Eyes wide shut: induced patent infringement and the willful blindness standard.

• Author: Hagen, Kristin M.

INTRODUCTION I. INDUCED PATENT INFRINGEMENT II. THE SUPREME COURT'S "CLARIFICATION": GLOBAL-TECH APPLIANCES V. SEB III. HOW TO APPLY THE STANDARD: PROS AND CONS CONCLUSION: A "GOOD FAITH" APPROACH SHOULD BE TAKEN INTRODUCTION

In its recent 8-1 decision in Global-Tech Appliances, Inc. v. SEB S.A., (1) the Supreme Court both clarified and confused the law governing induced patent infringement. Up until the Supreme Court's decision, the law of inducement, namely the level of intent required in order for one to be found liable for inducement, was in a confused state. Because of seemingly conflicting case law within the Federal Circuit, patent holders and innovators were left with uncertainties over when liability for induced infringement could attach: Must an innovator knowingly induce only the acts that happen to cause infringement? Or must he induce acts knowing that those acts will cause infringement?

While the Court clarified the issue of intent once and for all, in doing so, it injected another element of confusion into the mix, holding that "willful blindness" could satisfy the knowledge requirement for induced patent infringement. (2) Although the Court announced a seemingly clear test for what qualifies as willful blindness, this Comment will illustrate that the Court's new formulation of induced patent infringement, particularly the willful blindness aspect, is not so clear-cut. Different interpretations of the rule will bring different consequences and policy considerations.

Part I of this Comment will briefly trace the origins and history of the law of induced patent infringement and discuss the debate within the Federal Circuit leading up to the Supreme Court's decision in Global-Tech. Part II will summarize the Court's decision, paying particular attention to its treatment of the knowledge requirement for induced patent infringement and the new willful blindness standard. Part Ill will discuss the problems with the willful blindness standard and will elaborate two potential interpretations of the rule, and potential problems with each. Finally, Part IV concludes that the less stringent standard should be followed, but only when omissions are made in bad faith.

1. INDUCED PATENT INFRINGEMENT

   Patent infringement occurs when one "without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent." (3) As Professor Mark Lemley notes, "patent courts have long recognized that focusing only on the party who actually practices the invention will sometimes let off the hook the party who deserves to be held liable." (4) For that reason, liability for patent infringement has long been extended to include not only those who directly infringe, but also to those who contribute to infringement and to those who induce infringement. (5) The goal is to give patent owners "effective protection in circumstances in which the actual infringer either is not the truly responsible party or is impractical to sue." (6)

   Before 1952, courts recognized "secondary patent infringement," which could be comprised of either what is now known as induced infringement, or what is now known as contributory infringement. (7) In 1952, the Patent Act was amended and Congress clearly separated the offense of active inducement from that of contributory infringement. (8) While the two offenses are similar in that they punish third parties rather than direct infringers, they are distinctly different. "The distinction between contributory and induced infringement is summarized by noting that while contributory infringement involves the sale of components or parts to the direct infringer, induced infringement covers 'other acts' that direct, facilitate, or abet infringement." (9)

   Both of the statutory sections for contributory infringement and induced infringement contain an ambiguity as to the level of knowledge and intent required in order for one to be held liable for infringement. (10) Governing contributory infringement, section 271(c) states:

   Whoever offers to sell or sells within the United States ... a component of a patented [invention] ... constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer. (11) Similarly, governing induced infringement, section 271(b) states "[w]hoever actively induces infringement of a patent shall be liable as an infringer." (12) Both of these sections contain an ambiguity; to be liable for contributory infringement, must one "need[] to intend to commit the acts that constitute contributory infringement or ... [must] the party also need[] to intend that the third party infringe"? (13) To be liable for induced infringement, must one knowingly induce acts that happen to cause infringement, or must he induce acts knowing that they will cause infringement?

   As for contributory infringement, that ambiguity was resolved by the Supreme Court in the case of Aro Manufacturing Co. v. Convertible Top Replacement Co. (Aro II). (14) Here, the Court noted that Congress, by enacting section 271(c), wished to codify existing case law, which premised liability on "mak[ing] and sell[ing] one element of a combination covered by a patent with the intention and for the purpose of bringing about its use in such a combination." (15) Thus, the Court in Aro II reiterated that intent to contribute to infringement was required.

   The ambiguity as to induced infringement was not resolved so easily; while it was settled that intent was required to be liable for induced infringement, (16) until recently, there has been disagreement over precisely what intent is necessary. Two Federal Circuit cases, decided only weeks apart, set forth two opposing standards, perpetuating the uncertainty in the area. In Hewlett-Packard v. Bausch & Lomb, (17) the Federal Circuit held that one could be liable for inducement if it could be proven that he "actual[ly] intend[ed] to cause the acts which constitute the infringement." (18) In Manville Sales v. Paramount Systems, Inc., (19) however, the Federal Circuit held that in order to be held liable for induced infringement, the defendant must have the "specific intent to encourage another's infringement and not merely ... ha[ve] knowledge of the acts alleged to constitute inducement." (20) These two very different holdings, Hewlett-Packard setting a very low intent requirement, and Manville, setting a very high intent requirement, created much uncertainty for not only lower courts seeking to apply the standard, but for inventors and patent holders as well. (21)

   This ambiguity was finally settled by the Federal Circuit in DSU Medical Corp. v. JMS Co., Ltd (22) There, the court held that "'knowledge of the acts alleged to constitute infringement' is not enough" to incur liability for induced patent infringement. (23)

2. THE SUPREME COURT'S "CLARIFICATION": GLOBAL-TECH APPLIANCES V. SEB

   Although DSU seemed to clarify the issue of what level of knowledge one must have in order to incur liability for induced patent infringement under [section] 271(b), the Supreme Court attempted to make it crystal clear with its holding in Global-Tech (24) The decision affirmed the ruling of the Federal Circuit in DSU, confirming that the knowledge requirement under section 271(b) requires knowledge that the induced acts will cause patent infringement. (25) However, the Court was also asked to specifically clarify the "knowledge" requirement; namely, the Court needed to determine whether "deliberate indifference" could qualify as knowledge under the statute. (26)

   SEB is a company specializing in manufacturing and selling home-cooking appliances. (27) SEB sells products in the United States through its subsidiary, T-Fal Corp., and owns U.S. Patent No. 4,995,312 ("The '312 Patent"). (28) The patent covered SEB's "cool-touch" deep fryer, which implemented "external services that remain[ed] cool during the frying process." (29) SEB obtained the patent in 1991, and sold the fryers under the "T-Fal" brand in the United States with great commercial success. (30)

   Petitioner Pentalpha Enterprises, Ltd., is a Hong Kong company specializing in manufacturing home...