Commil United States, LLC v. Cisco Sys., Inc.
Commil United States, LLC v. Cisco Sys., Inc.
Opinion
A patent holder, and the holder's lawful licensees, can recover for monetary *1924 injury when their exclusive rights are violated by others' wrongful conduct. One form of patent injury occurs if unauthorized persons or entities copy, use, or otherwise infringe upon the patented invention. Another form of injury to the patent holder or his licensees can occur when the actor induces others to infringe the patent. In the instant case, both forms of injury-direct infringement and wrongful inducement of others to commit infringement-were alleged. After two trials, the defendant was found liable for both types of injury. The dispute now before the Court concerns the inducement aspect of the case.
I
The patent holder who commenced this action is the petitioner here, Commil USA, LLC. The technical details of Commil's patent are not at issue. So it suffices to say, with much oversimplification, that the patent is for a method of implementing short-range wireless networks. Suppose an extensive business headquarters or a resort or a college campus wants a single, central wireless system (sometimes called a Wi-Fi network). In order to cover the large space, the system needs multiple base stations so a user can move around the area and still stay connected. Commil's patent relates to a method of providing faster and more reliable communications between devices and base stations. The particular claims of Commil's patent are discussed in the opinion of the United States Court of Appeals for the Federal Circuit.
Commil brought this action against Cisco Systems, Inc., which makes and sells wireless networking equipment. In 2007, Commil sued Cisco in the United States District Court for the Eastern District of Texas. Cisco is the respondent here. Commil alleged that Cisco had infringed Commil's patent by making and using networking equipment. In addition Commil alleged that Cisco had induced others to infringe the patent by selling the infringing equipment for them to use, in contravention of Commil's exclusive patent rights.
At the first trial, the jury concluded that Commil's patent was valid and that Cisco had directly infringed. The jury awarded Commil $3.7 million in damages. As to induced infringement, the jury found Cisco not liable. Commil filed a motion for a new trial on induced infringement and damages, which the District Court granted because of certain inappropriate comments Cisco's counsel had made during the first trial.
A month before the second trial Cisco went to the United States Patent and Trademark Office and asked it to reexamine the validity of Commil's patent. The Office granted the request; but, undoubtedly to Cisco's disappointment, it confirmed the validity of Commil's patent. App. 159, 162.
Back in the District Court, the second trial proceeded, limited to the issues of inducement and damages on that issue and direct infringement. As a defense to the claim of inducement, Cisco argued it had a good-faith belief that Commil's patent was invalid. It sought to introduce evidence to support that assertion. The District Court, however, ruled that Cisco's proffered evidence of its good-faith belief in the patent's invalidity was inadmissible. While the District Court's order does not provide the reason for the ruling, it seems the court excluded this evidence on the assumption that belief in invalidity is not a defense to a plaintiff's claim that the defendant induced others to infringe.
At the close of trial, and over Cisco's objection, the District Court instructed the *1925 jury that it could find inducement if "Cisco actually intended to cause the acts that constitute ... direct infringement and that Cisco knew or should have known that its actions would induce actual infringement." Id., at 21. The jury returned a verdict for Commil on induced infringement and awarded $63.7 million in damages.
After the verdict, but before judgment, this Court issued its decision in
Global-Tech Appliances, Inc. v. SEB S. A.,
563 U.S. ----,
Cisco appealed to the United States Court of Appeals for the Federal Circuit. The Court of Appeals affirmed in part, vacated in part, and remanded for further proceedings. The court concluded it was error for the District Court to have instructed the jury that Cisco could be liable for induced infringement if it " 'knew or should have known' " that its customers infringed.
What is at issue is the second holding of the Court of Appeals, addressing Cisco's contention that the trial court committed further error in excluding Cisco's evidence that it had a good-faith belief that Commil's patent was invalid. Beginning with the observation that it is "axiomatic that one cannot infringe an invalid patent," the Court of Appeals reasoned that "evidence of an accused inducer's good-faith belief of invalidity may negate the requisite intent for induced infringement."
Id., at 1368. The court saw "no principled distinction between a good-faith belief of invalidity and a good-faith belief of non-infringement for the purpose of whether a defendant possessed the specific intent to induce infringement of a patent."
Judge Newman dissented on that point. In Judge Newman's view a defendant's good-faith belief in a patent's invalidity is not a defense to induced infringement. She reasoned that "whether there is infringement in fact does not depend on the belief of the accused infringer that it might succeed in invalidating the patent."
Id., at 1374(opinion concurring in part and dissenting in part). Both parties filed petitions for rehearing en banc, which were denied.
This Court granted certiorari to decide that question. 574 U.S. ----,
*1926 II
Although the precise issue to be addressed concerns a claim of improper inducement to infringe, the discussion to follow refers as well to direct infringement and contributory infringement, so it is instructive at the outset to set forth the statutory provisions pertaining to these three forms of liability. These three relevant provisions are found in § 271 of the Patent Act.
