Commil v. Cisco: Whether a good-faith belief of invalidity negates the intent requirement for induced infringement

On December 5, 2014, the Supreme Court granted certiorari in Commil USA v. Cisco Systems to decide whether a defendant’s good-faith belief of patent invalidity is a defense to induced infringement under 35 U.S.C. §271(b). A ruling is due by the end of June and could prove significant for patent litigation involving intent or knowledge standards as a defense to liability.

Commil holds a method patent for implementing short-range wireless networks (“hand-offs”). These hand-offs result when a mobile device changes wireless access points on a network. Commil’s patent provides a method for faster and more reliable hand-offs. Commil sued Cisco for direct infringement and induced infringement. Commil alleged that Cisco prompted its customers to infringe Commil’s patent through the use of networking equipment that Cisco manufactured. Under 35 U.S.C. § 271(b), to induce infringement, a defendant must ““knowingly induce[] infringement and possess[] specific intent to encourage [another party’s direct] infringement.” Prior to trial, Cisco provided evidence demonstrating its good-faith belief that Commil’s patent was invalid. However, the district court excluded the evidence and provided jury instructions imposing liability for inducers that were at least negligent to the fact that their actions would induce infringement. Consequently, the jury found Cisco liable for induced infringement.

On appeal, Cisco argued that (1) the district court improperly excluded evidence of its good-faith belief of invalidity and (2) the jury instruction on induced infringement was erroneous because it allowed the jury to find inducement based on mere negligence. The U.S. Court of Appeals for the Federal Circuit agreed with Cisco’s arguments, holding that: (1) the jury should have been allowed to consider the evidence of Cisco’s good-faith belief of invalidity and (2) the jury instruction on induced infringement was erroneous as a matter of law and prejudiced the outcome. The Federal Circuit relied on the standard for induced infringement set forth by the Supreme Court in Global-Tech v. SEB which requires “knowledge that the induced acts constitute patent infringement,” a requirement that can be satisfied through actual knowledge or willful blindness. Under this standard, the Federal Circuit reasoned that induced infringement liability is precluded when the facts only support recklessness or negligence on the part of the inducer. Because the district court’s jury instruction erroneously allowed a finding of liability based on mere negligence rather than actual knowledge or willful blindness, the Federal Circuit found that the outcome was prejudiced. Consequently, the Federal Circuit vacated the district court’s holding on induced infringement and remanded for a new trial.

On January 23, 2014 Commil filed a petition for a writ of certiorari, challenging the Federal Circuit’s approval of Cisco’s good-faith belief of invalidity as a defense and the jury instruction regarding inducement. In response, the Court requested the Solicitor General to file an amicus brief on whether certiorari should be granted. The Solicitor General’s brief supported the grant of certiorari and argued that a defense based on the accused inducer’s good-faith belief in the patent’s invalidity may undermine Section 271(b)’s efficacy in deterring and remedying infringement.

The Supreme Court’s decision may be significant for future cases involving intent or knowledge standards as they relate to induced infringement. If the Court affirms the Federal Circuit decision, alleged infringers accused of inducing others to infringe will have a new defense to induced infringement based on their own analysis of the validity of patent claims. Critics of the Federal Circuit decision contend that an actual knowledge standard would drastically weaken the Patent Act’s provision of liability for inducing infringement and provide infringer’s with an escape hatch from liability. Further, opponents of the Federal Circuit decision argue that disproving a good faith belief would be very difficult to refute, since alleged infringers produce self-serving evidence. On the other hand, supporters of the decision assert that actual knowledge is the appropriate standard and that a good-faith belief is just one piece of evidence to consider.

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