Yesterday, the Supreme Court decisively struck down the "good-faith belief of invalidity" defense for induced patent infringement cases in Commil USA, LLC v. Cisco Sys., Inc., No. 13-896, U.S. (May 26, 2015). While the Court acknowledged that the validity of a patent is a predicate to its enforceability, it rejected the notion that a mere good-faith belief of invalidity could shield against liability for induced infringement.
To state a claim for induced infringement, a plaintiff must allege facts showing the alleged infringer (1) knew of the patent, (2) knowingly induced the infringing acts, and (3) possessed a specific intent to encourage another's infringement of the patent. DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1305-06 (Fed. Cir. 2006). To establish the specific intent, the Plaintiff must allege "more than just intent to cause the acts that produce direct infringement." Id. at 1306.
In 2007, the patentee—Commil—brought claims against Cisco for direct and induced infringement of a patent on short-range wireless networks. In defending against the inducement to infringe claim, Cisco proffered evidence that it had a good-faith belief that the patent was invalid. Cisco therefore claimed that it could not have the specific intent required for induced infringement.
The district court excluded this evidence without a written opinion. On appeal, the Federal Circuit's split panel reversed and, for the first time, held that "a good-faith belief of invalidity may negate the requisite intent for induced infringement." Judge Newman vehemently dissented and called the decision an inappropriate change in the law of inducement.
The Supreme Court reversed, largely agreeing with Judge Newman's dissent. The Court stressed that the "scienter element for induced infringement concerns infringement; that is a different issue than validity." In other words, a belief that a patent may be invalid cannot serve to negate a showing that the accused infringer had knowledge of the patent and that the acts it has induced constitute infringement of that patent.
The decision closes the door on what many viewed as a readily accessible, but difficult to assess, defense to induced infringement. Note, however, that the Supreme Court's decision neither overturned nor addressed the Federal Circuit's precedent that "a good-faith belief of non-infringement is relevant evidence that tends to show that an accused inducer lacked the intent required to be held liable for induced infringement."
Companies in litigation or pursuing strategies based on a good-faith belief of invalidity defense need to quickly re-evaluate their position.