Supreme Court Rejects Belief of Invalidity Defense for Inducement

A recent Supreme Court decision has held that an accused infringer’s good-faith belief that a patent is invalid is not a defense to inducement of infringement.

In Commil USA, LLC v. Cisco Systems, Inc., Commil sued Cisco alleging infringement of its patent relating to a method of implementing short-range wireless networks. Commil alleged that Cisco had infringed Commil’s patent by making and using networking equipment and that Cisco induced others to infringe the patent by selling the infringement equipment for them to use.

At trial, Cisco argued that it should not be liable for inducing its customers’ infringement because it believed in good faith that Commil’s patents were invalid. However, the district court disagreed with Cisco’s argument. Subsequently, the Federal Circuit reversed, ruling that the “evidence of an accused inducer’s good faith belief of invalidity may negate the requisite intent for induced infringement.”

The Supreme Court, in a 6-2 decision by Justice Kennedy, reversed the Federal Circuit decision and held that a good-faith belief in patent invalidity is not a defense to induced infringement: “[b]elief regarding validity cannot negate the scienter required for [induced infringement].” The Court rejected Cisco’s argument that, by analogy, there should be no induced liability when the defendant believes in good faith that the patent was invalid because “infringement and validity are separate issues under the Act [and] belief regarding validity cannot negate the scienter required under §271(b)” and “[w]hen infringement is the issue, the validity of the patent is not the question to be confronted.” The Court also noted that the good-faith belief of invalidity defense would “undermine” the presumption of validity under Section 282(a).

The Court then noted several “practical reasons” to reject a defense based on a good-faith belief of invalidity because “accused inducers who believe a patent is invalid have various proper ways to obtain a ruling to that effect,” such as, inter parties review, ex parte reexamination, declaratory judgment action asking a federal court to declare the patent invalid and affirmative defense of invalidity. Additionally, in cases of frivolous litigations, courts could award attorney fees and imposes sanctions to “militate in favor of maintaining the separation expressed through the Patent Act between infringement and validity.”

Samuel H. Megerditchian is Counsel in the Gibbons Intellectual Property Department.
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