THE NEW DEVELOPMENT OF THE KNOWLEDGE
REQUIREMENT OF INDUCED INFRINGEMENT UNDER
THE AMERICAN PATENT LAW
Ping-Hsun Chen*Assistant Professor
Graduate Institute of Intellectual Property, National Taipei University of Technology (Taiwan)
ABSTRACT
The United States has the most pro-inventor patent system which provides a full range of remedies for patentees facing infringement. 35 U.S.C. § 271(b) provides, “Whoever actively induces infringement of a patent shall be liable as an infringer.” So, a person accused of active inducement does not infringe the claimed invention directly. Instead, another person directly exploits the claimed invention. In 2011, the Supreme Court in Global-Tech
Appliances, Inc. v. SEB S.A. interpreted the knowledgment requirement of §
271(b) to mandate that the plaintiff has to prove that an inducer knew the patent-in-suit and the patent infringement. The Supreme Court clarified that there is no negligent or reckless inducer. However, what was not clear is whether the “should have known” standard has been abrogated because the Supreme Court did not express that. After the Federal Circuit’s Commil USA,
LLC v. Cisco Sys., Inc. in 2013, the “should have known” standard was
finally removed from the knowledge requirement. After Global-Tech, there were several district court decisions applying Global-Tech. This article analyzed several early district court decisions and found no effect on the traditional practice of finding inducement.
Keywords: American patent law, inducement, Global-Tech, indirect infringement, patent infringemen
* J.D. 10’ & LL.M. 08’, Washington University in St. Louis School of Law; LL.M. 07’, National Chengchi University, Taiwan; B.S. 97’ & M.S. 99’ in Chem. Eng., National Taiwan University, Taiwan. Corresponding email: cstr@ntut.edu.tw. The original version of this article was presented at the 2012 National Technology Law Conference in National Chiao Tung University. The author would like to thank the National Science Council for its financial support to this research (Project title: New Development of Induced Infringement under the American Patent Law, NSC 101-2410-H-027-001).
I. Introduction
The United States has the most pro-inventor patent system which provides a full range of remedies for patentees facing infringement. The system was designed to encourage innovations and to keep the economy growing.1 To encourage disclosure of an invention, the patent law grants to the inventor an exclusive right to prevent others from unlawfully exploiting her invention.2 This exclusive right is vested in the statutes defining liabilities of unlawful exploitation of a claimed invention.
35 U.S.C. § 271 defines various forms of infringement.3 One form is active inducement. 4 § 271(b) provides, “Whoever actively induces infringement of a patent shall be liable as an infringer.” So, a person accused of active inducement does not infringe the claimed invention directly. Instead, another person directly exploits the claimed invention.
When § 271(b) was codified in 1952, Congress intended to make liable contributory infringement of a patent developed by the case law.5 Instead of creating a single provision to cover all infringing acts under the case law of contributory infringement, Congress provided two categories of contributory infringement.6 One was in § 271(b), and the other was in § 271(c). § 271(c) states, “Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.” § 271(c) was intended to cover a specific act of contributory infringement, while § 271(b) was intended to cover a broad sense of contributory infringement.7
1 See Ping-Hsun Chen, Should We Have Federal Circuit Law for Reviewing JMOL
Motions Arising from Patent Law Cases?, 1 NTUTJ. OF INTELL.PROP.L.&MGMT. 1, 1 (2012).
2 See F. Scott Kieff, The Case for Registering Patents and the Law and Economics of
Present Patent-Obtaining Rules, 45 B.C.L.REV. 55, 61-62 (2003).
3 About the history of section 271, please see Tom Arnold & Louis Riley, Contributory Infringement and Patent Misuse: The Enactment of § 271 and its Subsequent Amendments, 76 J.PAT.&TRADEMARK OFF.SOC’Y 357 (1994).
4 See Timothy R. Holbrook, The Intent Element of Induced Infringement, 22 S
ANTA CLARA COMPUTER &HIGH TECH.L.J. 399, 399 (2006).
5 See Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 485-86 (1964).
6 See Hewlett-Packard Co. v. Bausch & Lomb Inc., 909 F.2d 1464, 1468-69 (Fed. Cir.
1990).
7 See Power Lift, Inc. v. Lang Tools, Inc., 774 F.2d 478, 481 (Fed. Cir. 1985) (“The
In 1988, the Federal Circuit first interpreted § 271(b) to require that a person infringes a patent “by actively and knowingly aiding and abetting another’s direct infringement.”8 The Federal Circuit particularly clarified “knowing” as an element because “the case law and legislative history uniformly assert such a requirement.” 9 The “knowing”/”knowledge” requirement requires “proof of a specific, knowing intent to induce infringement.”10 But, the Federal Circuit did not require “direct evidence,” and confirmed that “circumstantial evidence may suffice.”11
The “knowledge” requirement had been ambiguous back then because of two conflicting opinions of the Federal Circuit in 1990.12 In
Hewlett-Packard Co. v. Bausch & Lomb Inc., the Federal Circuit held that “proof of
actual intent to cause the acts which constitute the infringement is a necessary prerequisite to finding active inducement.”13 That is, causing infringement specifically is not required. Contrarily, in Manville Sales Corp.
v. Paramount Sys., Inc., the Federal Circuit held, “The plaintiff has the
burden of showing that the alleged infringer’s actions induced infringing acts and that he knew or should have known his actions would induce actual infringements.”14 That is, knowledge of direct infringement is specifically required.
Hewlett-Packard Co. and Manville Sales Corp. provide two different
standards. Prof. Lemley comments that the Hewlett-Packard Co. court is “a fairly lower standard of intent since most people do intend the natural consequences of their acts.”15 On the other hand, he mentions that for the
Manville Sales Corp. court, “it is the knowledge of the legal consequence –
infringement – that matters.”16 He also observes that the Federal Circuit and district courts applied either of these two standards and the Federal Circuit failed to reconcile the standards.17
infringement and at the same time eliminate ... doubt and confusion. Paragraph (b) recites in broad terms that one who aids and abets an infringement is likewise an infringer.’” (citing a Congressional report)).
8 Water Techs. Corp. v. Calco, Ltd., 850 F.2d 660, 668 (Fed. Cir. 1988). 9 Id.
10 Id. 11 Id.
12 See Mark A. Lemley, Inducing Patent Infringement, 39 U.C.D
AVIS L.REV. 225, 238 (2005).
13 Hewlett-Packard Co. v. Bausch & Lomb Inc., 909 F.2d 1464, 1469 (Fed. Cir. 1990). 14 Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 553 (Fed. Cir. 1990). 15 Lemley, supra note 12, at 239.
