Expert Commentary

Court Expands Defenses to Indirect Infringement

The Federal Circuit's holding in Commil USA LLC v. Cisco Sys., 720 F.3d 1361 (Fed. Cir. 2013), presents accused inducers of patent infringement with opportunities both during litigation and even before a lawsuit is filed.


Intellectual Property
November 2013

Although Commil dealt with several legal issues on appeal, the salient point with particular import to patent litigation generally is that, for the first time, the Federal Circuit recognized "that evidence of an accused inducer's good faith belief of invalidity may negate the requisite intent for induced infringement." This holding provides an additional defense to accused inducers and lends itself to proactively seeking legal advice on validity when potentially anticipating prior art surfaces.

Commil Procedural Background

Commil USA LLC owns US Patent No. 6,430,395 (the "patent"), covering a method of providing mobile devices with faster and more reliable transfers from one base station to another. Commil sued Cisco Systems, Inc., alleging certain access points and controllers infringed the claims of the patent. The lawsuit ultimately resulted in two separate trials because the district court found that Cisco's counsel made inflammatory statements that had a prejudicial effect on the jury during the initial trial. Prior to the second trial, Cisco proffered evidence showing its good faith belief that the patent was invalid. The district court excluded the evidence without a written opinion. In April 2011, the jury found Cisco liable and awarded Commil $63.7 million in damages.

On appeal, Cisco raised several points of error. Among these, Cisco argued that the jury instruction on inducement was erroneous in light of the Supreme Court's decision in Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011), because the jury was instructed to find inducement upon a mere negligence showing. Most relevant to this discussion, Cisco also asserted that the district court improperly excluded evidence of its good faith belief of invalidity, which could have shown that it lacked the requisite intent for induced infringement.

Federal Circuit's Holding: Good Faith Is a Viable Defense for Accused Indirect Infringers

In a fractured 2–1 decision, where an en banc hearing was subsequently denied, the Federal Circuit affirmed the district court's grant of a new trial, vacated the jury's verdict on induced infringement, and remanded for a new trial. From the outset, Commil reaffirmed that "[a] finding of inducement requires both knowledge of the existence of the patent and 'knowledge that the induced acts constitute patent infringement.'" Commil, 720 F.3d at 1367. As a threshold, the Federal Circuit vacated the jury's verdict related to induced infringement because post–Global Tech jury instructions should reflect a showing of actual knowledge or willful blindness of induced infringement, neither of which can be found from facts supporting recklessness or negligence on the part of the inducer. Moving forward, the Federal Circuit next addressed an issue of first impression: whether a good faith belief that a patent is invalid could constitute a defense to induced infringement.

Reviewing case law in the area of good faith as a defense to induced infringement, the Federal Circuit determined that, just as a good faith belief of noninfringement is relevant to the intent inquiry for inducement, so too is a good faith belief of invalidity. As Commil explained, "We see no principled distinction between a good faith belief of invalidity and a good faith belief of non-infringement for the purpose of whether a defendant possessed the specific intent to induce infringement of a patent." Id. at 1368. Going further:

It is axiomatic that one cannot infringe an invalid patent. Accordingly, one could be aware of a patent and induce another to perform the steps of the patent claim, but have a good faith belief that the patent is not valid. Under those circumstances, it can hardly be said that the alleged inducer intended to induce infringement. Thus, a good faith belief of invalidity is evidence that may negate the specific intent to encourage another's infringement, which is required for induced infringement.

Id. (internal citations omitted). Nevertheless, the Federal Circuit cautioned that evidence of good faith is not a surefire inoculation to liability because a jury should still properly consider evidence of good faith along with the totality of the record to determine whether someone induced direct infringement.

Proactive Strategies May Save a Lawsuit

At surface level, Commil provides an additional argument against induced infringement that should be pursued when those facts present themselves; at a deeper level, Commil also suggests that seeking legal advice on validity when a potentially anticipating patent comes to light both is prudent and may bolster a legal defense down the road. As businesses engage in research and development, potential anticipating prior art is inevitable in all but the most cutting edge areas. When initial searches turn up patents that may encompass the end result of a business's research and development efforts, seeking legal advice on both infringement and validity is one of several ways to demonstrate a good faith belief that the business was not inducing patent infringement. Indeed, being armed with a legal opinion on patent validity allows for informed decision-making and may even constitute the origins of an evidentiary record that could preclude liability as an inducer of patent infringement.

Conclusion

In short, Commil affords greater legal options to accused indirect infringers while in the midst of litigation and even before the courthouse is in sight. In Commil, Cisco should have been allowed to present evidence showing its good faith belief of invalidity. Likewise, businesses should be aware that a good faith belief of patent invalidity is a workable defense against induced infringement. In all events, where a business faces the prospect of an induced infringement allegation, that business should posture its intellectual property strategies to reach an informed decision before embarking on further related activities.


Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.

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