Subsection (a) governs direct infringement and provides:
"Except as otherwise provided in this title, whoever 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 therefor, infringes the patent."
Under this form of liability, a defendant's mental state is irrelevant. Direct infringement is a strict-liability offense.
Global-Tech,
563 U.S., at ----,
Subsection (b) governs induced infringement:
"Whoever actively induces infringement of a patent shall be liable as an infringer."
In contrast to direct infringement, liability for inducing infringement attaches only if the defendant knew of the patent and that "the induced acts constitute patent infringement."
Id.,
at ----,
Subsection (c) deals with contributory infringement:
"Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, 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."
Like induced infringement, contributory infringement requires knowledge of the patent in suit and knowledge of patent infringement.
Aro Mfg. Co. v. Convertible Top Replacement Co.,
This case asks a question of first impression: whether knowledge of, or belief in, a patent's validity is required for induced infringement under § 271(b).
A
Before turning to the question presented, it is necessary to reaffirm what the Court held in
Global-Tech
. Commil and the Government (which supports Commil in this case) argue that
Global-Tech
should be read as holding that only knowledge of the patent is required for induced infringement. That, as will be explained, would contravene
Global-Tech
's explicit holding that liability for induced infringement can only attach if the defendant knew of the patent and knew as well that "the induced acts constitute patent infringement." 563 U.S., at ----,
In
Global-Tech
, the plaintiff, SEB, had invented and patented a deep fryer. A few years later, Sunbeam asked Pentalpha to supply deep fryers for Sunbeam to sell. To make the deep fryer, Pentalpha bought
*1927
an SEB fryer and copied all but the cosmetic features. Pentalpha then sold the fryers to Sunbeam, which in turn sold them to customers. SEB sued Pentalpha for induced infringement, arguing Pentalpha had induced Sunbeam and others to sell the infringing fryers in violation of SEB's patent rights. In defense, Pentalpha argued it did not know the deep fryer it copied was patented and therefore could not be liable for inducing anyone to infringe SEB's patent. The question presented to this Court was "whether a party who 'actively induces infringement of a patent' under
After noting the language of § 271(b)and the case law prior to passage of the Patent Act did not resolve the question, the
Global-Tech
Court turned to
Aro II,
a case about contributory infringement
.
The
Global-Tech
Court deemed that rules concerning contributory infringement were relevant to induced infringement, because the mental state imposed in each instance is similar. Before the Patent Act, inducing infringement was not a separate theory of indirect liability but was evidence of contributory infringement. 563 U.S., at ----,
Aro II
concluded that to be liable for contributory infringement, a defendant must know the acts were infringing.
"Based on this premise, it follows that the same knowledge is needed for induced infringement under § 271(b). As noted, the two provisions have a common origin in the pre-1952 understanding of contributory infringement, and the language of the two provisions creates the same difficult interpretive choice. It would thus be strange to hold that knowledge of the relevant patent is needed under § 271(c)but not under § 271(b).
"Accordingly, we now hold that induced infringement under § 271(b)requires knowledge that the induced acts constitute patent infringement." 563 U.S., at ----,131 S.Ct., at 2068 .
In support of Commil, the Government argues against the clear language of
Global-Tech
. According to the Government, all
Global-Tech
requires is knowledge of the patent: "The Court did not definitively resolve whether Section 271(b)additionally requires knowledge of the infringing nature of the induced acts." Brief for United States as
Amicus Curiae
9. See also Brief for Petitioner 17. Together, Commil and the Government claim the "factual circumstances" of
Global-Tech
"did not require" the Court to decide whether knowledge of infringement is required for inducement liability. Brief for United States as
Amicus Curiae
12. See also Brief for Petitioner 23-24. But in the Court's
Global-Tech
decision, its description of the factual circumstances suggests otherwise. The Court concluded there was enough evidence to support a finding that Pentalpha knew "the infringing nature of the sales it encouraged Sunbeam to make." 563 U.S., at ----,
Accepting the Government and Commil's argument would require this Court to depart from its prior holding. See
*1928
id.,
at ----,
B
The question the Court confronts today concerns whether a defendant's belief regarding patent validity is a defense to a claim of induced infringement. It is not. The scienter element for induced infringement concerns infringement; that is a different issue than validity. Section 271(b)requires that the defendant "actively induce[d] infringement." That language requires intent to "bring about the desired result," which is infringement.
When infringement is the issue, the validity of the patent is not the question to be confronted. In
Cardinal Chemical Co. v. Morton Int'l, Inc.,
Indeed, the issues of infringement and validity appear in separate parts of the Patent Act. Part III of the Act deals with "Patents and Protection of Patent Rights," including the right to be free from infringement. §§ 251-329. Part II, entitled "Patentability of Inventions and Grants of Patents," defines what constitutes a valid patent. §§ 100-212. Further, noninfringement and invalidity are listed as two separate defenses, see §§ 282(b)(1), (2), and defendants are free to raise either or both of them. See
Cardinal, supra, at 98,
Allowing this new defense would also undermine a presumption that is a "common core of thought and truth" reflected in this Court's precedents for a century.
