Virginia IP Law : Virginia Intellectual Property Lawyer & Attorney : Troutman Sanders Law Firm : Technology & Patent Litigation

For the first time, an Eastern District of Virginia judge has addressed claims of indirect patent infringement claims under Twombly and Iqbal, and it appears that a plaintiff needs only to recite the elements of induced or contributory infringement to defeat a motion to dismiss. The Nielsen Co. v. comScore, Inc., Case No. 2:11CV168 (E.D.Va. Aug. 19, 2011) (Davis, J.).

• Email This
• Print
• Comments
• Trackbacks

Among his eleven summary judgment rulings in MeadWestvaco’s (“MWV”) patent infringement suit against Rexam and Valois, Judge Lee dismissed claims of inequitable conduct  under Therasense but allowed claims of inducement of infringement to survive under the Supreme Court’s new standard of “willful blindness.” 

Judge Lee’s rulings heavily favored MWV, which prevailed on its motions for summary judgment on anticipation, obviousness and inequitable conduct and defeated Rexam’s and Valois’ motions on indefiniteness, infringement and willfulness. MWV lost only on the defendants’ motion for summary judgment on infringement under the doctrine of equivalents.

Judge Lee’s opinion can be found here and at MeadWestvaco Corp. v. Rexam PLC, Case No. 1:10CV511, 2011 U.S. Dist. LEXIS 92947 (E.D.Va. Aug. 18, 2011). Our earlier post on this case can be found here, and a summary of Judge Lee’s rulings follows:

• Email This
• Print
• Comments
• Trackbacks

In a near unanimous, 8 to 1, decision  today, the Supreme Court held that induced infringement under 35 U.S.C. § 271(b) requires knowledge that the induced acts constitute patent infringement but such knowledge need not rise to the level of actual knowledge. Global-Tech Appliances, Inc. v. SEB S.A., No. 10-6 (U.S. Sup. Ct. May 31, 2011) (found here).

Instead of an actual knowledge requirement, the Court adopted the criminal doctrine of “willful blindness” and held that a defendant is liable for induced infringement if it (1) subjectively believed that there is a high probability that the acts it induces infringe a patent; and (2) took deliberate actions to avoid learning of that infringement. Willful blindness, the Court held, has a “limited scope that surpasses recklessness and negligence” and that a willfully blind defendant “is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and can almost be said to have actually known the critical facts.”

Our earlier posts on the Global-Tech case, which detail the facts of the case and the Federal Circuit’s decision can be found here, here and here. In short, the Federal Circuit held that inducement liability requires only a “deliberate indifference” to a known risk that a patent exists. The Supreme Court rejected this holding as flawed because it permits a finding of knowledge where there is merely a “known risk” that the induced acts are infringing and because the “deliberate indifference” standard did “not require active efforts by an inducer to avoid knowing about the infringing nature of the activities.”

While the Supreme Court overturned the Federal Circuit’s deliberate indifference standard, it affirmed the result on the grounds that the evidence was more than sufficient for a jury to find that the accused infringer met the willful blindness standard.Specifically, the Court pointed out that  the infringer, Pentalpha:

• Copied the patentee’s “cool-touch” deep fryer;
• Believed that the patentee’s product embodied advanced technology, as shown by its decision to copy all but the cosmetic features of the deep fryer;
• Copied an overseas model of the patented deep fryer with the awareness that it would not bear U.S. patent markings;
• Failed to inform the attorney from whom it sought a right-to-use opinion that it had copied the deep fryer. The Court stated that it “cannot fathom” what motive Pentalpha might have had for withholding this information from its attorney.

Despite the result in Global-Tech, most plaintiffs asserting an inducement claim will still have to meet the higher standard of proving that a defendant had actual knowledge that the acts it induced constitute patent infringement. Except in extreme cases like Global-Tech -- where an accused infringer copies a competitor’s product and takes active steps to avoid finding out if the product is patented -- the willful blindness standard will be difficult to meet. As the Supreme Court pointed out, willful blindness requires more than reckless or negligent conduct, and evidence that an accused infringer subjectively believed that there was a high probability that it was inducing patent infringement will be difficult to obtain. If Pentalpha itself, for example, had just told its right-to-use attorney that it had copied a competitor’s product or even if it had copied a U.S. model of the deep fryer that had no patent markings, it may have escaped liability. Thus, it is likely that cases of inducement liability in the absence of proof of actual knowledge of the infringing nature of the induced acts will be few and far between.

One last note -- the one dissenting Justice was Justice Kennedy, who is almost always in the majority because of his status as the swing-vote in most cases.   Global-Tech is the rare case where he not only wrote a dissent, but he couldn't get any other justice to join him.

• Email This
• Print
• Comments
• Trackbacks

The Supreme Court has scheduled argument in the case of Global-Tech Appliances Inc. v. SEB S.A. for February 23, and, coincidentally, we published an article last week in BNA’s Patent, Trademark and Copyright Journal (found here), analyzing the issues the Court will address and predicting that the Court will overturn the Federal Circuit’s holding that inducement of patent infringement requires only “deliberate indifference” to the existence of a patent.

For background on the Federal Circuit’s decision and the Supreme Court’s decision to grant cert see our earlier blog posts here and here. A few of the highlights of our BNA article are:

• Global-Tech raises an issue of justiciability which could allow the Supreme Court to avoid the merits and simply remand the case for a trial on damages for direct infringement.
   
