Blindness equals knowledge?
Does a party who ‘actively induces infringement of a patent’ under 35 U.S.C. §271(b) have to know as a fact that the actions in question support patent infringement? The U.S. Supreme Court granted certiorari in 2010 to Global-Tech Appliances, Inc., et al., Petitioners v. SEB S.A., a case in which inducement to infringement of a patent had a central role.
Their verdict, handed down May 31, 2011, is worth a close look in that it establishes apparently new criteria for violation of §271(b), as well as upsetting a considerable amount of criminal and civil law. The history of Global-Tech v SEB is a bit complicated, although most of the issues are now settled.
SEB is the French company behind the T-Fal brand of kitchen appliances. In the late 1980’s, they invented a deep fryer with surfaces that stayed cool during frying, and received a U.S. utility patent in 1991. In 1997, Sunbeam asked Pentalpha Enterprises (a wholly-owned subsidiary of Global-Tech) to design and manufacture deep fryers meeting certain specifications.
Pentalpha purchased an SEB fryer and reverse engineered a version for Sunbeam. The fryer was bought in Hong Kong, and bore no U.S. patent markings. Pentalpha then retained an attorney to conduct a right-to-use study, but did not inform him that the design was copied from SEB. The attorney failed to locate SEB’s patent.
SEB sued Sunbeam for patent infringement in March 1998, whereupon Sunbeam notified Pentalpha of the lawsuit. SEB settled the suit with Sunbeam, and then sued Pentalpha, alleging that Pentalpha had actively induced Sunbeam and others to sell Pentalpha’s deep fryers in violation of SEB’s patent rights, thereby violating 35 U.S.C. §271(b). (‘Whoever actively induces infringement of a patent shall be liable as an infringer.’) The District Court found in SEB’s favor.
Pentalpha filed post-trial motions seeking a new trial, arguing that there was insufficient evidence that induced infringement had occurred, because Pentalpha did not know of SEB’s patent until early 1998. The District Court and the CAFC rejected this argument, stating that Pentalpha, in not notifying their attorney that their fryer was a copy of an SEB fryer, ‘deliberately disregarded a known risk that SEB had a protective patent.’ Such disregard was then equated to a form of actual knowledge. The Supreme Court agreed to hear the case.
Pentalpha argued that active inducement liability under §271(b) requires more than deliberate indifference to a known risk that the induced acts may violate an existing patent, rather arguing that actual knowledge of the existing patent is needed. (This is sometimes known as the ‘Sergeant Schultz’ defense.) Does a party who merely leads another into infringement fall under the provisions of §271(b), or must the inducer know that the induced conduct is infringing?
In 1964, the Court narrowly decided that knowledge of the infringed patent was necessary for violation of §271(c), which contains very similar language. Stare decisis requires that the present Court regard this issue as settled. Because of the similarity in language, the Court now decided that ‘induced infringement under §271(b) requires knowledge that the induced acts constitute patent infringement.’ Having decided that actual knowledge is required, the Court then added that willful blindness is legally equivalent to actual knowledge, affirming the CAFC decision.
The concept of willful blindness derives from criminal common law, and roughly states that one who takes care to keep from learning that he is involved in a criminal act is as culpable as one who is fully aware. In his dissent, Justice Kennedy notes that adoption of willful blindness as a sign of culpability suits the role of the criminal code in punishing the guilty. However, this is a civil case, in an area of law whose purpose is to ‘promote the Progress of Science and useful Arts,’ Article 1, §8, clause 8 of the U.S. Constitution.
Justice Kennedy urges that the application of this doctrine to civil cases is a matter for the Congress to enact, and not for the Court to decide. He also urges that willful blindness cannot substitute for knowledge in a violation of law, and that this position was not previously expounded by the Court, even in criminal matters.
It seems likely that the major change in civil case law which will result from the Court’s opinion was not required for disposition of this case. Knowledge must often be inferred from a person’s conduct and circumstantial facts, and this takes place regularly in our courts. In this commentator’s opinion, the decision to press a poor analogy in an isolated case, thereby usurping the role of Congress, does the Court little honor.