16 Id. at 240. 17 See id. at 240-41.
In 2006, the Federal Circuit resolved the conflicting case law through
DSU Med. Corp. v. JMS Co.18 that is an en banc decision on the issue of inducement.19 The Federal Circuit chose the Manville Sales Corp. court as an ultimate standard for inducement.20 It further held, “The requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent.”21
Although the standard for determining inducement is definite, the application of the standard is still confusing because a court looks to circumstantial evidence. A plaintiff may prove that the defendant actually knew the induced act was infringement. Or, a plaintiff may prove that the defendant should have known the induced act was infringement. All factual findings are based on circumstantial evidence. In 2010, the Federal Circuit took a bold step to loosen the standard of knowledge to find inducement with the evidence on hands. 22 The Federal Circuit created a “deliberate indifference” standard.23
In 2011, Global-Tech Appliances, Inc. v. SEB S.A.24 is the Supreme Court’s first case related to the interpretation of 35 U.S.C. § 271(b). The decision responded to the Federal Circuit’s “deliberate indifference” standard. The Supreme Court clarified that § 271(b) requires the plaintiff to prove that the accused infringer not only knows the patent-in-suit but also has a specific intent to cause others to infringe the patent.25 The Supreme Court also overruled the “deliberate indifference” standard.26 While “actual knowledge” of both the patent and direct infringement is required for proving inducement, the Supreme Court introduced the willful-blindness standard as an alternative of proving “actual knowledge.”27 The standard has two prongs.28 First, “the
18 DSU Med. Corp. v. JMS Co., 471 F.3d 1293 (Fed. Cir. 2006).
19 See David W. Roadcap, Global-Tech Appliances, Inc. v. SEB S.A. and the Creation of a
Flexible Blindness Standard for Induced Patent Infringement, 13 N.C.J.L.&TECH.ON. 117, 122 (2011).
20 See DSU Med. Corp., 471 F.3d at 1304. 21 Id.
22 See SEB S.A. v. Montgomery Ward & Co., Inc., 594 F.3d 1360, 1376-78 (Fed. Cir.
2010).
23 See Andrew Ward, Inducing Infringement: Specific Intent and Damages Calculation, 94
J.PAT.&TRADEMARK OFF.SOC’Y 1, 13-14 (2012).
24 Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011).
25 See Daniel Eric Gorman, Note, Global-Tech Appliances, Inc. v. SEB S.A.: Invoking the
Doctrine of Willful Blindness to Bring those Who Lack Knowledge of Induced Infringement within § 271(b)’s Prohibition, 14 TUL.J.TECH.&INTELL.PROP. 397, 402 (2011).
26 See Ward, supra note 23, at 20.
27 See Jason A. Rantanen, An Objective View of Fault in Patent Infringement, 60 A
M.U.L. REV. 1575, 1615-16 (2011).
defendant must subjectively believe that there is a high probability that a fact exists.”29 Second, “the defendant must take deliberate actions to avoid learning of that fact.”30
The Global-Tech decision is a new beginning of inducement. Because this new legal standard is invented, it is necessary to observe how district courts apply the willful-blindness standard. This paper has two parts. Part II discusses the Global-Tech decision and background knowledge thereof, including key facts and lower courts’ opinions. Additionally, one recent Federal Circuit case that responded to the Global-Tech decision is discussed. Part III provides a survey of early thirty five district court decisions citing the Global-Tech decision and analyzes how district courts applied the willful-blindness standard or understood the Global-Tech decision. The district courts’ interpretations of the standard are reviewed. The opinions are analyzed in terms of different types of motion under the Federal Rules of Civil Procedure (“FRCP”), for example, Rule 12(b)(6) motions, Rule 56 motions, and motions for judgment as a matter of law (“JMOL”).
II. Global-Tech Appliances, Inc. v. SEB S.A. A. Procedural History
The plaintiff in Global-Tech was the owner of a U.S. Patent No. 4,995,312 that claims an electrical deep fryer.31 The plaintiff also made deep fryers and sold them through its distributor.32
The defendants were Montgomery Ward & Co., Inc., Global-Tech Appliances, Inc., and Pentalpha Enterprises Ltd.33 Pentalpha Enterprises Ltd. was responsible for designing and selling the accused product, while Global-Tech Appliances, Inc. was a mother company of Pentalpha Enterprises Ltd.34 Pentalpha Enterprises Ltd. sold the accused product to Montgomery Ward & Co., Inc. that owned a lot of retailer stores in the States.35 Then, Montgomery Ward & Co., Inc. began to sell to customers the accused product.36
In August 1999, the plaintiff filed a law suit against those three defendants at the United States District Court for the Southern District of
28 See Ward, supra note 23, at 20.
29 Rantanen, supra note 27, at 1603 (citing the Global-Tech decision). 30 Id. (citing the Global-Tech decision).
31 See SEB S.A. v. Montgomery Ward & Co., Inc., 77 F. Supp. 2d 399, 400 (S.D.N.Y.
1999). 32 See id. 33 See id.
34 See SEB S.A. v. Montgomery Ward & Co., Inc., 594 F.3d 1360, 1366 (Fed. Cir. 2010). 35 See SEB S.A., 77 F. Supp. 2d at 400.
New York and asserted patent infringement.37 On September 10, 1999, the plaintiff moved for preliminary injunction.38 On November 15, 1999, the district court issued “a preliminary injunction against defendants’ continued sale of the fryer.”39 The defendants then appealed to the Federal Circuit which affirmed the preliminary injunction on November 6, 2000.40
During the term of the preliminary injunction, the accused product was modified,41 so the plaintiff moved for a supplemental preliminary injunction on August 3, 2000 to include the modified fryers as part of the original injunction.42 Agreeing with the plaintiff, the district court later issued a new injunction on March 20, 2001.43
Long after the discovery was closed on October 30, 2001, the district court did not begin the trial until April 17, 2006.44 After the jury heard all evidence, the defendants (not including Montgomery Ward & Co., Inc.) moved for judgment as a matter of law on inducement.45 But, the district court denied the motion and let the jury try the case.46 With respect to the issue of inducement, the jury found the inducement by the defendants.47
Among other motions, the defendants filed a post-trial motion for judgment as a matter of law on inducement.48 But, the district court again denied the motion.49 Then, the defendants appealed to the Federal Circuit which, among other things, reviewed the issue of inducement and affirmed the district court’s ruling as well as jury’s finding.50
The defendants later filed a petition to the Supreme Court which granted the petition for writ of certiorari on October 12, 2010.51 The issue was specifically about inducement, and the defendants challenged the legal standard of inducement adopted by the Federal Circuit.52 Unfortunately to
37 See SEB S.A. v. Montgomery Ward & Co., Inc., 137 F. Supp. 2d 285, 286 (S.D.N.Y. 2001).
38 See SEB S.A., 594 F.3d at 1367. 39 See SEB S.A., 137 F. Supp. 2d at 286. 40 See id.
41 See id. 42 See id. at 287. 43 See id. at 285.
44 See SEB S.A., 594 F.3d at 1367. 45 See id.
46 See id. 47 See id.
48 See SEB S.A. v. Montgomery Ward & Co., Inc., 2007 WL 3165783, at *13 (S.D.N.Y.
2007).
