Supreme Court Holds that “Willful Blindness” to Patent Rights May Prove Indirect Infringement
Global-Tech v. SEB (decided 5/31/11)By: Charles Steenburg
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What This Means to You
- Under certain circumstances, companies can be liable for indirect infringement even if they were not actually aware of the specific patent(s) in question.
- When asking patent lawyers to perform a "freedom-to-operate" study, it is important to provide all available information about the relevant item, including whether it was copied (either in whole or in part) from another
- As a result of this decision, indirect infringement theories are particularly likely to require a full-fledged jury trial.
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Overview
The Supreme Court’s May 31, 2011 decision in Global-Tech Appliances, Inc. v. SEB S.A. makes it possible for patent owners to prevail on “indirect infringement” claims even without specific evidence proving the defendants actually knew about the patents in question.
Indirect infringement theories are sometimes the only practical option for patent owners seeking to enforce their rights. There are various reasons why it may not be feasible (or even permissible) to sue “direct infringers” – the people or companies that are actually making, using, selling, or importing the patented product or method in the United States. For example, suing direct infringers could be a bad business decision, particularly if the patent owner wants to attract the would-be defendants as customers. In the case of “medical method” claims, moreover, the law specifically immunizes doctors from suit.
In the case of indirect infringement – both “contributory infringement” and “inducement” of infringement – the defendant is somehow responsible for a third party’s direct infringement. For contributory infringement, a key requirement is selling a product “knowing the same to be especially made or especially adapted for use in an infringement of [a] patent.” The inducement statute is less specific. It simply states that “[w]hoever actively induces infringement of a patent shall be liable as an infringer.”
Case Background
SEB accused Global-Tech of inducing infringement of an SEB patent as a result of supplying deep fryers to third parties, which in turn sold them in the United States. Global-Tech had based the design on a fryer made by SEB itself. Global-Tech had acquired the SEB fryer in Hong Kong, and it lacked any U.S. patent markings. A patent attorney conducted a right-to-use study and did not locate the SEB patent. Notably, however, Global-Tech had never informed the attorney that it had copied SEB’s fryer.
At district court, a jury found in SEB’s favor. Global-Tech challenged the inducement verdict based on the lack of evidence that Global-Tech had actually known about SEB’s patent at the relevant time.
The Federal Circuit affirmed, reasoning that Global-Tech had “deliberately disregarded a known risk” that SEB had patent rights protecting the fryer design. The Supreme Court in turn granted Global-Tech’s petition to review the Federal Circuit’s decision.
Decision Analysis
While affirming the jury verdict that Global-Tech had induced infringement of SEB’s patent, the Supreme Court rejected the Federal Circuit’s “deliberate indifference” test and instead held that inducement at minimum requires “willful blindness” to the infringing nature of the third party’s sales. The Court concluded that a jury could have found Global-Tech guilty of such blindness given that it copied SEB’s fryer and then sought advice from a patent attorney without even telling the attorney about the “knockoff.”
The Court’s analysis began with the holding that patent inducement “requires knowledge that the induced acts constitute patent infringement.” This had been a major point of dispute during oral argument as well as the briefing process, with some suggestions that inducement did not require any sort of intent. In the end, however, the Court looked to earlier decisions concerning contributory infringement and reasoned that the same standard should apply for inducement claims.
Although the opinion does not discuss whether the “willful blindness” test is appropriate for contributory infringement claims, the Court’s reasoning would seem to suggest that it is. The Supreme Court also did not directly address the related question of whether a defendant that did know about a patent may nevertheless rebut indirect infringement claims based on a good-faith belief that the relevant activities did not actually infringe that patent, regardless of whether or not the acts are ultimately found to constitute direct infringement.
However, a number of recent Federal Circuit cases suggest that such a good-faith belief can be enough. These decisions likely remain good law in light of the Supreme Court’s emphasis on the need for “knowledge that the induced acts constitute patent infringement.”
Takeaways
Global-Tech confirms that patent owners may prevail on inducement or contributory infringement claims even without proof that defendants actually knew about the patents at issue.
Depending on how lower courts interpret the “willful blindness” test, it may even be possible to pursue indirect infringement theories based simply on evidence that defendants copied designs and then did not request any sort of right-to-use study.
While the “willful blindness” test is ostensibly quite narrow, it could in practice prove to be quite versatile and make indirect infringement theories possible in a greater range of circumstances. At the same time, the Global-Tech decision may solidify a number of defenses for accused infringers. In the end, therefore, indirect infringement theories are particularly likely to require a full-fledged jury trial.
For companies interested in entering new markets, Global-Tech illustrates the importance of commissioning a right-to-use study while providing patent counsel with all available information about the products under consideration.
