June 1, 2011
On May 31, 2011, the U.S. Supreme Court issued its decision in Global-Tech Appliances, Inc. v. SEB S.A. The Court held that “induced infringement” under the patent statute requires knowledge that the induced acts constitute patent infringement. The Court unanimously rejected the Federal Circuit’s test, under which the “plaintiff [had to] show that the alleged infringer knew or should have known that his actions would induce actual infringement.”
The Court also held that knowledge could be shown through the “willful blindness” doctrine, in a manner analogous to criminal statutes that require knowledge or willfulness. Under the willful blindness doctrine, “defendants cannot escape the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances.”
In Global-Tech, plaintiff SEB’s patent concerned a deep fryer with external surfaces that remain cool during the frying process. Pentalpha (a Global-Tech subsidiary) purchased an SEB fryer in Hong Kong and copied the design. The SEB fryer that Pentalpha copied did not have U.S. patent numbers marked on it. Pentalpha retained an attorney to conduct a right-to-use study, but refrained from telling the attorney that it had copied the SEB design. The attorney did not find SEB’s patent, and issued an opinion letter stating that Pentalpha’s design did not infringe any patents he had found.
After Pentalpha started selling fryers, SEB sued Pentalpha and Global-Tech for patent infringement. The Court held that Pentalpha was liable for inducing infringement under the “willful blindness” test, which, held the Court, has “two basic requirements: (1) the defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must take deliberate actions to avoid learning that fact.” The Court rejected the “deliberate indifference” test articulated by the Federal Circuit, which required only that there be a “known risk” that the induced acts are infringing, and that there be “deliberate indifference” to that risk.
In applying its test, the Supreme Court noted several uncontested facts that support the jury’s verdict. Pentalpha knew that its products were being designed for the U.S. market and knew that products for overseas markets do not usually have U.S. patent markings. This knowledge revealed Pentalpha’s motivation in copying an overseas model of SEB’s fryer. The Court also seized on Pentalpha’s failure to inform its patent attorney that its product was a “knockoff” of SEB’s deep fryer as an effort to “manufacture a claim of plausible deniability.”
The Global-Tech decision applies to infringement by inducement. The decision does not affect the law of direct infringement, which does not require proof of intent.
Global-Tech will be an important consideration for parties bringing or defending cases of patent infringement, and also for parties conducting right-to-use studies. For questions about the case, please contact Fitch Even attorney David A. Gosse, the author of this alert.