Supreme Court Addresses Requirements for Induced Infringement

By: Thomas P. McNulty

In Commil USA, LLC v. CISCO Systems, Inc., the Supreme Court recently held that a defendant’s belief regarding patent invalidity is not a defense to an induced infringement claim. The decision overturned the Federal Circuit’s earlier decision in the same case that a defendant could submit evidence of a good-faith belief that the underlying patent was invalid in order to show it had not induced infringement. The Supreme Court decision has now foreclosed this avenue of defense. From the point of view of a patentee, the decision strengthens the value of a patent by removing a potential defense to an indirect infringement claim.

Induced infringement is a form of indirect infringement, where a party is liable not for performing the steps of a patented process itself but instead for inducing another to directly infringe the claimed process. 35 U.S.C. § 271(b). In contrast to direct infringement, liability for inducing infringement attaches only if the defendant knew of the patent and knew that the induced acts constitute patent infringement.Slip opinion at p. 7.

If a party believes that a patent is invalid, can it nevertheless have the requisite knowledge that it was causing another to infringe? The Supreme Court answered, yes. The majority opinion, authored by Justice Kennedy, reasoned that infringement and validity are two separate issues under the Patent Act, and therefore “belief regarding validity cannot negate the scienter required” for induced infringement. Slip opinion at p. 9. The Court noted that the issues of infringement and validity appear in separate parts of the Patent Act. Further, noninfringement and invalidity are listed as two separate defenses to infringement. To allow a belief of invalidity to negate knowledge of infringement would improperly conflate these two separate issues.

The Court asserted that its conclusion also followed from the presumed validity of an issued patent. Under the Patent Act, a patent is “presumed valid.” That presumption takes away any need for a plaintiff to prove his patent is valid in order to bring a claim. “But,” the Court opined, “if belief in invalidity were a defense to induced infringement, the force of that presumption would be lessened to a drastic degree.” Slip opinion at p. 10.

A dissenting opinion authored by Justice Scalia reasoned that “[b]ecause only valid patents can be infringed, anyone with a good-faith belief in a patent’s invalidity necessarily believes the patent cannot be infringed.” This view did not prevail.

While the decision in Commil forecloses good-faith belief of invalidity as a defense to inducement, good-faith belief of noninfringement does remain as a defense. Therefore, if a defendant can convince a court that it reasonably believed the acts it induced did not infringe an asserted patent claim, even if the court ultimately concludes that the underlying acts did infringe, then the defendant will not be found liable for inducement.

Likewise, if the patent does indeed prove to be invalid, then no liability for inducement attaches in that situation, either.

Should a business be confronted with a patent purporting to cover a process of interest, obtaining a well-reasoned opinion from counsel still remains a good option for evaluating associated risk. If the analysis can provide a strong basis for a non-infringement position, then that opinion can be asserted as a defense against inducement if necessary at a later time. Even though an invalidity opinion cannot serve that same defensive role, assessing the overall strength of the patent will be valuable in terms of related due diligence.