Copying Products is Risky Business: Inducing Patent Infringement


Freedom-to-operate opinions are often a wise business investment when taking a product to market. A thorough freedom-to-operate analysis includes not only the client’s activities that might directly result in infringement, but also the possibility that a client may be liable when others directly infringe a patent. Under 35 U.S.C. § 271(b), “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” Induced infringement commonly involves an entity selling a product, whereby end-use by a customer amounts to patent infringement. It was long held that in order to actively induce infringement of a patent, however, the inducer needed actual knowledge of the existence of that patent. This is no longer entirely true, and it should be noted that inducing infringement can lead to damage awards similar to those awarded for direct infringement.

On February 5, 2010, the U.S. Court of Appeals for the Federal Circuit affirmed a district court decision and further held that “deliberate indifference” to potential patent rights satisfies the knowledge requirement for induced infringement. SEB S.A. v. Montgomery Ward & Co., Nos. 2009-1099, 2009-1108, 2009-1119 (Fed. Cir. Feb. 5, 2010). At issue in SEB was whether actual knowledge of existing patent rights was required before infringement could be induced. The court’s interpretation of § 271(b) was that deliberate indifference to a known risk was not different from actual knowledge, but was instead a form of actual knowledge. Id. at 12. Therefore, a deliberate disregard of a known risk that patent rights exist can satisfy the “actual knowledge” requirement of § 271(b).

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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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