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Supreme Court to Review Induced Infringement

November 02, 2010

After many years of confusion, the Supreme Court has agreed to review a lawsuit addressing the standard of intent required for inducement of infringement. This pivotal case may resolve once and for all whether a party must intend to infringe a patent in order to be liable, or whether it is sufficient to be aware of the possibility of infringement by third parties.

Under Section 271 of the patent statutes, one who “actively induces” infringement by others is liable for infringement. Most commonly, this statute is asserted when a patent requires a product to be used in a particular way. In that situation, the manufacturer may not be liable for direct infringement because the manufacturer does not use the product at all. If the packaging describes a particular way of using the product, or perhaps if there is really only one principal way of using it, then the manufacturer or seller may be liable for inducing infringement once the customers buy the product and use it as directed.

According to court decisions to date, the party accused of inducing infringement must either have knowledge of the patent or the specific intent to induce infringement. These are certainly two very different standards. If knowledge of the patent is sufficient then the seller may be liable for infringement even if there is no actual knowledge that anyone actually used the product in an infringing manner, and perhaps without the intent that any buyers would actually use the product in an infringing way. Under the second standard, by contrast, the seller would escape liability even if it knew about the patent as long as it did not specifically intend to encourage infringement by others.

The specific case under review is SEB S.A. v. Montgomery Ward & Co., Inc., 594 F.3d 1360 (Fed. Cir. 2010). In this case, Pentalpha reverse-engineered SEB’s patented cooker and began selling a competing product. Pentalpha obtained an opinion from its attorneys who believed that the product did not infringe any patents, but Pentalpha did not tell its attorneys that the product copied another product already on the market. The opinion was therefore considered to be suspect because the attorneys did not look for patents belonging to the company that manufactured the copied product. The Federal Circuit Court of Appeals believed that Pentalpha deliberately ignored the possibility that SEB had a patent covering its product. The language of the decision makes it unclear whether such “deliberate indifference” is sufficient for inducement or whether “specific intent” is required.

The Supreme Court agreed to review the case in order to specifically address whether deliberate indifference of a known risk is sufficient or whether inducement of infringement requires purposeful, culpable expression and conduct to encourage the infringement by others.

filed in: Intellectual Property

Attorneys

Lawrence D. Graham

Lawrence D. Graham

Our attorneys regularly produce substantive memoranda and news, addressing legal advancements in Trademarks, Intellectual Property, Patents and Litigation.

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