Commil USA, LLC v. Cisco Systems, Inc.

Section 271(b) of the Patent Act requires that “whoever actively induces infringement of a patent shall be liable as an infringer.” In Global-Tech Appliances, Inc. v. SEB S.A. (“Global-Tech”), the Supreme Court established that “induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement.” In this case, the Court will decide whether a defendant’s good-faith belief that a patent is invalid is a defense to induced patent infringement under § 271(b). Commil argues that good-faith belief defense of a patent’s invalidity is irrelevant if § 271(b)’s intent requirement is satisfied. On the other hand, Cisco argues that a good-faith belief defense is pertinent to establishing culpability and thus, relevant in determining induced infringement under § 271(b).

DOES INDUCEMENT LIABILITY DEPEND ON KNOWLEDGE OF DIRECT INFRINGEMENT?

The Intent Requirement Under § 271(b)

Commil argues that § 271(b)’s intent requirement is satisfied under two conditions: the alleged inducer (1) had knowledge of the patent in question, and (2) “intended to cause third-party acts that directly infringe that patent.” In support, Commil points to Aro Manufacturing Co. v. Convertible Top Replacement Co. (“Aro II”) which established that proof of a patent owner’s opinion that a defendant engaged in contributory infringement—without consideration of a defendant’s subjective belief—satisfied the intent requirement. Commil contends that the reasoning for 271(c) contributory infringement applies to 271(b) induced infringement. Commil additionally asserts that Aro II, Global-Tech, and other cases have linked the intent requirement for indirect infringement to knowledge of the patent, as opposed to a defendant’s subjective belief regarding the strength of a liability defense.

Cisco, on the other hand, denies that Commil’s two conditions are sufficient to satisfy the intent requirement under § 271(b). Rather, Cisco contends that a third condition must be met: a defendant must have knowledge of direct infringement. Cisco argues that Global-Tech held unequivocally that “induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement.” Cisco further asserts that Aro II, contrary to Commil’s characterization, required that a defendant know of the patent and the infringement. Hence, Cisco state that in addition to a defendant’s required knowledge of the patent or the patent holder’s allegation of infringement, the § 271(b)’s intent requirement mandates that a defendant possess knowledge of actual infringement.

The Statutory Text and Purpose of § 271(b)

Commil argues that a good-faith belief defense conflicts with § 271(b)’s text and purpose and that it is overly burdensome to require a patent holder to show that an inducer did not possess a subjective good-faith belief defense. According to Commil, Congress enacted §§ 271(b) and (c) with the purpose of codifying contributory infringement in the patent sphere, as well as providing a remedy to patentees, so that patent holders could efficiently protect their rights. Commil asserts that a good-faith defense would jeopardize Congress’s purposes by undermining this statutory remedy. Commil further contends that a good-faith belief defense would “inject uncertainty into the merits of inducement claims” and discourage the pursuit of lawsuits against manufacturers, thereby weakening the rights secured by § 271(b). Lastly, Commil argues that a “good-faith belief” defense runs counter to the purpose of § 271(b) because it both fails to promote the policy behind § 271(b)’s scienter requirement (actual knowledge or willful blindness) and does not offer any “countervailing policy benefits.”

Cisco argues that Global-Tech’s interpretation of § 271(b)—inducement liability requires a defendant’s knowledge of infringement—is consistent with the statutory text and purpose. Cisco argues that a “natural” reading of the statute recognizes t two conduct elements (direct infringement by a third party and defendant’s inducement) in addition to a scienter requirement. Cisco further argues that the knowledge-of-infringement requirement aligns with § 271(b)’s purpose and Congress’s objective to establish liability for “conduct that was not only instrumental to infringement, but culpably so.”

IS A DEFENDANT’S “GOOD-FAITH BELIEF” IN A PATENT’S INVALIDITY RELEVANT TO § 271(b)?

Commil argues that regardless of the relevancy of a defendant’s a good-faith belief in patent non-infringement, a defendant’s good-faith belief in patent invalidity is irrelevant. Commil asserts that patent invalidity and infringement are f separate legal issues. Commil argues that the Patent Act’s separate codification of infringement and validity—§§ 271 and 282, respectively—sheds light on Congress’s intention to distinguish the concepts of infringement and validity. Furthermore, Commil contends that case law precedent acknowledges infringement and validity as separate concepts. Accordingly, Commil maintains that infringement is contingent on whether a patent’s claims “cover[] the alleged infringer’s product or process.” However, Commil asserts that patent validity encompasses a multitude of “legal tests,” each tailored to various parts of the Patent Act. Hence under separate analyses, Commil contends, one might infringe a patent’s claims, but those claims might be invalid. Therefore, Commil contends that a defendant’s good-faith belief of patent invalidity has no impact on the required subjective intent for inducement under § 271(b). Moreover, Commil argues that allowing a defendant’s good-faith belief of invalidity to discharge liability for infringement would jeopardize § 282, a statutory presumption that patent claims—independent, dependent, or multiple-dependent form—are valid.

Cisco counters that only a valid patent can be infringed. Accordingly, Cisco maintains that a good-faith belief of a patent’s invalidity is relevant to the intent requirement under § 271(b). Cisco argues that it is immaterial that infringement and validity are codified in separate subsections. Rather, Cisco maintains that a scienter determination does not consider whether infringement and validity are separate legal issues. Cisco further contends that a good-faith belief of patent invalidity is relevant as evidenced by the Court’s decision in Grokster, which states that inducement requires “purposeful, culpable expression and conduct.” Cisco further cites to Global-Tech to argue that infringement by inducement requires a defendant’s knowledge of unlawful conduct and, because patent rights are nonexistent if a patent is invalid, this requires knowledge of a patent’s validity. Cisco argues that the distinct codification of infringement and validity does not demonstrate that infringement and validity are separate spheres, but merely recognizes that a patent holder’s “can lose” if the alleged infringer “did not practice the patent’s claims” or the patent is invalid. Furthermore, Cisco contends that the purpose of the presumption of patent validity is to place the burden of proof on the alleged infringer to prove patent invalidity and to heighten the standard of proof the alleged infringer must satisfy to prevail. Finally, Cisco maintains that Congress’s enactment of § 298 of the Leahy-Smith America Invents Act demonstrates that validity is relevant to the scienter requirement under §271(b) because § 298 is premised on the assumption that opinions of counsel are “relevant evidence of . . . intent to induce.”