On May 26, the Supreme Court finally drew a line in the sand on indirect patent infringement defenses. Enter: COMMIL USA, LLC v. CISCO SYSTEMS, INC.
Previously, the Federal Circuit held that “evidence of an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement,” Commil USA LLC v. Cisco Systems Inc., No. 2012-1042, slip op. at 11 (Fed. Cir. June 25, 2013). The Supreme Court actually read the plain text of the Patent Act and reversed.
Direct infringement is still strict liability. Here, the Supreme Court held that a patent defendant’s so-called “Good Faith Belief of Invalidity” defense to infringement simply does not exist in reality or in law. (Slip Opp. pp. 5-14). Plainly, the Court held that the mental state of a direct infringer is wholly irrelevant. This is wonderful news for fans of stare decisis because SCOTUS held the exact same thing in Global-Tech v. SEB S.A. No real surprises here.
Good-faith belief of non-infringement will probably suffice. However, the Commil opinion reiterated its Global-Tech holding that liability for indirect infringement can only attach if the defendant knew of the patent and knew as well that “the induced acts constitute patent infringement.” In delivering the opinion, Justice Kennedy reiterated that for both induced and contributory infringement, Global-Tech requires “proof the defendant knew the acts were infringing.” (Slip Opp. at 9).
Well … how will a defendant know that an act is infringing without a ruling stating the same? This gives defendants a lot of flexibility in defeating an accusation of indirect infringement. In essence, a defendant can say, “Well how was I supposed to know I was inducing or contributing? Patent Infringement can only be fully known when a court says so.” To be fair, Kennedy hinted that such a belief of non-infringement on the part of the defendant must be “reasonable,” but that still gives defendants plenty of ammunition to defeat an accusation.
Good-faith belief of invalidity is no defense. Citing how different the issues of infringement and invalidity are under the Patent Act, the Court held that a good faith belief of invalidity is NOT a defense to indirect or direct infringement. The Court spilled some ink over how burdensome litigation would become if a good-faith belief of invalidity would be allowed, but indirect infringers can make things just as onerous by maintaining a good-faith belief of non-infringement.
The lesson here for indirect infringement defendants is to play dumb regarding infringement. The lesson here for plaintiffs is to find a direct infringer. Some are calling this a “win for trolls,” including dissenter Justice Scalia (Roberts also joined in the dissent). But from a practical standpoint, the Court’s ruling will likely not make life any easier for plaintiffs, because a defendant will only need to hodge-podge some good faith belief of non-infringement – as opposed to a good faith belief of invalidity. In light of the Federal Circuit’s recent Akamai decision, that’s getting increasingly easier to do.
At the end of the day, however, the Supreme Court made a lot of patent plaintiffs breathe a collective sigh of relief after reeling from the Federal Circuit’s earlier decision.