A patent may be infringed directly or indirectly. Direct infringement exists when the alleged infringer makes, uses, sells, offers to sell, or imports a patented product or performs a patented method. 35 U.S.C. § 271(a). Indirect infringement exists when the alleged infringer causes another to directly infringe a patent. 35 U.S.C. §271(b) and (c).
There are two types of indirect infringement: inducing infringement and contributory infringement. Inducing infringement is essentially aiding and abetting another to infringe a patent. Section 271(b). Contributory infringement exists when the alleged infringer sells a component of a patented invention knowing that the component is especially made for use in an infringing product and not a staple article of commerce having substantial noninfringing uses. Section 271(c).
In Global-Tech Appliances, Inc. v. SEB S.A., 179 L.Ed.2d 1167(May 31, 2011), the United States Supreme Court was faced with the question of whether liability for inducing infringement under section 271(b) requires knowledge of the patent. The court decided that it does, but that the requirement may be satisfied by a defendant’s willful blindness to the existence of the patent.
The case involved a patent for a deep frying machine for home use. The patent was owned by SEB SA, a French company who made high-end appliances. SEB made the deep fryer and sold it in the United States and in foreign countries. One of SEB’s U.S. competitors, Sunbeam, contracted with Pentalpha, a Hong Kong company, to develop and manufacture deep fryers for Sunbeam to sell in the U.S.
Pentalpha purchased SEB’s deep fryer and copied it. The SEB deep fryer that Pentalpha bought was not marked with SEB’s U.S. patent number because it was manufactured for sale outside the U.S. Pentalpha hired an attorney to perform a right-to-use analysis of its new deep fryer but did not inform the attorney that the Pentalpha deep fryer was copied from SEB’s deep fryer. The attorney did not find SEB’s U.S. patent and concluded that the Pentalpha deep fryer did not infringe any patents. Pentalpha then began making its deep fryers and selling them to Sunbeam who sold them in the U.S.
SEB sued Sunbeam for patent infringement. Sunbeam informed Pentalpha of the lawsuit, but Pentalpha continued to sell its deep fryers to other companies in the U.S. SEB settled with Sunbeam and then filed suit against Pentalpha. SEB alleged that Pentalpha had committed direct infringement and had induced infringement by selling its deep fryers to Sunbeam and the other companies in the U.S.
The jury found Pentalpha liable and further found that Pentalpha’s infringement was willful. Pentalpha moved for a new trial on the grounds that there was no evidence to support the jury’s finding on inducing infringement because Pentalpha had no actual knowledge of SEB’s patent until Sunbeam was sued. The district court denied Pentalpha’s motion. Pentalpha appealed to the Federal Circuit Court of Appeals which affirmed the judgment.
The Federal Circuit held that a plaintiff must prove that the defendant knew or should have known that their actions would result in actual infringement and that this proof included knowledge of the patent. The appellate court found that despite the fact that there was no evidence that Pentalpha had known of the patent before the lawsuit, it had a “form of actual knowledge” in that it had “deliberately disregarded a known risk that SEB had a protective patent.”
Pentalpha appealed to the United States Supreme Court. Pentalpha contended that liability for inducing infringement under section 271(b) requires actual knowledge of the patent, not just a disregard of a known risk.
The Supreme Court first reviewed the statue itself, which states: “whoever actively induces infringement of a patent shall be liable as an infringer.” The Court found this language ambiguous, in that it could mean that the defendant must cause another to either do something that happens to be an infringing act or do something that the defendant knows is an infringing act.
The Court then examined the case law. The Court noted that before section 271 was enacted in 1952, both inducing infringement and contributory infringement were treated as contributory infringement. Section 271 divided contributory infringement into two types of infringement, inducing infringement and contributory infringement. The court found that subsection (c) contains the same ambiguity as section (b). This ambiguity had been resolved, however, by the Court in its decision in Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964), which held that in order to be liable for contributory patent infringement under subsection (c), a defendant had to know “that the combination for which his component was especially designed was both patented and infringing.”
The Court stated that the two subsections should not have different standards for knowledge, and thus, its prior holding in Aro Mfg. compelled the conclusion that subsection (b) required the same knowledge. Thus, the Court held that “induced infringement under §271(b) requires knowledge that the induced acts constitute patent infringement.”
In addressing the facts before it, the Court agreed with Pentalpha that “deliberate indifference to a known risk that a patent exists is not the appropriate standard under section 271(b),” but affirmed the Federal Circuit’s decision under the doctrine of “willful blindness.” The court explained that willful blindness is a criminal law doctrine that holds a defendant who deliberately ignores clear evidence of facts as culpable as a defendant with actual knowledge of the facts. According to the court, “persons who know enough to blind themselves to direct proof of critical facts in effect have actual knowledge of those facts.” Willful blindness is applied in criminal cases throughout the country; therefore, the Court said, it is reasonable to apply it to civil cases of inducing patent infringement.
In determining the test for willful blindness in patent infringement cases, the Court reviewed the doctrine as articulated by the appellate courts in criminal cases. Those courts have held that the doctrine requires that: “(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 of that fact.” The Court found that:
“Under this formulation, a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts…By contrast, a reckless defendant is one who merely knows of a substantial and unjustified risk of such wrongdoing,…and a negligent defendant is one who should have known of a similar risk but, in fact, did not…”
The Court concluded that the Federal Circuit did not apply the willful blindness test properly in this case. The appellate court had found knowledge where there was only a “known risk” that the induced acts constituted infringement and had found that “deliberate indifference” to the risk was sufficient, rather than active steps to avoid knowledge of the infringement.
The Court affirmed the Federal Circuit’s decision, however, because it found that there was sufficient evidence for the jury to have found that Pentalpha’s conduct constituted willful blindness. Pentalpha knew that SEB’s deep fryer was commercially successful in the U.S. when it chose to copy it; Pentalpha’s CEO was an inventor on many U.S. patents and knew that the SEB product manufactured for foreign sales would not be marked with a patent number; and Pentalpha deliberately decided not to inform its attorney that it had copied SEB’s deep fryer. This evidence demonstrated that Pentalpha subjectively believed that there was a high probability that SEB’s deep fryer was covered by a patent, that Pentalpha deliberately acted to avoid knowledge of this fact, and thus, Pentalpha had willfully blinded itself to the infringement of those to whom it had sold its product.