Source: https://www.gibsondunn.com/supreme-court-raises-the-bar-for-claims-of-active-inducement-of-patent-infringement-in-global-tech-appliances-inc-v-seb-s-a-563-u-s-____-2011/
Timestamp: 2019-11-15 10:10:04
Document Index: 303083555

Matched Legal Cases: ['§ 271', '§ 271', '§ 271', '§ 271', '§ 271', '§ 271', '§ 271', '§ 271', '§ 271']

Gibson Dunn | Supreme Court Raises the Bar For Claims of Active Inducement of Patent Infringement In Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. ____ (2011)
On May 31, 2011, in Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. ___ (2011), the Supreme Court toughened the standard for establishing that a party has "actively induce[d] infringement of a patent" under 35 U.S.C. § 271(b). The Court held that § 271(b) requires proof of a defendant’s knowledge that the induced acts constitute patent infringement and that "willful blindness" is sufficient to support a finding of knowledge. Slip op. at 10. In reaching this conclusion, the Court rejected the Federal Circuit’s legal standard, which held that liability attached if a plaintiff could show that an alleged infringer deliberately disregarded a known risk of the existence of a patent. Id.
Section 271(b) makes it unlawful to "actively induce infringement of a patent." The Court first observed that both the plain language of § 271(b) and the pre-1952 case law codified in § 271(b) are ambiguous as to whether liability for induced infringement requires proof that the defendant knew that the conduct it was inducing constituted infringement of a patent, or instead can be established merely by proof that the defendant knew it was inducing acts that (unbeknownst to the defendant) would constitute infringement. Id. at 4-8. The Court then turned to its decision in Aro Manufacturing Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964) (Aro II), in which a majority of the Court interpreted a similarly ambiguous prohibition in § 271(c) (which applies to the sale of components of patented inventions) and concluded that it requires knowledge of infringement. Id. at 8-9. Because § 271(b) and § 271(c) share a common origin in the pre-1952 understanding of contributory infringement, the Court concluded that Aro II compels the conclusion that § 271(b) likewise requires proof of the defendant’s "knowledge that the induced acts constitute patent infringement." Id. at 10.
The Court then considered whether the Federal Circuit had applied the correct standard in upholding the jury’s verdict against Pentalpha, a wholly owned Global-Tech subsidiary, for induced infringement of a deep fryer appliance patented by SEB. The Federal Circuit had held that alleged inducers could be liable under § 271(b) if they were deliberately indifferent "to a known risk" that a protective patent exists. Id. The Supreme Court rejected this standard as inappropriate, but nonetheless affirmed the Federal Circuit’s judgment because the evidence in the case was sufficient to support a finding of willful blindness, which the Court recognized constitutes an adequate substitute for actual knowledge. Id. at 10-13.
Finally, the Court stressed that proving willful blindness is significantly more difficult than proving deliberate indifference to a known risk, recklessness, or negligence. Unlike those easier to prove mental states, willful blindness requires proof that (1) the alleged inducer subjectively believed that there was a high probability–more than a mere risk or even a substantial risk–that a product or feature was protected by a patent, and (2) the alleged inducer took deliberate actions to avoid learning of that fact. Id. at 13-14.
The Global-Tech decision brings significant clarity to the standard governing claims of induced infringement and should be welcome news to all those who are involved in making, using, selling, or importing technologies. If it had been allowed to stand, the Federal Circuit’s "deliberate indifference" standard would have subjected innovators to virtually unlimited and wholly unpredictable liability. Given the existence of nearly two million enforceable U.S. patents, every entity that makes, uses, offers to sell, sells, or imports a product could be said to be aware of some risk that its customers could employ the product in a manner that infringes a valid patent. The Court’s willful blindness standard, by contrast, exposes to liability only those who, in the face of a high probability that the actions they are inducing will constitute infringement, take deliberate steps to avoid learning whether those actions actually infringe.
Global-Tech, however, leaves open several questions regarding the type of evidence that will be sufficient to establish willful blindness. In Global-Tech, the Court found that Pentalpha had acted with willful blindness to the probable existence of a valid patent over the features of SEB’s product because (1) SEB’s product was innovative; (2) Pentalpha copied the functional features of SEB’s product; (3) Pentalpha chose to purchase and copy the product overseas where it was less likely to bear U.S. patent markings, even though Pentalpha was designing the product for the U.S. market; and (4) Pentalpha did not inform the attorney it had hired to do a patent search that it had copied an existing product. Id. at 15. Many cases will lack the latter three features present in Global-Tech. Accordingly, the decision creates uncertainty about how willful blindness will be addressed in cases arising in industries where patent protection for innovative products and features is unpredictable. Nonetheless, the Court’s emphasis of the high hurdle posed by the willful blindness standard suggests that it should be difficult (absent copying or "smoking gun" evidence suggesting knowledge of infringement) to impose active inducement liability on legitimate innovators.
Gibson Dunn filed an amicus brief in Global-Tech in support of Pentalpha on behalf of Comcast Corporation, Facebook, Inc., Intuit Inc., Microsoft Corporation, Netflix, Inc., Overstock.com, Inc., and SAP America, Inc. that urged adoption of the standard accepted by the Supreme Court.
If you have any questions about Global-Tech, or would like to talk with one of our lawyers about a patent appeal, please call Thomas G. Hungar at 202-955-8558 or Matthew D. McGill at 202-887-3680. These partners, resident in our Washington office, have participated in virtually every recent patent case in the Supreme Court and in many of the leading cases in the Federal Circuit.