ways to operate a device.  Because there was no such evidence in this case, the district court's finding of infringement was reversed, and the district court's award of damages and finding that the case was exceptional (doubling the damages and awarding attorney fees), were vacated.

More detail of Acco Brands, Inc. v. ABA Locks Mfr. Co. after the jump.     

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