In a paper published by the Washington Legal Foundation, entitled Supreme Court To Address Standard For Induced Patent Infringement, Brian Pandya of Wiley Rein LLP present an examination of Global-Tech Appliances Inc. v. SEB, S.A. The U.S. Supreme Court will hold oral argument in the case today.
The Supreme Court has ruled in nine patent challenges since 2005. The nine decisions are more than double the number of patent rulings by the justices in the five years prior to 2005.
The Global-Tech case involves the standard for holding a company liable if it has induced its customers to infringe another’s patent. The Federal Circuit, ruling for SEB, said the intent needed to establish liability for inducement to infringe is “deliberate indifference to potential patent rights.” Global-Tech is arguing for a higher standard. It urges the Court to require evidence of a purposeful, culpable expression and conduct by the defendant encouraging infringement.
Whether the legal standard for the “state of mind” element of a claim for actively inducing infringement under 35 U.S.C. § 271(b) is “deliberate indifference of a known risk” that an infringement may occur or instead “purposeful, culpable expression and conduct” to encourage an infringement.
The plaintiff is SEB, a large French appliance manufacturer that holds a patent on a design for a deep-fat fryer that has a cool external surface. The defendants (petitioner Global-Tech and a variety of affiliates) are a group of companies that design and manufacture appliances, largely in China. After Sunbeam requested that Global-Tech manufacture a deep-fat fryer, Global-Tech purchased several deep-fat fryers in Hong Kong, studied them, and developed a proposal that incorporated some of the most desirable features of those fryers, as well as a few new features of its own. SEB’s fryer was one of those that Global-Tech examined.
After settling on a design for a fryer, Global-Tech obtained a patent opinion from its US attorney indicating that the proposed fryer would not infringe any United States patents. Of special note is that Global-Tech did not disclose to the attorney the specific manufacturers whose fryers it had examined, and the attorney did not locate SEB’s patent.
Pandya believes that the Supreme Court is likely to affirm the lower judgment:
This case presents a challenging set of facts. On one hand, Global-Tech can credibly argue that it was not aware of SEB’s patent before being placed on actual notice of alleged infringement, therefore it could not have specifically intended SEB’s patent to be infringed. On the other hand, Global-Tech appears to have acted in a willfully blind manner, if not in bad faith, by copying SEB’s design and then commissioning a freedom to operate search without notifying its patent attorney of the product copying.
Although it is plausible that the Supreme Court could impose a requirement of actual knowledge of a patent and reverse the decision below in its entirety, it seems more likely that that the Supreme Court will affirm the judgment that Global-Tech induced infringement of the ‘312 patent, but reject the Federal Circuit’s deliberate indifference standard as inconsistent with Grokster. Such a decision would raise the bar for proving induced infringement, but would leave unanswered questions, such as under which circumstances intent to infringe a patent can be inferred when the accused infringer had no notice of patent infringement.
See the entire article here: Supreme Court To Address Standard For Induced Patent Infringement