49 See id. at *4.
50 See SEB S.A., 594 F.3d at 1374, 1378.
51 See Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 458, 458 (2010).
the defendants, while the Supreme Court did not agree with the Federal Circuit’s legal standard,53 it eventually held the Federal Circuit’s ruling because under a new standard developed by the Supreme Court, the circumstantial evidence supported the finding of inducement.54
B. Inducement Issue
The key facts surrounding the inducement issue were about the product development of the accused products. Pentalpha Enterprises Ltd. designed the accused fryer in Hong Kong, China.55 The design idea was not original, because Pentalpha Enterprises Ltd. simply copied the plaintiff’s fryer sold in Hong Kong.56 In 1997, Global-Tech Appliances, Inc. sold the accused products to Sunbeam Products, Inc. in the States.57 Under the request of Sunbeam Products, Inc., Global-Tech Appliances, Inc. hired an American attorney to do a right-to-use study that was based on the analysis of twenty six patents and concluded that the accused product was not read on any claims of those patents.58 But, Global-Tech Appliances, Inc. had never told the attorney that the accused product copied the plaintiff’s fryer.59
When the district court heard the defendants’ motion for judgment as a matter of law on inducement, the defendants specifically argued that it was insufficient to show the knowledge of the patent-in-suit by using the piece of evidence to show that the attorney was set up to avoid knowing the accused fryer simply copied the plaintiff’s fryer.60 But, the district court disagreed by stating that “the jury was free to consider whether key information was not disclosed to Levy in his patent search and whether that information would have allowed defendants to discover the patent.”61 The district court further recognized that the evidence of “copying” “‘was sufficient to establish “specific intent and action to induce infringement.’”62 Thus, the jury’s finding was upheld.
C. Analysis of the Federal Circuit Decision
53 See id. at 2067, 2065.
54 See id. at 2068-72.
55 See SEB S.A., 594 F.3d at 1366. 56 See id.
57 See id. I assumed that the mother company was responsible for selling products. 58 See id.
59 See id.
60 See SEB S.A., 2007 WL 3165783, at *4.
61 See id. at *4. 62 See id.
The debate of the inducement issue focused on the jury’s finding related to inducement.63 The key issue was whether all relevant evidence considered by the jury sufficiently supported a finding of knowledge of the patent-in-suit. 64 To resolve the issue, the Federal Circuit first elaborated the requirement of knowledge of a patent-in-suit.
The Federal Circuit case law requires that to constitute inducement, “the plaintiff must show that the alleged infringer knew or should have known that his actions would induce actual infringements.”65 This requirement “necessarily includes the requirement that he or she knew of the patent.”66 However, when the Federal Circuit dealt with the defendants’ appeal, what was not defined was “the metes and bounds of the knowledge-of-the-patent requirement.” 67 Although the defendants challenged the “should have known” standard, the Federal Circuit developed an even more loose standard for determining actual knowledge of a patent-in-suit.68 It is a “deliberate indifference” standard which was later abrogated by the Supreme Court.
While again recognizing that “inducement requires a showing of ‘specific intent to encourage another’s infringement,’”69 the Federal Circuit stated that “‘specific intent’ in the civil context is not so narrow as to allow an accused wrongdoer to actively disregard a known risk that an element of the offense exists.” 70 This statement indicated the Federal Circuit’s awareness of the fact of this case. Because the defendants intentionally hid the key information from their attorney when the attorney was doing a right-to-use study, the Federal Circuit seemed to condemn such behavior by developing a new standard for inducement in such case.
To support the “deliberate indifference” standard, the Federal Circuit cited sister Circuits’ cases and stated the “the standard of deliberate indifference of a known risk is not different from actual knowledge, but is a form of actual knowledge.”71 The Federal Circuit also gave an evidential definition of the “deliberate indifference” standard. First, the Federal Circuit distinguished the “should have known” standard and “deliberate indifference” standard by stating that the former standard “implies a solely objective test” and that the latter standard “may require a subjective
63 See SEB S.A., 594 F.3d at 1373. 64 See id. 65 See id. at 1376. 66 See id. 67 See id. 68 See id. at 1376-77. 69 See id. at 1376. 70 See id.
71 See SEB S.A., 594 F.3d at 1377 (quoting United States v. Carani, 492 F.3d 867, 873 (7th Cir. 2007); Woodman v. WWOR-TV, Inc., 411 F.3d 69, 84 n.14 (2d Cir. 2005)).
determination that the defendant knew of and disregarded the overt risk that an element of the offense existed.”72 Second, the Federal Circuit recognized that “an accused infringer may defeat a showing of subjective deliberate indifference to the existence of a patent where it shows that it was genuinely ‘unaware even of an obvious risk.’”73
After defining the “deliberate indifference” standard as an ultimate standard for the present case, the Federal Circuit explained why “[t]he record contains adequate evidence to support a conclusion that [the defendants] deliberately disregarded a known risk that [the plaintiff] had a protective patent.”74 The Federal Circuit quoted several pieces of evidence heard by the jury to support its conclusion. For instance, “[the defendant] purchased an [plaintiff-made] deep fryer in Hong Kong and copied all but the cosmetics.”75 “[The defendant] hired an attorney to conduct a right-to-use study, but did not tell him that it had based its product on [the plaintiff’s] product.” 76 There were other facts that caused “[the] failure to inform [the defendants’] counsel of copying [to] be highly suggestive of deliberate indifference.”77 First, the president of one defendant was well familiar with the American patent system and was one listed inventor of several U.S. patents.78 In addition, the defendants had a prior business relationship with the plaintiff regarding the defendants’ patented steamer.79
The Federal Circuit also considered whether “proof of knowledge through a showing of deliberate indifference [was] defeated where an accused infringer establishes that he actually believed that a patent covering the accused product did not exist,”80 and concluded it was not.81 For example, while the plaintiff’s fryer copied was not marked with a U.S. patent number, the defendants did not “argue that it relied on the lack of a mark to come to a belief that the deep fryer was not patented.”82 The Federal Circuit even required the defendants to explain “why one would expect an [plaintiff’s] deep fryer purchased in Hong Kong to have U.S. patent markings.”83
72 See id. at 1376. 73 See id. at 1376-77. 74 See id. at 1377. 75 See id. 76 See id. 77 See id. 78 See id. 79 See id. 80 See id. at 1378. 81 See id. 82 See id. 83 See id.
While the defendants’ behavior surrounding the accused fryer constituted inducement under the “deliberate indifference” standard, the Federal Circuit further cautioned that “[its] opinion does not purport to establish the outer limits of the type of knowledge needed for inducement.”84 Under a dictum made in this case, “a patentee may perhaps only need to show, … , constructive knowledge with persuasive evidence of disregard for clear patent markings.”85
In conclusion, the Federal Circuit created the new “deliberate indifference” standard while not limiting its knowledge theories for future development.
D. Analysis of the Supreme Court Decision
1. Rejection of the “Deliberate Indifference” Standard
The Supreme Court in Global-Tech expressly rejected the “deliberate indifference” standard and, contrary to the Federal Circuit, established a boundary of the knowledge requirement for inducement. To set aside the “deliberate indifference” standard, the Supreme Court specified the knowledge requirement of inducement under section 271(b).
