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IP Alert: Good Faith Belief of Patent Invalidity Can Negate Intent Element for Induced Infringement

June 26, 2013

Yesterday, in Commil USA, LLC v. Cisco Systems, Inc., the U.S. Court of Appeals for the Federal Circuit considered the intent element of a claim of induced patent infringement. The court held that if the party accused of inducing infringement held a good-faith belief that the patent was invalid, such evidence can be used to establish lack of intent to induce infringement.

Commil, the plaintiff, sued Cisco and alleged that Cisco’s Wi-Fi access points and controllers infringed its patent. In a first trial, a jury found the patent valid and infringed, and awarded damages to Commil. Commil then filed for and was granted a new trial on the issues of induced infringement and damages. At the second trial, the jury found indirect infringement and awarded $63.7 million in damages. Cisco appealed the verdict on several grounds.

The court vacated the jury verdict in light of an improper jury instruction. In addition, the court considered Cisco’s appeal from a motion in limine precluding Cisco from introducing its good-faith belief that the Commil patent was invalid. Considering this question, the court first observed that in Global-Tech Appliances, Inc. v. SEB S.A., the Supreme Court held that liability for inducing the infringement of another generally can be found only where the accused inducer possessed “knowledge that the induced acts constitute patent infringement.” The court further recognized that since Global-Tech, it had not before considered whether evidence of a good-faith belief in the invalidity of the patent, as opposed to whether the claims of the patent covered the accused activity, was relevant to this inquiry.

In a split opinion authored by Judge Prost, the court held that evidence of such intent may be considered to negate the requisite intent for induced infringement. The court went on to explain that such evidence does not preclude a finding of induced infringement, but “is evidence that should be considered by the fact finder.” This is because “[i]t is axiomatic that one cannot infringe an invalid patent.” Accordingly, held the court, “one could be aware of a patent and induce another to perform the steps of the patent claim, but have a good-faith belief that the patent is not valid.” Under such circumstances, the court continued, “it can hardly be said that the alleged inducer intended to induce infringement. Thus, a good-faith belief of invalidity is evidence that may negate the specific intent to encourage another’s infringement, which is required for induced infringement.”

Judge O’Malley wrote a separate opinion concurring in the above but dissenting from the majority’s opinion in other respects. Judge Newman wrote a separate opinion characterizing the majority’s opinion as a “change of law” to which she dissented.

The Commil case is of interest to parties facing a potential charge of induced infringement. Among other considerations, the case appears to highlight the benefit of obtaining an opinion of counsel under such circumstances.

Written by Fitch Even attorney Shane Delsman.

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