In a case of first impression, the Federal Circuit panel by a 2-1 majority held that a defendant's "good-faith belief of invalidity may negate the requisite intent for induced infringement."
Evidence of a defendant's good-faith belief that patent claims were invalid may negate the specific intent required to prove induced infringement under 35 U.S.C. § 271(b). In Commil USA, LLC v. Cisco Systems, Inc., a U.S. Court of Appeals for the Federal Circuit panel held that a good-faith belief that the asserted patent claims were invalid is relevant to the intent required to prove induced infringement. Appeal No. 2012-1042 (June 25, 2013). While prior cases established that a good-faith belief of noninfringement was relevant to show a lack of intent to induce infringement, the Federal Circuit has now held that the same is true of a good-faith belief of invalidity.
In a case of first impression, the Federal Circuit panel by a 2-1 majority held that a defendant's "good-faith belief of invalidity may negate the requisite intent for induced infringement." Slip opinion at 9. Because an invalid patent cannot be infringed, a good-faith belief that asserted patent claims are invalid, just like a good-faith belief of noninfringement, is relevant evidence to show that a defendant does not have the necessary intent to induce others to infringe. Evidence of a good-faith belief of invalidity was relevant to induced infringement even though the Federal Circuit affirmed the jury's verdict that the patent claims were not invalid.
All three members of the panel agreed, following the Supreme Court's decision in Global-Tech Appliances, Inc. v. SEB S.A., that induced infringement requires actual knowledge or willful blindness that the acts being induced constitute patent infringement. Slip opinion at 6–8. The Federal Circuit found error in the trial court's instruction that the jury could find inducement if the defendant "knew or should have known that its actions would induce actual infringement." Slip opinion at 6. The "knew or should have known" standard for inducement had been employed and approved by the Federal Circuit dating back more than 20 years. See Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 553 (Fed. Cir. 1990). But in 2011, the Supreme Court held that knowledge or willful blindness was required, and explained that a negligent defendant who merely "should have known" that the acts it was encouraging infringed on a patent is not liable for induced infringement. Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2070–71 (2011). In Commil, the Federal Circuit acknowledged that its earlier line of cases applying the "knew or should have known" standard for induced infringement was no longer good law. Slip opinion at 7.
In Commil, the Federal Circuit thus acknowledged that Global-Tech raised the standard for proving induced infringement. The Federal Circuit panel also held that defendants can introduce evidence of a good-faith belief that the asserted patent claims were invalid to show they lacked an intent to induce infringing acts. The majority made clear, however, that evidence of a good-faith belief of invalidity does not preclude a finding of induced infringement. Slip opinion at 11.
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