Based on three reasons, the Supreme Court held that “induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement.”86
First, from the language of section 271(b), the Supreme Court explained “actively induces” and concluded that “the inducement must involve the taking of affirmative steps to bring about the desired result.”87 But, section 271(b), as the Supreme Court was confused, might be read to “require merely that the inducer lead another to engage in conduct that happens to amount to [direct] infringement,”88 or to “mean that the inducer must persuade another to engage in conduct that the inducer knows is [direct] infringement.”89
To resolve such ambiguity, the Supreme Court then looked to the case law before the indirect infringement clauses were codified, because the legislative history showed that sections 271(b) and (c) were intended to codify the case law of contributory patent infringement.90 However, the Supreme Court found that there were two conflicting ways of how courts
84 See id.
85 See id.
86 See Global-Tech Appliances, Inc., 131 S. Ct. at 2068. 87 See id. at 2065.
88 See id. 89 See id.
viewed contributory patent infringement.91 The pre-codification case law did not help. So, the Supreme Court relied on its recent precedent, which relates to contributory copyright infringement.92 Citing its 2005 decision,
Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.,93 the Supreme Court stated again that “[t]he inducement rule ... premises liability on purposeful, culpable expression and conduct.”94
Last, because of no clue from the pre-codification case law, the Supreme Court relied on its precedent of interpreting § 271(c) to resolve the issue. In 1964, the Supreme Court in Aro Mfg. Co. v. Convertible Top Replacement
Co. (“Aro II”)95 interpreted § 271(c),96 and concluded that “a violator of § 271(c) must know ‘that the combination for which his component was especially designed was both patented and infringing.’”97 That is, “§ 271(c) requires knowledge of the existence of the patent that is infringed.”98 Here, for some reasons, the Supreme Court held that the Aro II decision “compels this same knowledge for liability under § 271(b).”99 First, the inducement under section 271(b) was considered part of contributory patent infringement prior to the codification.100 Second, the phrase “knowing [a component] to be especially made or especially adapted for use in an infringement” in section 271(c) also could be read in two ways: “[(1)] a violator must know that the component is “especially adapted for use” in a product that happens to infringe a patent[; or (2)] the phrase may be read to require, in addition, knowledge of the patent's existence.”101 Third, the Supreme Court felt “strange to hold that knowledge of the relevant patent is needed under § 271(c) but not under § 271(b).”102
It should be noted that the Supreme Court referred the “deliberate indifference” standard to “deliberate indifference to a known risk that a
91 See id. at 2066.
92 See id. at 2066-67 (interpreting Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005)).
93 Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).
94 See Global-Tech Appliances, Inc., 131 S. Ct. at 2067(citing Metro-Goldwyn-Mayer
Studios Inc., 545 U.S. at 937).
95 Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964).
96 See Global-Tech Appliances, Inc., 131 S. Ct. at 2067 97 See id. 98 See id. at 2068. 99 See id. at 2067. 100 See id. 101 See id. 102 See id. at 2068.
patent exists.”103 While the Supreme Court used “known risk,” the Federal Circuit actually emphasized “overt risk” or “obvious risk.”104
2. Creation of a “Willful-blindness” Standard
Although the newly-born “deliberate indifference” standard was overruled, the Supreme Court did not mean to free the defendants because it then created a new “willful-blindness” standard to hold that the behavior of the defendants constituted inducement under § 271(b).105 The doctrine of willful blindness is a concept of criminal law.106 The doctrine is applied to prevent “defendants [from] escap[ing] the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances.”107
The doctrine of willful blindness was adopted because “defendants who behave in this manner are just as culpable as those who have actual knowledge.”108 The Supreme Court considered “willful blindness” as a substitute for “actual knowledge.”109
Based on Circuit Courts’ case laws, the Supreme Court held the willful-blindness standard had “two basic requirements: (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.”110 Alternatively, the Supreme Court held that “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.”111
To distinguish the “willful-blindness” standard from the “deliberate indifference” standard, the Supreme Court first stated that “[the two basic] requirements give willful blindness an appropriately limited scope that surpasses recklessness and negligence.”112 The Supreme Court characterized “a reckless defendant [as] one who merely knows of a substantial and unjustified risk of such wrongdoing”113 and “a negligent defendant [as] one
103 See id.
104 See SEB S.A., 594 F.3d at 1376-77.
105 See Global-Tech Appliances, Inc., 131 S. Ct. at 2068. 106 See id. 107 See id. at 2068-69. 108 See id. at 2069. 109 See id. 110 See id. at 2070. 111 See id. at 2070-71. 112 See id. at 2070. 113 See id. at 2071.
who should have known of a similar risk but, in fact, did not.”114 Thus, thee proposition suggests that neither a reckless defendant nor negligent defendant can be held liable for inducement.
The Supreme Court also criticized the “deliberate indifference” standard in two ways.115 “First, [the Federal Circuit’s standard] permits a finding of knowledge when there is merely a ‘known risk’ that the induced acts are infringing. Second, in demanding only ‘deliberate indifference’ to that risk, the Federal Circuit’s test does not require active efforts by an inducer to avoid knowing about the infringing nature of the activities.”116
But, the question remains whether the Supreme Court has abrogated the “should have known” standard. First, whether the “should have known” standard is equivalent to the Supreme Court’s “negligent defendant” is questionable. Second, “surpass” was used as a verb in comparing willful blindness with recklessness and negligence, while the Supreme Court did not expressly hold that the “negligence” standard is not applicable. So, the proposition that the “willful-blindness” standard is a better test seems not to mean that the “should have known” standard is inappropriate.
3. Application of the “Willful-blindness” Standard
Although the defendants won on the issue of an applicable standard, the Supreme Court still held that “[t]he jury could have easily found that before April 1998 [the defendants] willfully blinded itself to the infringing nature of the sales it encouraged [a third party] to make.”117 Several pieces of evidence were relied on. First, the Supreme Court found that the plaintiff’s fryer was an innovation and that sales of the fryer were expected to be growing for some time.118 When the defendants developed the accused fryer for their American customer, they did a market research and collected as much information as possible.119 The defendants believed that the advanced technology embodied in the plaintiff’s fryer was valuable to the U.S. market, because they decided to copy such advanced technology.120 The defendants intended to copy the plaintiff’s fryer sold in Hong Kong.121 The defendants knew their deep fryer was developed for the U.S. market.122 The top
114 See id. 115 See id. 116 See id. 117 See id. 118 See id. 119 See id. 120 See id. 121 See id. 122 See id.
manager of the defendants was an inventor of many U.S. patents.123 Last, the top manager decided not to tell their attorney that their deep fryer was a copy of the plaintiff’s product when the attorney was producing a right-to-use report.124
The Supreme Court particularly questioned the motive of the top manager to hide the information that they copied the plaintiff’s deep fryer. The Supreme Court stated that “we cannot fathom what motive [the top manager] could have had for withholding this information other than to manufacture a claim of plausible deniability in the event that his company was later accused of patent infringement.”125
Based on the evidence surrounding the making of the right-to-use study, the Supreme Court held that it “was more than sufficient for a jury to find that [the defendants] subjectively believed there was a high probability that [the plaintiff’s fryer was patented, that [the defendants] took deliberate steps to avoid knowing that fact, and that it therefore willfully blinded itself to the infringing nature of [a third party’s] sales.”126
It should be noted that the Supreme Court actually asked the defendants to provide some rebuttals, so the inference could be withdrawn. For instance, the defendants might answer “whether the attorney would have fared better had he known of [the plaintiff’s] design.”127 That is, the defendants might have had a chance to provide a theory of why the attorney does not need to know that they copied the plaintiff’s fryer. But, the defendants did not respond.128
E. Federal Circuit’s Response
While excluding a negligent defendant from inducement actions, the Supreme Court in Global-Tech did not explicitly overrule the “should have known” standard that has been adopted by the Federal Circuit. After
Global-Tech, the Federal Circuit was occasionally confronted with inducement, but
until 2013 it did not address the legality of the “should have known” standard.129 123 See id. 124 See id. 125 See id. 126 See id. at 2072. 127 See id. at 2071. 128 See id. at 2071.
