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Belief in Patent's Validity Not a Defense to Inducing Infringement

By Mark Wilson, Esq. on May 26, 2015 3:54 PM

The end-of-term madness continues as the Supreme Court today issued four new opinions, dealing with bankruptcy, bankruptcy, whistleblowing, and patents. It's this last case that concerns us today.

Commil USA has a patent on a particular method of extending the range of wireless networks. It sued Cisco Systems, claiming infringement of its patent in Cisco's network equipment. Commil also claimed that Cisco induced others to infringe its patent by selling the network equipment containing the allegedly infringing technology.

Inducement Doesn't Require Knowledge

Cisco's defense? It claimed that it had a good faith belief that Commil's patent was invalid. The district court refused to let Cisco use this defense, however, finding that whether Cisco honestly and truly believed Commil's patent was invalid wasn't a defense to the claim that Cisco induced other to infringe on the patent.

By a split 6-2 margin (Justice Breyer, likely due to his investments in one of the companies, didn't participate here), the Supreme Court held that a defendant's belief in the validity of a patent had no bearing on the separate question of the defendant's inducing others to infringe on the patent.

Direct infringement is essentially a strict liability offense: It doesn't matter whether the defendant knew there was a patent. Inducement, on the other hand, requires a defendant to know of the patent and to be aware that "the induced acts constitute patent infringement."

Quite simply, said Justice Kennedy, writing for the majority, "The question the Court confronts today concerns whether a defendant's belief regarding patent validity is a defense to a claim of induced infringement. It is not. The scienter element for induced infringement concerns infringement; that is a different issue than validity." Whether a patent is valid simply has no effect on whether a defendant engaged in inducing acts.

You might be wondering, "Does that mean you can induce infringement to an invalid patent?" That's still a "no"; the Court's decision today largely concerned burdens of persuasion; "if at the end of the day, an act that would have been an infringement or an inducement to infringe pertains to a patent that is shown to be invalid, there is no patent to be infringed," said Kennedy. But the validity of the patent isn't to be litigated in a discussion of induced infringement.

In closing, Kennedy let us all know that the Court isn't blind; it's well aware that "[s]ome companies may use patents as a sword to go after defendants for money, even when their claims are frivolous," but neither party raised the issue of frivolity here, and the Court wasn't going to go down that road if it didn't have to.

Dissent: Don't Feed the Trolls

Justice Scalia, joined by Chief Justice Roberts, dissented for a very simple reason. In Scalia's view, which makes a lot of sense, "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 Scalia squarely addresses the concern that Kennedy raises, but dismisses, by observing, "[I]t is by no means clear that the Court's holding, which increases the in terrorem power of patent trolls, is preferable."

The power of a patent "troll" is extinguished only when its patent is held to be invalid. Scalia is correct call their power "in terrorem," (a slightly moldy bit of Latin meaning a legal threat in case you don't remember much from your 1L year). Now, a patent troll can sue for induced infringement even if the defendant has a good faith belief that the patent is completely bogus. What Scalia realizes (that Kennedy may not) is that patent trolls don't care about seeing patent litigation through to the end. Indeed, they don't want patent cases to go to trial, where they run the risk of losing. They would much rather use the threat of a lawsuit to get what they want, and this opinion does make that easier.

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