Commil USA v. Cisco Systems

By: Andreas Baltatzis  |   June 2, 2015

In an entirely unsurprising decision, the Supreme Court once again overruled the Court of Appeals for the Federal Circuit (CAFC). Commil v. Cisco considers the question of “whether knowledge of, or belief in, a patent’s validity is required for induced infringement under [35 U.S.C.] § 217(b).” 575 U.S., at ___ , No. 13-896, slip op. at 6 (2015). In a 6-2 decision, the Supreme Court held that “[b]ecause infringement and validity are separate issues under the [Patent] Act, belief regarding validity cannot negate the scienter required under § 271(b).’” Id. at 9.

This decision culminated from a series of cases regarding the knowledge requirement for induced infringement under § 271(b). In DSU Medical, the CAFC held that “a patent holder must prove that once the defendants knew of the patent, they ‘actively and knowingly aid[ed] and abett[ed] another's direct infringement.’” 471 F.3d 1293, 1305 (2006). There, the foreign manufacturer of a product found to directly infringe a patent in the United States successfully defended against induced infringement by presenting noninfringement opinions indicating the manufacturer did not believe its products infringed the patent. Id. at 1307. The issue of actual knowledge of the patent itself was addressed by the Supreme Court in Global-Tech v. SEB, stating that willful blindness by the accused induced infringer is enough to show knowledge of the patent. 131 S.Ct. 2060, 2072 (2011). In Commil, the CAFC applied Global-Techto overturn a jury finding of infringement based on a “known or should have known” standard, and then proceeded to expand the holding of DSU Medical. Commil USA, LLC. V. Cisco Systems, Inc., 720 F.3d 1361, 1366–1367 (Fed. Cir. 2013). Following the rationale of DSU Medical, the CAFC held that “a good-faith belief of invalidity is evidence that may negate the specific intent to encourage another’s infringement.” Id. at 1368. After the request for en banc consideration was denied by the CAFC, the case was taken up by the Supreme Court.

As an initial matter, the Supreme Court reaffirmed the holding of Global-Tech, “that liability for induced infringement can only attach if the defendant knew of the patent and knew as well that ‘the induced acts constitute patent infringement.’” 575 U.S., at ___ , No. 13-896, slip op. at 6 (2015). Next, the Court held that a good-faith belief of invalidity cannot negate the knowledge of infringement required by Global-Tech because infringement and validity are separate matters under patent law. Id. at 9. First, the Court found that infringement and validity are listed in distinct sections of the Patent Act, and are expressly listed as separate defenses under 35 U.S.C. §§ 282(b)(1) and (2). Id. at 10. Second, the majority argued that allowing a good-faith belief of invalidity to negate induced infringement would lessen the statutory presumption of validity to a “drastic degree.” Id. When addressing the possibility of infringing an invalid patent, the majority stated that “invalidity is not a defense to infringement, it is a defense to liability.” Id. at 11. The Court then listed practical reasons not to create a defense based on a good-faith belief in invalidity, including: 1) the ability of the accused inducer to obtain a ruling on invalidity by filing a DJ, IPR or Ex Parte Reexamination; 2) increasing litigation burdens by incentivizing myriad theories of invalidity in order to meet a standard of belief in invalidity; and 3) confusing the jury with arguments of belief regarding invalidity as opposed to actual invalidity. Id. at 12. The Court then drew parallels to other aspects of law including: 1) tortious interference with a contract (belief in invalidity is irrelevant); 2) trespass (committed despite belief in legal right to enter); and 3) criminal law (mistake of law is no defense). Id. at 13. Finally, in an aside that indicates the Supreme Court’s current sensitivity to the public debate on patent law, the Court addressed the effect of the decision on patent trolls (where none was involved), stating that patent trolls are best addressed by sanctions under Rule 11 for frivolous litigation or fee shifting under 35 U.S.C. § 285 and the Court’s decision inOctane Fitness. Id. at 14

The dissent by Justice Scalia sharply disagreed with the decision stating that “[t]o talk of infringing an invalid patent is to talk nonsense.” Id. dissent at 1. “Because only valid patents can be infringed, anyone with a good-faith belief in a patent’s invalidity necessarily believes the patent cannot be infringed. And it is impossible for anyone who believes that a patent cannot be infringed to induce actions that he knows will infringe it.” Id. at 1–2 (emphasis in original).