129 See e.g., Merial Ltd. v. Cipla Ltd., 681 F.3d 1283 (Fed. Cir. 2012); In re Bill of Lading Transmission and Processing System Patent Litigation, 681 F.3d 1323 (Fed. Cir. 2012); SynQor, Inc. v. Artesyn Techs., Inc., 709 F.3d 1365 (Fed. Cir. 2013); Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012); Smith & Nephew, Inc. v. Arthrex, Inc., 502 F. App’x. 945 (Fed. Cir. 2013).
In 2013, the Federal Circuit in Commil USA, LLC v. Cisco Sys., Inc.130 confirmed that the “should have known” standard has been abrogated by the Supreme Court. In Commil USA, LLC, the appeal related to a jury instruction that told the jury to find inducement if the defendant “actually intended to cause the acts that constitute direct infringement and that Cisco knew or should have known that its actions would induce actual infringement.”131 The Federal Circuit found this jury instruction was legally erroneous because a defendant that negligently induces the direct infringement may still be found liable under § 271(b).132
Drawing from Global-Tech, the Federal Circuit clarified the “knowledge” requirement in two aspects. First, showing either “actual knowledge or willful blindness” may prove the inducer’s knowledge of the patent-in-suit.133 Second, § 271(b) requires a finding of two types of knowledge: knowledge of the patent-in-suit and knowledge of direct infringement.134
The Federal Circuit also provided an evidentiary aspect of how to determine an inducer’s knowledge. First, the level of supporting facts of “willful blindness” prevents a finding of knowledge based on either recklessness or negligence.135 Thus, circumstantial evidence supporting a finding of knowledge based on recklessness or negligence cannot lead to a finding of knowledge based on “willful blindness.” Second, the “should have known” standard may accuse a finding of inducement based on an inducer’s recklessness or negligence.136 Thus, a jury instruction reciting the “should have known” standard is erroneous.
Third, evidence of an inducer’s good-faith belief of invalidity of the patent-in-suit must be heard by fact-finders.137 The Federal Circuit provided this proposition in response to the district court’s exclusion of the defendant’s evidence of a good-faith belief of invalidity, where the same district court recognized the Federal Circuit case law allowing evidence of a good-faith belief of non-infringement that may negate the prerequisite intent
130 Commil USA, LLC v. Cisco Sys., Inc., 720 F.3d 1361 (Fed. Cir. 2013).
131 Id. at 1366 (citing the jury instruction). 132 See id. at 1367.
133 See id. at 1366.
134 See id. at 1367 (“A finding of inducement requires both knowledge of the existence of the patent and ‘knowledge that the induced acts constitute patent infringement.’”).
135 See id. at 1366 (“The [Supreme] Court acknowledged that the facts that must be
adduced to find willful blindness prevent such a finding on facts that support only recklessness or negligence.”).
136 See id. (“[T]he present jury instruction plainly recites a negligence standard, which taken literally, would allow the jury to find the defendant liable based on mere negligence where knowledge is required.”).
required for finding inducement.138 The proposition is based on a notion that “[i]t is axiomatic that one cannot infringe an invalid patent.”139 Therefore, it is possible that “one could be aware of a patent and induce another to perform the steps of the patent claim, but have a good-faith belief that the patent is not valid.”140 In addition, the importance of evidence of good-faith belief of invalidity is that it may “negate [a finding] of the specific intent to encourage another’s infringement.” 141 However, while holding that “evidence of an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement,” 142 the Federal Circuit cautioned that “[t]his is, of course, not to say that such evidence precludes a finding of induced infringement.”143
Therefore, after Commil USA, LLC, the “should have known” standard is no longer a good law. The scope of the “knowledge” requirement is more definite.
III. Early District Court Response
A. Overview
Since Global-Tech, there have been several district court decisions citing
Global-Tech.144 Among the cases issued by May 22, 2012, Mikkelsen
Graphic Eng’g Inc. v. Zund Am., Inc.,145 ePlus, Inc. v. Lawson Software,
Inc.146 (hereinafter, “ePlus I”), and ePlus Inc. v. Lawson Software, Inc.147 (hereinafter, “ePlus II”), Vasudevan Software, Inc. v. TIBCO Software
Inc.,148 Ill. Tool Works, Inc. v. MOC Prods. Co.,149 Weiland Sliding Doors
and Windows, Inc. v. Panda Windows and Doors, LLC,150 Trading Techs.
138 See id. at 1367. 139 Id. at 1368. 140 Id. 141 Id. 142 Id. 143 Id. at 1368-69.
144 The search date was done on Oct. 9, 2013. The database was Westlaw’s KeyCite.
145 Mikkelsen Graphic Eng’g Inc. v. Zund Am., Inc., 2011 WL 6122377 (E.D. Wis. Dec.
08, 2011).
146 ePlus, Inc. v. Lawson Software, Inc., 2011 WL 3584313 (E.D. Va. Aug. 12, 2011)
(hereinafter, ePlus I).
147 ePlus Inc. v. Lawson Software, Inc., 2011 WL 4704212 (E.D. Va. Oct. 04, 2011)
(hereinafter, ePlus II).
148 Vasudevan Software, Inc. v. TIBCO Software Inc., 2012 WL 1831543 (N.D. Cal. May
18, 2012).
149 Ill. Tool Works, Inc. v. MOC Prods. Co., 2012 WL 727828 (S.D. Cal. Mar. 06, 2012).
150 Weiland Sliding Doors and Windows, Inc. v. Panda Windows and Doors, LLC, 2012
Int’l, Inc. v. BCG Partners, Inc.,151 Minemyer v. R-Boc Representatives,
Inc.,152 and Walker Digital, LLC v. Facebook, Inc.153 are decisions that interpret the Global-Tech decision. This section is intended to explore these decisions to see how they viewed the Global-Tech decision.
1. Does the Global-Tech Decision Change the Elements of Inducement?
Some commentators stated that the Global-Tech decision changed the rules of inducement under section 271(b).154 This observation from the
Global-Tech decision may not be a case.
In Mikkelsen Graphic Eng’g Inc., the district court stated that the
Global-Tech decision “does not change the state-of-mind element for
inducement.”155 In Vasudevan Software, Inc., to state a proposition where “[u]nder Global-Tech, to state a claim for inducement, the patentee must show that the alleged infringer had ‘knowledge of the existence of the patent that is infringed,’” the district court cited not only the Global-Tech decision but also one Federal Circuit’s en banc case, DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1304 (Fed. Cir.2006), and quoted: “the requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent.”156 This shows that the district court linked the Global-Tech decision to the existing Federal Circuit case law, indicating that the Global-Tech decision just affirms the existing case law.