Radio Corp. of America v. Radio Engineering Laboratories, Inc.,
*1929
Under the Patent Act, and the case law before its passage, a patent is "presumed valid." § 282(a);
id.,
at 8,
To say that an invalid patent cannot be infringed, or that someone cannot be induced to infringe an invalid patent, is in one sense a simple truth, both as a matter of logic and semantics. See
M. Swift & Sons, Inc. v. W.H. Coe Mfg. Co.,
Invalidity is an affirmative defense that "can preclude enforcement of a patent against otherwise infringing conduct." 6A Chisum on Patents § 19.01, p. 19-5 (2015). An accused infringer can, of course, attempt to prove that the patent in suit is invalid; if the patent is indeed invalid, and shown to be so under proper procedures, there is no liability. See i4i, supra, at ---- - ----, 131 S.Ct., at 2247-2248. That is because invalidity is not a defense to infringement, it is a defense to liability. And because of that fact, a belief as to invalidity cannot negate the scienter required for induced infringement.
There are also practical reasons not to create a defense based on a good-faith belief in invalidity. First and foremost, accused inducers who believe a patent is invalid have various proper ways to obtain a ruling to that effect. They can file a declaratory judgment action asking a federal court to declare the patent invalid. See
MedImmune, Inc. v. Genentech, Inc.,
Creating a defense of belief in invalidity, furthermore, would have negative consequences. It can render litigation more burdensome for everyone involved. Every accused inducer would have an incentive to put forth a theory of invalidity and could
*1930
likely come up with myriad arguments. See Sloan, Think it is Invalid? A New Defense to Negate Intent for Induced Infringement,
As a final note, "[o]ur law is ... no stranger to the possibility that an act may be 'intentional' for purposes of civil liability, even if the actor lacked actual knowledge that her conduct violated the law."
Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A.,
III
The Court is well aware that an "industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees."
eBay Inc. v. MercExchange, L.L.C.,
No issue of frivolity has been raised by the parties in this case, nor does it arise on the facts presented to this Court. Nonetheless, it is still necessary and proper to stress that district courts have the authority and responsibility to ensure frivolous cases are dissuaded. If frivolous cases are filed in federal court, it is within the power of the court to sanction attorneys for bringing such suits. Fed. Rule Civ. Proc. 11. It is also within the district court's discretion to award attorney's fees to prevailing parties in "exceptional
*1931
cases."
The judgment of the United States Court of Appeals for the Federal Circuit is vacated, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
Justice BREYER took no part in the consideration or decision of this case.
Justice SCALIA, with whom THE CHIEF JUSTICE joins, dissenting.
I agree with the Court's rejection of the main argument advanced by Commil and the United States, that induced infringement under
Infringing a patent means invading a patentee's exclusive right to practice his claimed invention.
Crown Die & Tool Co. v. Nye Tool & Machine Works,
Induced infringement, we have said, "requires knowledge that the induced acts constitute patent infringement."
Global-Tech Appliances, Inc. v. SEB S. A.,
563 U.S. ----, ----,
The Court makes four arguments in support of the contrary position. None seems to me persuasive. First, it notes that the Patent Act treats infringement and validity as distinct issues.
Ante,
at 1928 - 1929. That is true. It is also irrelevant. Saying that infringement cannot exist without a valid patent does not "conflate the issues of infringement and validity,"
ante,
at 1928, any more than saying that water cannot exist without oxygen "conflates" water and oxygen. Recognizing that infringement requires validity is entirely consistent with the "long-accepted truth ... that infringement and invalidity are separate matters under patent law."
The Court next insists that permitting the defense at issue would undermine the statutory presumption of validity.
Ante,
at 1928 - 1929. It would do no such thing. By reason of the statutory presumption of validity, § 282(a), patents can be held invalid only by "clear and convincing evidence."
Microsoft Corp. v. i4i Ltd. Partnership,
564 U.S. ----, ----,
Next, the Court says that "invalidity is not a defense to infringement, it is a defense to liability." Ante, at 1929. That is an assertion, not an argument. Again, to infringe a patent is to invade the patentee's right of exclusivity. An invalid patent confers no such right. How is it possible to interfere with rights that do not exist? The Court has no answer.
That brings me to the Court's weakest argument: that there are "practical reasons not to
create
a defense based on a good-faith belief in invalidity."
Ante,
at 1929 (emphasis added); see also
ibid.
("
Creating
a defense of belief in invalidity, furthermore, would have negative consequences" (emphasis added)). Ours is not a common-law court.
Erie R. Co. v. Tompkins,
For the foregoing reasons, I respectfully dissent.
Justice THOMAS joins Parts II-B and III of this opinion.
The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See
United States v. Detroit Timber & Lumber Co.,
Reference
- Full Case Name
- COMMIL USA, LLC, Petitioner v. CISCO SYSTEMS, INC.
- Cited By
- 261 cases
- Status
- Published