In an important decision in Commil USA, LLC v. Cisco Systems, Inc., the U. S. Supreme Court held yesterday that a good-faith belief in the invalidity of a patent cannot negate the intent required for induced infringement. The 6-2 decision (with Justice Breyer recused) clarifies the Court’s earlier holding in Global-Tech Appliances, Inc. v. SEB S.A. that “induced infringement under [35 U.S.C.] § 271(b) requires knowledge that the induced acts constitute patent infringement.”

The issue arose in the context of Commil’s patent for a method of implementing short-range wireless networks. Cisco was accused of directly infringing the patent, and of inducing infringement by selling equipment to others for use in an infringing manner. The district court refused to allow Cisco to present evidence at trial of its belief in the invalidity of Commil’s patent, and the federal circuit reversed, holding that Cisco’s good-faith belief of invalidity could negate the intent for induced infringement because it is “axiomatic that one cannot infringe an invalid patent.” The Supreme Court granted certiorari to decide whether knowledge of, or belief in, a patent’s validity is required for induced infringement.

As an initial matter, the Court reaffirmed its holding in Global-Tech that inducement liability requires that the defendant “knew of the patent and knew as well that the induced acts constitute patent infringement.” Both Commil and the United States as amicus curiae had argued that Global-Tech resolved only the question of whether a defendant must know of the existence of a patent in order to be held liable for inducement. The Supreme Court disagreed, calling this argument contrary to the “clear language of Global-Tech.”

Moving to the question presented, the Court interpreted the Patent Act as only requiring that the defendant intend to “bring about” infringement for inducement. And according to the Court, because “infringement and validity are separate issues under the Act,” reading the Act’s intent requirement for infringement as also applying to validity would improperly “conflate” the two issues. As the Court explained, “invalidity is not a defense to infringement, it is a defense to liability.”

The Court also held that allowing a belief in invalidity as a defense to induced infringement would undermine the presumption of validity that attaches to a granted patent. If a reasonable (though mistaken) belief in invalidity were enough to avoid liability, a defendant accused of inducing infringement could “circumvent” the clear-and-convincing evidence standard that would normally apply to an invalidity defense.

Finally, the Court observed that one accused of inducing infringement has several options for invalidating a patent, from seeking ex parte reexamination (which Cisco had done), to filing a declaratory judgment action, or challenging the patent in inter partes review proceedings. And the Court stressed that an invalidity ruling is still a complete defense to induced infringement, even if a reasonable belief in invalidity is not.

Justice Scalia, joined by Justice Thomas, dissented, disagreeing with each of the majority’s points. The dissent would have concluded that, because an invalid patent cannot be infringed, an accused inducer who reasonably believed the patent to be invalid could not know that “the induced acts constitute patent infringement,” as Global-Tech requires. Although maintaining that the practical effects of the decision should not play a role in construing the Patent Act, the dissent cautioned that the Court’s decision would potentially increase the ability of “patent trolls” to extract favorable settlements.

The decision is a mixed bag for litigants. Although the Court eliminated the substantial defense of a reasonable belief in invalidity, it also reaffirmed its holding that induced infringement requires knowledge that the induced acts infringe the patent. Companies who were relying on a reasonable belief of invalidity as a defense to induced infringement may have to reevaluate their strategy in light of the decision. Furthermore, as the Court suggested, those companies may now wish to explore the various options available for challenging the validity of patents asserted against them.

Ballard Spahr’s Intellectual Property Department comprises trial lawyers and counselors who are on the cutting edge of patent, trademark, unfair competition, copyright, trade secret, Internet, licensing, and trade dress matters. We bring and defend IP cases in courts throughout the country, and before the PTAB and TTAB. We have a deep bench of lawyers with advanced technical degrees who identify and protect our clients' global intellectual property interests, and offer strategic prosecution and due diligence guidance relating to strategic product development, mergers and acquisitions and licensing, and portfolio restructuring.

For more information, please contact Marc S. Segal at 215.864.8843 or segalm@ballardspahr.com or the Ballard Spahr attorney with whom you work.


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