In Minemyer, the district court stated that the Supreme Court “clarified the existing case law.”157 While “clarified” was used, the district court still stated, “The Supreme Court’s holding confirmed long-established Federal Circuit law on inducement.”158
Maybe the knowledge requirement is refined by the Global-Tech decision. In Trading Techs. Int’l, Inc., the district court confirmed that the
Global-Tech decision required a plaintiff to prove that “the alleged infringer
151 Trading Techs. Int’l, Inc. v. BCG Partners, Inc., 2011 WL 3946581 (N.D. Ill. Sept. 02, 2011).
152 Minemyer v. R-Boc Representatives, Inc., 2012 WL 527857 (N.D. Ill. Feb. 15, 2012).
153 Walker Digital, LLC v. Facebook, Inc., ___ F. Supp. 2d ___, 2012 WL 1129370 (D.
Del. Apr. 04, 2012).
154 See Yuan-Chen Chiang, “Willful Blindness” for Induced Infringement-Impacts of the U.S. Supreme Court’s Global-Tech Case on Taiwanese Companies, 1 NTUTJ. OF INTELL. PROP.L.&MGMT. 114, 119 (2012) (“Now the standard is much stricter, and thus it’s harder for a plaintiff to prove induced infringement.”).
155 Mikkelsen Graphic Eng’g Inc., 2011 WL 6122377, at *7.
156 See Vasudevan Software, Inc., 2012 WL 1831543, at *6.
157 Minemyer, 2012 WL 527857, at *1 (emphasis added).
must have knowledge of the patent at issue (or at least ‘willful blindness’ to the patent) and knowledge that the infringer’s product infringed on that patent.”159 In Walker Digital, LLC, the district court cited the Global-Tech decision and stated that “[the plaintiff] must allege that [the defendants] had knowledge not only of the patent, but of the allegedly infringing nature of the asserted conduct under § 271(b).”160 That is, there are two forms of knowledge. One is that a defendant has to know the patent-in-suit. The other is that a defendant has to know the existence of direct infringement.
2. What is the Willful-blindness Standard?
Two requirements of the Willful-blindness standard were defined by the Global-Tech decision. The district courts treat the two requirements as two elements for proving that a defendant willfully blinded himself from knowing the patent-in-suit.
Some opinions misunderstood the Supreme Court’s ruling. In Illinois
Tool Works, Inc. and Weiland Sliding Doors and Windows, Inc., the district
court distinguished the willful-blindness standard from actual knowledge by stating, “The [Supreme] Court further held that under this standard actual knowledge is not required, but that the doctrine of willful blindness applies to inducement of infringement claims.”161 However, the exact propositions made by the Supreme Court are, “The traditional rationale for this doctrine is that defendants who behave in this manner are just as culpable as those who have actual knowledge,”162 and “It is also said that persons who know enough to blind themselves to direct proof of critical facts in effect have actual knowledge of those facts.”163 The Supreme Court has never rejected that actual knowledge is not required but that the willful-blindness standard is an alternative for proving actual knowledge in the context of inducement.
3. Is There Any Alternative to the “Willful-blindness” Standard?
In ePlus I, the district court equaled “deliberately disregard” to “willfully blind.” 164 The defendant challenged the jury instruction read as “[k]nowledge of the patent may be established by a finding that Lawson had actual knowledge of the patent or that Lawson deliberately disregarded a
159 Trading Techs. Int’l, Inc., 2011 WL 3946581, at *3.
160 Walker Digital, LLC, 2012 WL 1129370, at *5.
161 See, e.g., Weiland Sliding Doors and Windows, Inc., 2012 WL 202664, at *4; Ill. Tool
Works, Inc., 2012 WL 727828, at *7.
162 Global-Tech Appliances, Inc., 131 S. Ct. at 2069. 163 Id.
known risk that ePlus had a protective patent.”165 The defendant asserted that the jury instruction adopted “a flawed, pre-[Global-Tech] standard for intent.”166 But, the district court held, “This instruction comports with the Supreme Court's discussion of willful blindness in [Globabl-Tech].”167 The holding was based on the fact that the difference between “deliberate indifference” and “deliberately disregard” was explained to the jury by the district court.168
In ePlus II, which followed ePlus I, the defendant again attacked the language “deliberately disregarded a known risk that ePlus had a protective patent” in the jury instruction.169 In responding to that attack, the district court explained why “this language does not depart from the ‘willful blindness’ standard set out in Global-Tech.”170 By citing one quotation in footnote nine of the Global-Tech decision, the district court held, “‘Deliberate disregard of a known risk’ implies that the Defendant ‘knew that criminal activity was particularly likely’ (the risk), and ‘intentionally failed to investigate” (deliberate disregard).’”171 In addition, the distinction between “deliberate indifference” and “deliberately disregard” was made again. The district court stated, “Whereas disregard implies ‘deliberate actions to avoid confirming a high probability of wrongdoing,’ indifference does not.”172 That is, in the district court’s view, “deliberately disregard” requires a defendant to take an action to not knowing the existence of a patent-in-suit or patent infringement. Therefore, the “willful-blindness” standard can be operated in a form of “deliberately disregard.”
B. Rule 12(b)(6) Motion Cases 1. Rule 12(b)(6) Motions
A Rule 12(b)(6) motion is a procedural tool for defendants to request the court to dismiss the complaint. In determining whether a Rule 12(b)(6) should be granted, many district courts have recognized two recent Supreme Court cases Ashcroft v. Iqbal173 and Bell Atlantic Corp. v. Twombly174 as a
165 See id. at *5.
166 See id. at *4. 167 See id. at *5. 168 See id.
169 See ePlus II, 2011 WL 4704212, at *3. 170 See id.
171 See id. In footnote nine of the Global-Tech decision, the quoted proposition is:
“Ignorance is deliberate if the defendant was presented with facts that put her on notice that criminal activity was particularly likely and yet she intentionally failed to investigate those facts,” from United States v. Florez, 368 F.3d 1042, 1044 (8th Cir. 2004).
172 See ePlus II, 2011 WL 4704212, at *3. 173 Ashcroft v. Iqbal, 556 U.S. 662 (2009).
legal standard. The Ashcroft Court reaffirmed the standard of reviewing Rule 12(b)(6) motions ruled in Bell Atlantic Corp.175
To survive a Rule 12(b)(6) motion, a complaint must state factual allegations sufficient to “allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”176 Reciting “the elements of a cause of action, supported by mere conclusory statements, do not suffice.”177 To determine whether to deny a motion to dismiss, the court must conduct “a context-specific task [to] draw on its judicial experience and common sense.”178 If factual allegations are well pleaded, the court “should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.”179
In the context of inducement, the ultimate question is “whether [the plaintiff] has plead sufficient facts … for the [c]ourt to infer that the defendant[] had knowledge of [the patent at issue] and that [the defendant’s] products infringed on [the patent].”180
2. Plaintiff-won Cases
a. Trading Techs. Int’l, Inc. v. BCG Partners, Inc.
