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May 27, 2015Client Alert

Supreme Court Rules that a Good-Faith Belief of Invalidity is Not a Defense to Indirect Infringement

The Supreme Court further clarified the state of mind required to commit indirect patent infringement with its May 26, 2015, decision in Commil USA, LLC v. Cisco Systems, Inc. In particular, the Court (i) held that a defendant’s beliefs regarding invalidity are irrelevant to establishing indirect infringement, and (ii) reiterated that the knowledge requirement includes both knowledge of the patent and knowledge that the induced acts constitute infringement, as set forth in Global Tech Appliances, Inc. v. SEB S.A., 563 U.S. __ (2011). The decision may be viewed as a mixed bag for plaintiffs and defendants alike—while it eliminated one simple (if short-lived) defense to indirect infringement, the Court also reinforced the exacting knowledge standard for establishing indirect infringement set forth in Global-Tech.

In Commil, the plaintiff alleged that Cisco had induced infringement of certain wireless networking patents. In response, Cisco sought to introduce evidence that it had a good-faith belief that the asserted claims were invalid as a defense to the inducement claim. The district court excluded that evidence as inapplicable to the inducement claim, but the Federal Circuit reversed. The court held that because “one cannot infringe an invalid patent,” evidence of a good-faith belief of invalidity could negate the intent needed to establish inducement. That holding established a new defense to inducement—for the first time, an accused infringer could avoid inducement liability through only a good-faith belief of invalidity, even if the asserted claims ultimately proved valid.

The Supreme Court rejected the Federal Circuit’s conclusion. The Court emphasized that infringement and validity are separate issues with distinct standards and burdens of proof and noted that the Federal Circuit’s holding would undermine the presumption of validity afforded to all issued patents. While it acknowledged that, in practical terms, an invalid patent cannot be infringed, the Supreme Court stressed that invalidity only provides a defense against liability for infringement, not against the fact of infringement itself. In other words, a successful invalidity defense “preclude[s] enforcement of a patent against otherwise infringing conduct.” Accordingly, the Court held that a defendant’s beliefs on invalidity are irrelevant to the issue of inducement.

Significantly, the Court also made a point of revisiting its earlier holding in Global-Tech and rejecting a narrow reading of that decision. Specifically, the plaintiff (supported by the government) urged that under Global-Tech, a defendant merely must have known of the asserted patent to satisfy the knowledge requirement for induced infringement. The Court emphatically rejected that position and repeated that inducement requires knowledge of the patent and knowledge that the induced acts would infringe. In so doing, the Court made clear that a party cannot be liable for induced or contributory infringement “if he did not know that the acts were infringing.” Interestingly, the Court added some concluding remarks generally decrying the proliferation of frivolous patent suits and underscoring the courts' “responsibility to ensure frivolous suits are dissuaded” through sanctions and fee awards.

Thus, while Commil may look like a pro-patentee decision in its core holding, the decision gives defendants at least two reasons to remain upbeat. Even though the Supreme Court eliminated one state-of-mind defense to escape indirect infringement liability, it removed any doubt that, on the issue of infringement itself, insufficient knowledge is a strong defense. Moreover, as a coda to the opinion, the Supreme Court went out of its way to criticize weak patent suits and remind district courts that they have numerous options for discouraging frivolous cases, including Rule 11 and 35 U.S.C. § 285.

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