Supreme Court Rules that Good-Faith Belief in Patent Invalidity is Not a Defense to Induced Infringement

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SUMMARY

The U.S. Supreme Court ruled that a defendant’s good-faith belief in the invalidity of a patent is not a defense to an induced infringement claim. The Court also affirmed its previous holdings that an induced infringement claim still requires a defendant’s knowledge of the infringing nature of the induced acts. The Court’s decision should strengthen a patent owner’s confidence in enforcing its patents, as the decision makes it more difficult for parties accused of inducing patent infringement to escape liability. Notwithstanding the Court’s decision that a good faith belief in a patent’s invalidity will not absolve a defendant from a finding of induced infringement, that same good faith belief may still shield a defendant from a finding of willful infringement and, hence, preclude an award of treble damages to the plaintiff. Accordingly, a party should seek an opinion of qualified counsel as to the validity of a patent of interest as the basis for a good-faith belief of the invalidity of the patent.

On May 26, 2015, the U.S. Supreme Court in Commil USA, LLC v. Cisco Systems, Inc. (slip op., No. 13-896) analyzed the scienter (knowledge) requirement for a claim of induced infringement.  Section 271(b) of the Patent Act establishes liability for “[w]hoever actively induces infringement of a patent.” Previously, the Court of Appeals for the Federal Circuit (CAFC) in Commil USA, LLC v. Cisco Systems, Inc., 720 F.3d 1361 (Fed. Cir. 2013) established that a good-faith belief in a patent’s invalidity could negate the scienter for induced infringement. Overruling the CAFC in a 6-2 decision, the Court held that a claim of induced infringement did not require knowledge or belief in a patent’s validity.

In analyzing the scienter requirements of § 271(b), the Court unanimously rejected Commil’s argument that an induced infringement claim requires only knowledge of the patent and does not require knowledge of the infringing nature of the induced acts. The Court confirmed that, consistent with its earlier decisions, liability under § 271(b) requires the defendant to have (1) knowledge of the patent, and (2) knowledge that the induced acts would infringe the patent.

The majority and dissent disagreed, however, on whether the scienter element for induced infringement requires belief of a patent’s validity. According to the dissent, because § 271(b) requires knowledge that the induced acts are infringing, belief regarding validity of the patent is relevant because “only valid patents can be infringed.” Thus, if a defendant believed that a patent was invalid, the defendant also necessarily believed that the patent could not be infringed, negating § 271(b)’s scienter element.

In contrast, the majority of the Court found that “belief as to invalidity cannot negate the scienter required for induced infringement.” According to the majority, infringement and validity are separate issues in the scienter element. Section 271(b)’s scienter requirement relates only to a defendant’s knowledge that the induced acts would infringe the patent claims, regardless of whether the patent is valid or whether the defendant believes the patent was valid.

The Court offered several reasons to support its holding. First, the Court pointed out that throughout the Patent Act, the issues of validity and infringement appear in separate parts. The Patent Act, for example, establishes noninfringement and invalidity as separate defenses to a claim of infringement.  The Court also explained that a defense of belief in invalidity of a patent to a § 271(b) claim would lessen the force of the presumption of a patent’s validity.  With the defense, a defendant could prevail if the defendant could prove a reasonable belief the patent was invalid, rather than the actual invalidity of the patent, which requires a higher standard of proof (clear and convincing evidence).

Finally, the Court discussed practical reasons for not establishing a defense of belief in patent invalidity. For example, the defense is not necessary or helpful given the availability of other mechanisms for challenging a patent’s validity and the difficulty for juries to separate a defendant’s belief regarding patent validity from the actual issue of patent validity. The majority further explained that its holding mirrored various common law claims in which belief in the validity of an instrument or mistaken beliefs regarding the law are not defenses to the claim. Also, although the holding may benefit “patent trolls,” the majority noted that the case at hand did not involve frivolous claims and that frivolous claims nonetheless could be dissuaded by district courts (e.g., via Fed. Rule Civ. Proc. 11).   

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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