In Trading Techs. Int’l, Inc., the district court denied the defendant’s motion to dismiss. The district court inferred the defendant’s knowledge of the patent-in-suit because of several main reasons.181 First, the defendants were in the business related the patent-in-suit.182 The plaintiff marked its products with the patent number.183 The defendants were aware of the patent-in-suit through several law suits while continuing to sell the infringing products to the customers.184 In addition, the district court considered other alleged facts, such as “press coverage, previously filed litigation, consent judgments entered in companion cases and complaints filed against other defendants in this consolidated proceeding.”185
The factual allegations related to knowledge of the patent-in-suit were presented as a competition game between the plaintiff and defendant. As the district court highlighted, because the defendant is a competitor with the
175 See Ashcroft, 556 U.S. at 677-79. 176 Id. at 678.
177 Id. 178 Id. at 679. 179 Id.
180 Trading Techs. Int’l, Inc., 2011 WL 3946581, at *3. 181 See id. at *4.
182 See id. 183 See id. 184 See id. 185 Id.
plaintiff, the defendant “would be keeping an eye on patents issued to [the defendant] and other competitors.”186 However, the district court in footnote 5 clarified that it did not require knowledge to be found “solely by pleading that the competitor would be monitoring the plaintiff’s patent filings and any patents issued to it.”187 Nonetheless, the fact that the parties are in the same industry “makes knowledge of the patent at issue more plausible.”188
With respect to the defendant’s knowledge of direct infringement or specific intent to cause direct infringement, the district court relied on the factual allegations where “the defendants sold their products to customers knowing that they had no other use than one that infringed on [patents at issue] and showed them how to infringe on those patents with their websites and instructions.”189 Therefore, “non-infringing use” might be a factor of knowledge of direct infringement.
b. Weiland Sliding Doors and Windows, Inc. v. Panda Windows and Doors, LLC
In Weiland Sliding Doors and Windows, Inc., the district court found sufficient pleadings of inducement.190 Regarding the defendant’s knowledge of the patent, the district court depended on two factual allegations. First, the plaintiff marked their products “with appropriate patent markings.” 191 Second, the plaintiff had sent a patent licensing opportunity letter that encloses a copy of the patent at dispute.192
Regarding the defendant’s knowledge of direct infringement, the district court pointed out the following allegations. First, the defendant possessed the patent and the plaintiff’s product.193 The defendant’s product was identical to the plaintiff’s, so any non-infringing use was impossible.194 The defendant had expressed his intent to copy the patented product.195 The defendant had never sought a counsel opinion of non-infringement.196 The on-line brochure, which advertises the allegedly infringing products and provides instructions of installation, was disseminated by the defendant.197
186 Id.
187 Id. at *4 n.5.
188 Id. (emphasis in original). 189 Id. at *4.
190 See Weiland Sliding Doors and Windows, Inc., 2012 WL 202664, at *6.
191 See id. at *4. 192 See id. 193 See id. at *5. 194 See id. 195 See id. 196 See id. 197 See id.
Particularly, regarding the factual allegation that the defendant had failed to obtain a counsel opinion about infringement analysis after receiving a copy of the patent, the district court clarified that the patent licensing opportunity letter actually did not “alert [the defendant] to the potentiality of infringement,”198 because the letter only expressed an offer for licensing the patent.199 So, the district court refused to infer the intent to cause direct infringement from such allegation alone.200
c. Apeldyn Corp. v. Sony Corp. (“Apeldyn I”)
In Apeldyn Corp. v. Sony Corp., the district court dismissed the defendant’s motion,201 while it did not expressly speak about knowledge of direct infringement. This Rule 12(b)(6) motion was filed by Sony, which and Samsung co-owned a company manufacturing infringing products.202 The district court found the defendant’s knowledge of the patent at issue because of several factual allegations. 203 First, the defendant’s in-house legal department routinely reviewed competitors’ patents.204 A notice letter sent to Samsung mentioned that their products might infringe the patent at issue.205 For the same patent, the plaintiff had filed a law suit against the defendant.206
d. Walker Digital, LLC v. Facebook, Inc.
In Walker Digital, LLC, the multiple defendants were in the e-commerce business.207 Two defendants, Amazon, Inc. and Zappos.com, Inc., filed a motion to dismiss.208 The district court denied both motions.209 Like the
Apeldyn court, the district court here did not specifically mention knowledge
of direct infringement. With respect to knowledge of the patents-in-suit, the district court’s holding was based on the factual allegation that the plaintiff’s representatives had interacted with the defendants for infringement issues
198 Id.
199 See id. 200 See id.
201 See Apeldyn Corp. v. Sony Corp., ___ F. Supp. 2d ___, 2012 WL 1129371, at *1 (D.
Del. Apr. 4, 2012) (hereinafter, “Apeldyn I”). 202 See id. at *2.
203 See id. at *4. 204 See id. 205 See id. 206 See id.
207 See Walker Digital, LLC, 2012 WL 1129370, at *1. 208 See id.
related to the patents-in-suit.210 Those interactions led to the inference of the defendants’ knowledge.211
e. CyberFone Sys. LLC v. Cellco P’ship
In CyberFone Sys., LLC v. Cellco P’ship, the district court dismissed the defendant’s Rule 12(b)(6) motion.212 The main dispute rested on the defendant’s knowledge of the patent at issue. The district court based its holding on the factual allegation that at least the defendant began to know the patent at issue when the original complaint was filed.213
3. Defendant-won Cases
a. Nazomi Commc’ns, Inc. v. Nokia Corp.
In Nazomi Commc’ns, Inc. v. Nokia Corp., the district court granted the defendant’s motion to dismiss, while it also allowed the plaintiff to amend the complaint.214 The district court held that the plaintiff did not specify particular facts related to inducement and that the plaintiff only made conclusory statements.215
b. Aguirre v. Powerchute Sports, LLC
In Aguirre v. Powerchute Sports, LLC, the district court dismissed the plaintiff’s indirect infringement claims because the allegations did not touch the knowledge requirement of inducement.216 In fact, the plaintiff had amended the complaint twice but had never specified the defendant’s knowledge of either the patent in suit or direct infringement.217 Nonetheless, the district court here still allowed the plaintiff to amend the complaint.218
c. McRee v. Goldman (McRee I)
In McRee v. Goldman (hereinafter, “McRee I”), the defendant who filed a motion to dismiss was a chairman of an association that allegedly directly
210 See id. at *4-*5.
211 See id. at *5.
212 See CyberFone Sys., LLC v. Cellco P’ship, 2012 WL 1509504, at *3 (D. Del. Apr. 30,
2012). 213 See id.
214 See Nazomi Commc’ns, Inc. v. Nokia Corp., 2011 WL 2837401, at *1 (N.D. Cal. July
14, 2011).
215 See id. at *3.
216 See Aguirre v. Powerchute Sports, LLC, 2011 WL 3359554, at *5 (W.D. Tex. Aug. 04,
2011).
217 See, e.g., Complaint for Patent Infringement, Aguirre v. Powerchute Sports, LLC, 2010 WL 3430669 (W.D. Tex. Aug. 23, 2010); First Amended Complaint for Patent Infringement, Aguirre v. Powerchute Sports, LLC, 2010 WL 4951253 (W.D. Tex. Sept. 17, 2010).
infringed the patent in suit.219 The district court granted the motion because of two main reasons. First, while recognizing the plaintiff’s allegation that the defendant had been notified of the infringement issue, the district court did not infer the defendant’s knowledge of either the patent or the infringement made by the association.220 Second, no allegation related to how the defendant induced his association to infringe the patent.221 The plaintiff only asserted that the defendant took a photograph of himself with the alleged infringing product.222
d. Wright Mfg. Inc. v. Toro Co.
