Federal Circuit Says Lack of Legal Opinion Can Be Used to Show Intent for Inducement of Patent Infringement

On September 24, 2008, the Federal Circuit issued a decision in Broadcom Corporation v. Qualcomm Incorporated, (___ F.3d ___, 2008 WL 4330323 (Fed. Cir. 2008)). The court held it was proper for a jury to consider the lack of an opinion of counsel in deciding whether the defendant had the necessary intent for inducing infringement (see p. 26 of the decision). The court said this was the flip side of its decision in DSU Medical Corp. v. JMS Co., Lmtd. (471 F.3d 1298), where the court said an opinion of counsel could be used to negate intent to induce infringement.

Thus, although the Seagate case (In re Seagate Technology, LLC (497 F.3d. 1360)) reduced the need for opinions to guard against willfulness and treble damages, the need for opinions is alive and well for situations involving charges of inducement.

As the Federal Circuit said in DSU Medical, inducement requires "more than just intent to cause the acts that produce direct infringement. . . . . [I]nducement requires evidence of culpable conduct, directed to encouraging another’s infringement, not merely that the inducer had knowledge of the direct infringer’s activities."

35 U.S.C. § 271(b) states that any party who "actively induces infringement of a patent shall be liable as an infringer." In DSU Medical, the Federal Circuit adopted the standard that “[t]he 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.” Manville Sales Corp. v. Paramount Systems, Inc., 917 F.2d 544, 554 (Fed. Cir. 1990) (emphasis added).

The DSU Medical and Broadcom cases highlight the need to obtain opinions of counsel where potential liability is through inducement - such as where the company does not perform all the steps of a claim. Companies concerned about being sued for infringement can shield themselves from charges of inducing infringement by obtaining a well-reasoned opinion of counsel that explains why the induced acts are not infringing. Although not expressly held in DSU Medical or Broadcom, the reasoning suggests that a defendant's reasonable belief in the invalidity of a patent would also shield against a finding of induced infringement, even if there was no dispute that the induced acts fell within the literal scope of the claim.

Although not explored in the decisions, a defendant in possession of a reasonable opinion of invalidity or non-infringement would likely be immune from any damages under 271(b) accrued before a district court (or possibly a higher court) affirmatively found the patent valid and infringed.