• Supreme Court: Ignorance of a Patent May Not Get You Off the Hook for Inducing Its Infringement
  • July 12, 2011
  • Law Firm: Sunstein Kann Murphy Timbers LLP - Boston Office
  • When we last encountered the SEB case, the Federal Circuit had held that one can be found liable for inducing infringement of a patent by acting with “deliberate indifference” as to the existence of the patent, even if one does not have actual knowledge of the patent.

    The Supreme Court has now affirmed that ruling, but determined that a “willful blindness” standard should apply instead.  While this decision heightens the standard, the original SEB takeaway remains: One can be liable for inducing infringement even with no actual knowledge of the infringed patent.

    As we earlier recounted, SEB alleged that Pentalpha, a Hong Kong company, induced its customers to infringe SEB’s patent covering a deep fryer.  When Sunbeam requested that Pentalpha supply it with a deep fryer to sell in the U.S. with certain specifications, Pentalpha responded by copying all aspects of SEB’s fryer except its cosmetic features.  While Pentalpha itself did not sell this deep fryer in the U.S., its customer Sunbeam went on to make these allegedly infringing sales.

    Because the SEB fryer that Pentalpha copied was an overseas model, it did not bear U. S. patent markings.  Pentalpha hired a patent attorney to issue a clearance letter, but failed to inform the attorney that Pentalpha’s product was a knockoff of SEB’s fryer.

    The court acknowledged that the inducement statute (35 U.S.C. § 271(b)) is ambiguous as to whether the intent element requires merely that the inducer must lead another to engage in conduct that happens to be infringing, as opposed to conduct that the inducer knows is infringing.

    The court held, based on precedent concerning the closely related contributory infringement statute (35 U.S.C. § 271(c)), that the inducer must know that the conduct is actually infringing.  “Willful blindness” is the new standard for determining whether an inducement defendant has this knowledge.

    Interestingly, the Court derived its willful blindness standard from its ubiquitous appearance in criminal law, not patent law. As the test applies in our context, (1) the inducement defendant must subjectively believe that there is a high probability that a relevant patent exists, and (2) the defendant must take deliberate action to avoid learning of that fact.

    The court clarified that this standard surpasses recklessness and negligence, and, in effect, rivals actual knowledge because the defendant can almost be said to have known the critical facts.  The court rejected the Federal Circuit’s “deliberate indifference” standard because, much like recklessness, it requires merely a known risk that the induced acts are infringing and does not require active efforts to avoid knowing about the infringing nature of the activities.

    Although the Federal Circuit applied the wrong standard, the Supreme Court found that the evidence in SEB was nevertheless sufficient to support a jury’s finding that Pentalpha willfully blinded itself to the infringing nature of Sunbeam’s sales.  In other words, a jury could have found that Pentalpha subjectively believed there was a high probability that SEB’s fryer was patented and that it took deliberate steps to avoid knowing that fact.

    In SEB itself, the “willful blindness” standard was a distinction without a difference, as the outcome was the same as under the “deliberate indifference” test.  But the SEB facts are relatively extreme.

    Although a sophisticated company’s unrestrained copying and its provision of selective information to patent counsel constitute inducement under any standard, we will no doubt better observe the effect of the “willful blindness” test in cases with subtler facts. By requiring proof of more egregious levels of ignorance, the new standard will make it harder for patent owners to prove the requisite knowledge.

    For their part, companies are well-advised to consult candidly with patent counsel to evaluate downstream uses of their products that could potentially give rise to infringement claims.  Closing one’s eyes to such activity could be risky business.