Supreme Court Rejects Good Faith Belief in Invalidity as a Defense to Inducement

Authored by Grantland G. Drutchas

The Supreme Court issued its decision today in Commil USA, LLC v. Cisco Systems, Inc. In a nutshell, the Supreme Court held that a good faith belief in invalidity (or presumably unenforceability) is no longer a defense against inducement (and presumably contributory infringement). The decision was written by Justice Kennedy. Justice Scalia dissented, joined by Chief Justice Roberts. Justice Breyer took no part in the decision.

This is an interesting case that shows how unique facts help focus decisions. Cisco – the accused indirect infringer – had two strikes against it that really drove home how divorced infringement was from invalidity.

• Cisco’s invalidity challenge in District Court was rejected in a first trial, so that only infringement was. (A retrial was granted on the infringement issue because of inappropriate religious comments made by Cisco’s counsel).
• Concurrent with the litigation (a month before the second trial on infringement/inducement issues), Cisco had filed, and lost, an ex parte reexamination – showing the weakness to its invalidity defense.

Thus, Cisco’s attempt to put in evidence during the infringement phase of their good faith invalidity defense was rejected by the District Court.

The Supreme Court reached this decision applying several factors:

• The differing statutory bases for infringement vs. validity
• Allowing a good faith belief in invalidity as a defense to inducement would undermine the presumption of validity
• There are other ways (Declaratory Judgment action, inter partes review, ex parte reexamination, etc.) for potential indirect infringers to have validity issues resolved.
• Invalidity as a defense to indirect infringement would raise litigation costs – “every accused inducer would have an incentive to put forth a theory of invalidity and could likely come up with myriad arguments”
• Infringement under 271(a) is a strict liability tort, suggesting that strict liability is not unreasonable in connection with validity issues. Strict liability is recognized in several situations under U.S. law (criminal and civil)

The Supreme Court also rejected, however, the Government’s and Commil’s attempt to limit the Supreme Court’s prior Global-Tech decision to requiring only knowledge of the patent to prove the necessary intent. That is, it reaffirmed that a good faith belief in noninfringement is a defense to inducement.

Finally, Justice Kennedy added a commentary at the end of the opinion, noting the problem with improper demand letters from non-practicing entities and concern over frivolous litigation, noting that District Courts have a duty to ensure frivolous cases are dissuaded and that fees can be awarded for exceptional cases. According to Justice Kennedy, the rationale for including this section was that it helps show that the dichotomy between infringement and validity means that belief in invalidity is no defense to a claim of induced infringement.

No. 13–896. Decided May 26, 2015

The opinion can be found at http://www.supremecourt.gov/opinions/14pdf/13-896_l53m.pdf.

Grantland G. Drutchas, a founder and former managing partner of McDonnell Boehnen Hulbert & Berghoff LLP, has more than 20 years of experience in the practice of intellectual property law, with a particular emphasis on litigation, licensing, and client counseling. His trial experience includes both jury and bench trials. His litigation experience encompasses disciplines ranging from recombinant DNA technology and cell signaling, pharmaceuticals, medical diagnostic instruments, and medical devices to conference phones, lampposts, and injection molds. drutchas@mbhb.com.

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