Commil USA, LLC v. Cisco Systems, Inc. – What You Need to Know
Today, the U.S. Supreme Court held in a 6–2 decision that a belief that a patent is invalid is not a defense to a claim of induced infringement.
Background of the Case
Commil sued Cisco for patent infringement, alleging liability under two theories: direct infringement based on making and using networking equipment, and inducing others to infringe by selling the networking equipment for others to use. After a first trial, Cisco was found liable for direct infringement but not induced infringement. After a second trial, Cisco was found liable for induced infringement. As a defense to the claim of inducement, Cisco sought to introduce evidence that it had a good-faith belief that Commil’s patent was invalid. The district court excluded that evidence as inadmissible. On appeal, the Federal Circuit reversed-in-part, holding that the trial court erred in excluding Cisco’s evidence regarding its good-faith belief of invalidity. The Supreme Court granted certiorari to consider the question whether a good-faith belief in invalidity is a defense to induced infringement.
Analysis
Before turning to the question presented, the Supreme Court reaffirmed its holding in Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. ___ (2011), that induced infringement requires knowledge that the induced acts constitute patent infringement. On the question presented, the majority presented several reasons to support its holding that a belief of patent invalidity is not a defense to induced infringement.
First, the Supreme Court observed that infringement and invalidity are “separate matters” under patent law that appear in different parts of the Patent Act. Providing a defense to induced infringement based on a belief in invalidity would improperly conflate the two issues. Second, the majority reasoned that the proposed defense would undermine the statutory presumption of validity created by Congress. Third, the majority noted that invalidity is an affirmative defense to liability; it is not a defense to infringement. Fourth, the majority noted the existence of practical reasons not to allow the new defense. These include the fact that accused infringers have several ways of obtaining rulings of invalidity, including declaratory judgment actions, inter partes reviews, and ex parte reexaminations, the last of which had been pursued by Cisco in connection with the dispute below.
The majority also observed that validity is often more difficult to determine than infringement, such that the new defense could render litigation more burdensome. Finally, the majority noted other areas of the law that disallow defenses based on a lack of actual knowledge that the conduct at issue violates the law, including contract law and trespassing.
The dissent found each of the majority’s reasons unpersuasive, viewing invalidity and infringement as intertwined issues. “It follows, as night the day, that only valid patents can be infringed.” On the issue of practicality, the dissent expressed concern that the majority’s holding increases the in terrorem power of patent trolls.
Observations
The Supreme Court has greatly simplified charges of indirect infringement, clarifying that acts relating to infringement are separate from beliefs of invalidity. Accordingly, alleged infringers cannot complicate a charge of induced infringement by raising a good-faith belief of invalidity. The ruling is the first in a while in which the Supreme Court has ruled in favor of a patent holder. But it continues the trend of the Supreme Court reversing the Federal Circuit on substantive patent law.