Federal Circuit Allows Good-Faith Belief of Invalidity as Defense to Induced Infringement

The U.S. Court of Appeals for the Federal Circuit has held that a good-faith belief of invalidity may negate the specific intent required for induced infringement.  While it was previously clear that a good-faith belief of non-infringement is relevant as a defense to induced infringement, the Federal Circuit, until now, had not determined whether a good-faith belief of invalidity could similarly negate the requisite intent for induced infringement.

The case, Commil USA LLC v. Cisco Systems Inc., No. 12-1042 (Fed. Cir. Jun. 25, 2013) concerns a patent for wireless-transmission technology held by Texas-based Commil.  The patent covers a way of maintaining network connections through a series of base stations, which Commil alleges was infringed by Cisco’s use of Wi-Fi access points and controllers.  The United States District Court for the Eastern District of Texas prevented Cisco from presenting evidence of its good-faith belief of invalidity of Commil’s patent and awarded Commil $63.8 million in damages.

The Federal Circuit found no distinction between a good-faith belief of non-infringement and a good-faith belief of invalidity in determining whether a defendant possessed the specific intent necessary to induce infringement.  The Court concluded that even if a party is aware of a patent and induces a third party to perform the steps of a patent claim, if the party believes the patent is not valid, it cannot be said that the party intended to induce infringement.

The Court also clarified the intent standard for induced infringement as enunciated by the U.S. Supreme Court in Global-Tech Appliances, Inc., v. SEB S.A., decided in 2011.  In that case, the Supreme Court determined that actual knowledge or willful blindness is required for induced infringement.  The Federal Circuit held that in light of Global-Tech, the district court’s jury instructions-in permitting a finding of induced infringement based on mere negligence-were erroneous.

As a result of the Federal Circuit’s ruling, defendants may now present evidence of a good-faith belief of invalidity to defeat liability based on induced infringement.  Such evidence may include an opinion letter of invalidity or a reexamination request.