• The Court is likely to approach Global-Tech as a straightforward case of statutory interpretation, much as it did in KSR and Bilski.  Thus, the Court will strictly construe the statutory language and give little weight to Federal Circuit authority that is not firmly grounded in the statute or Supreme Court precedent.
   
• Because the Federal Circuit did not derive its “deliberate indifference” standard from the language of 35 U.S.C. § 271(b) or Supreme Court precedent, the Federal Circuit’s standard is probably doomed.
   
• Even if it reverses the Federal Circuit, the Court is not likely to simply adopt the standard of “purposeful, culpable expression and conduct” proposed in the Question Presented.
   
• The Supreme Court is also not likely to adopt a standard of intent that is lower than set forth in the Federal Circuit’s earlier en banc decision in DSU Medical Corp. v. JMS Co., 471 F.3d 1293 (Fed. Cir. 2006) (en banc).
   
• The factors that support the conclusion that the Court will require knowledge of a patent for inducement liability also support the conclusion that such knowledge must be actual knowledge.
   
• An actual knowledge standard will reduce damage awards but it will not allow indirect infringers to escape liability for injunctive relief or damages once notice is given.
   
• An actual knowledge standard will make marking under 35 U.S.C. § 287(a) more important and will raise numerous questions about the nature and quality of evidence sufficient to show actual knowledge for later cases to decide.

For all the details, click here for the full article.

• Email This
• Print
• Comments
• Trackbacks

As we posted here, the Federal Circuit held in February that an accused infringer need not have actual knowledge of a patent to be liable for inducement of infringement. SEB S.A. v. Montgomery Ward & Co., Inc., 594 F.3d 1360 (Fed. Cir. 2010). That decision conflicted with the Federal Circuit’s en banc holding a little over three years earlier in DSU Medical Corp. v. JMS Co., Ltd., 471 F.3d 1293 (Fed. Cir. 2006), that “[t]he requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent.” The SEB panel danced around the DSU decision by stating that DSU did not set out the “metes and bounds” of the knowledge-of-the-patent requirement.

This morning, the Supreme Court granted a petition for certiorari filed by two of the defendants in SEB to decide “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 or instead ‘purposeful, culpable expression and conduct’ to encourage an infringement.” Global-Tech Appliances, Inc. v. SEB S.A., cert. granted, Docket No. 10-6 (U.S. Oct. 12, 2010).

The cert. petition can be found here, the opposition brief can be found here, and an amicus brief in support of granting cert. filed by 26 Law, Economics and Business Professors can be found here.

• Email This
• Print
• Comments
• Trackbacks

In a February 5 decision, the Federal Circuit clarified that an accused infringer need not have actual knowledge of a patent to be liable for inducement of infringement. SEB S.A. v. Montgomery Ward & Co., Inc., 2010 U.S. App. LEXIS 2454 (Fed. Cir. Feb. 5, 2010).

A little over three years earlier, an en banc panel of the Court held in DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1304 (Fed. Cir. 2006) that “[t]he requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent.”

The DSU decision would appear to require that an accused infringer have actual knowledge of a patent as a basis for inducement liability. The SEB panel held, though, that DSU did not set out the “metes and bounds” of the knowledge-of-the-patent requirement. Since the record showed that the accused infringer had actual knowledge of the patent in suit, the Court noted, the DSU Court never addressed the scope of knowledge required to prove intent.

The “knowledge” requirement, SEB holds, is met not only by actual knowledge but also by “deliberate indifference” to the existence of a patent. The basis for the Court’s conclusion, though, is unclear. The Court simply notes that inducement requires the specific intent to encourage another’s infringement, and that in other contexts, specific intent includes “deliberate indifference.” This reasoning assumes that the specific intent and knowledge of the patent are not separate elements of proof of inducement. Rather, the Court conflates knowledge of the patent within the requirement of specific intent and concludes that specific intent may be proven not only through actual knowledge but also through deliberate indifference.

The Court also clarified that “deliberate indifference” is not synonymous with a constructive knowledge. Deliberate indifference, unlike constructive knowledge, may require a subjective determination that a defendant knew of and disregarded a risk. Thus, “deliberate indifference” appears to be an intermediate standard, somewhere between constructive and actual knowledge. In fact, the Court held that deliberate indifference “is not different from actual knowledge, but is a form of actual knowledge.”

In SEB, there was no direct evidence of actual knowledge of the patent, but there was adequate evidence that the defendant deliberately disregarded a known risk that the plaintiff had patented its product based on the following factors:

• the defendant purchased the plaintiff’s product in Hong Kong and copied it but did not tell the counsel it hired to conduct a right-to-use study that it had done so, which was “highly suggestive” of deliberate indifference. 
• the defendant’s president was well-versed in the U.S. patent system and understood the plaintiff to be cognizant of patent rights. 
• the defendant produced no exculpatory evidence that it believed there were no patents covering the accused product.

The Court also left the door open to other ways of proving knowledge of a patent. For example, the Court suggested that constructive knowledge of a patent combined with “persuasive evidence of disregard for clear patent markings” may be sufficient.
 

• Email This
• Print
• Comments
• Trackbacks