In Wright Mfg. Inc. v. Toro Co., the district court granted the defendant’s motion to dismiss because the complaint only included conclusory allegations.223 The district court quoted one allegation that “Toro has known of [been aware of] [the patent] since at least 2008”224 and concluded that “[m]ore is required.”225
e. McRee v. Goldman (McRee II)
In McRee v. Goldman (hereinafter, “McRee II”), among other things, the district court granted to the same defendant in McRee I his motion to dismiss.226 And, the district court allowed the plaintiff to amend the complaint again.227 The McRee II decision was the following decision of the
McRee I decision.228 In McRee II, the defendant attacked the plaintiff’s first amended complaint.229 The district court agreed with the defendant because the plaintiff “fail[ed] to show the concurrence of knowledge and action necessary to establish [the defendant’s] liability under § 271(b) for induced infringement.”230 The holding in McRee II is similar to that in McRee I. The plaintiff still could not make sufficient factual allegations.
The plaintiff alleged some facts. First, the defendant had seen a model of the infringing product before the defendant donated money to an association that was authorized by a local government to construct the infringing
219 See McRee v. Goldman, 2011 WL 4831199, at*4 (N.D. Cal. Oct. 12, 2011).
220 See McRee I, 2011 WL 4831199, at*5.
221 See id. 222 See id.
223 See Wright Mfg. Inc. v. Toro Co., 2011 WL 6211172, at *3 (D. Md. Dec. 13, 2011). 224 See id. (modification in original).
225 See id.
226 See McRee v. Goldman, 2012 WL 929825, at *1 (N.D. Cal. Mar. 19, 2012) (hereinafter,
“McRee II”). 227 See id. at *5. 228 See id. at *3. 229 See id. 230 Id. at *5.
product.231 Second, the local government’s head had a meeting with the plaintiff before the construction of the infringing product began.232 In the meeting, the plaintiff disclosed to the local government’s head his patent application that later became the patent in suit.233
However, from these factual allegations, the district court could not “draw a plausible inference that [the defendant] knew of or was willfully blind to the existence of the [patent in suit] at the time of his charitable donation, nor that he knew his funds would be used to infringe the [patent in suit].”234 Specifically, the district court gave an instructive comment that “[the plaintiff] fail[ed] to allege how or when this information was conveyed to [the defendant] in advance of his charitable donation to the [construction project].”235
f. Vasudevan Software, Inc. v. TIBCO Software Inc.
In Vasudevan Software, Inc. v. TIBCO Software Inc., the district court granted the defendant’s motion to dismiss but left the plaintiff to amend the complaint.236 The plaintiff here applied the willful-blindness standard to willful infringement and inducement, both require a defendant’s knowledge of the patent-in-suit and direct infringement.237 The defendant tried to establish the defendant’s willful blindness instead of approving actual knowledge.238 However, the district court concluded that the plaintiff only made conclusory allegations.239 The district court specifically criticized that the plaintiff had not pointed out “any affirmative actions taken by the defendant to avoid gaining actual knowledge of the [patent-in-suit].”240
C. Rule 56 Motion Cases 1. Rule 56 Motions
A Rule 56 motion is also known as “a motion for summary judgment.” A Rule 56 motion is granted, “when, drawing all justifiable inferences in the non-movant’s favor, there exists no genuine issue of material fact and the
231 See id. 232 See id. 233 See id. 234 Id. 235 Id.
236 See Vasudevan Software, Inc. v. TIBCO Software Inc., 2012 WL 1831543, at *1 (N.D.
Cal. May 18, 2012). 237 See id. at *5. 238 See id. at *5-*6. 239 See id. at *6. 240 Id.
movant is entitled to judgment as a matter of law.”241 To determine whether “a dispute about a material fact is genuine,”242 a court looks to “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”243
2. Plaintiff-won Cases
a. DataQuill Ltd. v. High Tech Computer Corp.
In DataQuill Ltd. v. High Tech Computer Corp., the defendant (HTC) moved for summary judgment of no indirect infringement, but the district court denied the motion.244 Among other things, HTC argued that the plaintiff had not presented sufficient evidence to support the “specific intent” requirement.245
The suit was filed on March 24, 2008.246 Two patents were alleged to be infringed.247 Prior to the suit, both patents were subject to the reexamination proceeding.248 On April 1, 2008, two non-final office actions were issued to reject all claims of those two patents.249 On May 14, 2009, the district court stayed the action.250 On October 27, 2009, one reexamination certificate was issued to one patent.251 On April 13, 2010, one reexamination certificate was issued to the other patent.252 Then, the district court lifted the stay because of the positive outcome.253
To prove the inducement, the plaintiff presented several pieces of evidence. First, before the suit was filed, the plaintiff had sent a letter to notify HTC of the patents-in-suit.254 Second, the plaintiff had filed a law suit against HTC.255 Third, both patents-in-suit survived the reexamination.256 Fourth, the plaintiff had produced an expert opinion explaining the
241 Toshiba Corp. v. Imation Corp., 681 F.3d 1358, 1361 (Fed. Cir. 2012). 242 Id.
243 Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
244 See DataQuill Ltd. v. High Tech Computer Corp., 2011 WL 6013022, at *2 (S.D. Cal.
Dec. 01, 2011). 245 See id. at *8. 246 See id. at *1. 247 See id. 248 See id. 249 See id. 250 See id. 251 See id. 252 See id. 253 See id. 254 See id. at *9. 255 See id. 256 See id.
infringement made by the accused products.257 Fifth, the plaintiff had presented HTC’s “marketing materials and user guides related to the accused products.”258 With these facts, the district court held that a reasonable jury will reach a conclusion of inducement.259
HTC provided two arguments that were, however, rejected by the district court. First, HTC argued that the plaintiff only showed “evidence related to the issue of whether HTC had knowledge of the allegedly induced acts.”260 The district court disagreed and held that HTC “had knowledge of [the plaintiff’s] contention that HTC was infringing these patents because [the plaintiff] had already filed the present lawsuit against HTC.”261 The second argument was that HTC “did not have the specific intent” either because all claims of the patents-in-suit were rejected in the non-office actions during the reexamination proceeding262 or because HTC had “asserted substantial defenses to [the plaintiff’s] claims through [the] litigation.”263 The district court, however, responded that these assertions “at best show[ed] that there is a triable issue of fact as to whether HTC is liable for induced infringement.”264 Specifically, the district court held that “no case law stand[ed] for the proposition that inducement can be foreclosed as a matter of law by rejections in a non-final office action or by the assertion of substantial defenses during litigation of the patents-in-suit.”265
b. Mformation Techs., Inc. v. Research in Motion Ltd.
In Mformation Techs., Inc. v. Research in Motion Ltd., the district court denied the defendant’s motion for summary judgment regarding inducement.266 The defendant argued that the plaintiff did not establish the knowledge requirement and the “specific intent” requirement.267 Regarding the knowledge requirement, the district court held that there was a triable issue of whether the defendant knew the patent-in-suit.268 This was because the plaintiff had shown that some employees of the defendant had knowledge of the patent-in-suit during “a series of disclosures made while [the plaintiff]
257 See id. 258 Id. 259 See id. 260 Id. at *10. 261 Id. 262 See id. 263 Id. 264 Id. 265 Id.
266 See Mformation Techs., Inc. v. Research in Motion Ltd., 830 F. Supp. 2d 815, 2011
WL 6357804, at *20 (N.D. Cal. Dec. 19, 2011). 267 See id.
