Supreme Court Holds that Induced Patent Infringement Requires Knowledge that the Induced Acts Constitute Patent Infringement

May 31, 2011

This morning the Supreme Court issued a decision affirming, 8-1, the Federal Circuit’s 2010 judgment in Global-Tech Appliances, Inc. v. SEB S.A., 594 F.3d 1364 (Fed. Cir. 2010). Justice Alito delivered the Court’s opinion, and Justice Kennedy filed a dissenting opinion. The case concerns the doctrine of induced infringement and the Court was posed with the following question:

Whether the legal standard for the state of mind element of a claim for actively inducing infringement under 35 U.S.C. § 271(b) is "deliberate indifference of a known risk" that an infringement may occur, as the Court of Appeals for the Federal Circuit held, or "purposeful, culpable expression and conduct" to encourage an infringement, as this Court taught in MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 937, 125 S. Ct. 2764, 2780, 162 L. Ed. 2d 781, 801 (2005)?

Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 458 (2010).

The Court held "that induced infringement under §271(b) requires knowledge that the induced acts constitute patent infringement," and stated that "deliberate indifference to a known risk that a patent exists is not the appropriate standard under §271(b);" but, that "the evidence in this case was plainly sufficient to support a finding of [the accused infringer’s] knowledge under the doctrine of willful blindness." Slip Op. at 10. The Court recounted the doctrine of willful blindness in the context of criminal statutes and its wide acceptance in that context by nearly every Court of Appeals and, based on that, saw "no reason why the doctrine should not apply in civil lawsuits for induced patent infringement under 35 U.S.C. § 271(b)." Id. at 12 (footnote omitted). The Court acknowledged "two basic requirements: (1) the defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must take deliberate actions to avoid learning of that fact." Id. at 13 (footnote omitted). The Court continued:

Under this formulation, a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts. By contrast, a reckless defendant is one who merely knows of a substantial and unjustified risk of such wrongdoing, and a negligent defendant is one who should have known of a similar risk but, in fact, did not.

Id. at 14 (internal citations omitted).

The Court concluded that the test the Federal Circuit applied departs from this standard because it permits a finding of knowledge in instances where there is "merely a 'known risk' that the induced acts are infringing," and because it does not require active efforts by an inducer to avoid knowing about the infringing nature of the acts. Id. Despite that departure in this case, the Court states the jury could have easily found that the accused infringer here "willfully blinded itself to the infringing nature of the sales it encouraged [its customer] to make." Id. (footnote omitted). Accordingly, the Court affirmed the Federal Circuit’s judgment, 8-1.

In dissent, Justice Kennedy agreed with the majority that to induce infringement a defendant must know the induced acts constitute patent infringement, but stated that the Court’s holding that willful blindness will suffice is a "mistaken step" because he is unconvinced that "willfully blind defendants 'are just as culpable as those who have actual knowledge,'" and because the Court "has never before held that willful blindness can substitute for a statutory requirement of knowledge." Minimally, it appears that Justice Kennedy would vacate the Federal Circuit’s judgment and remand for its further consideration of the facts in view of the standard set forth in the majority’s opinion.