In a case supported by HP, eBay, Red Hat, Yahoo!, and General Motors, the US Supreme Court has issued a ruling that may make it more difficult for a company to be sued for inducing another company to infringe a patent.
According to the ruling, a defendent accused of inducing patent infringement must be proven to have either known that it was infringing, or was "willfully blind" to that infringement. Actual knowledge of infringement can be proven through documentary evidence or sworn testimony. Willful blindness is a bit more murky. As Justice Samuel Alito explained in his opinion:
The doctrine of willful blindness is well established in criminal law. Many criminal statutes require proof that a defendant acted knowingly or willfully, and courts applying the doctrine of willful blindness hold that defendants cannot escape the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances. The traditional rationale for this doctrine is that defendants who behave in this manner are just as culpable as those who have actual knowledge.
As Alito added: "Given the long history of willful blindness and its wide acceptance in the Federal Judiciary, we can see no reason why the doctrine should not apply in civil lawsuits for induced patent infringement."
Applying willful blindness to patent law, the Supreme Court's 8-1 decision (Justice Anthony Kennedy was the lone dissenter) essentially rules that when a party is accused of inducing another party to infringe on a patent, if it can be proven that it should have known that a patent was being infringed – by, say, copying a patent-protected product that it should have assumed was patent-protected – it's liable for claims of infringment.
The case that led to this decision was fairly complex, and was brought by Groupe SEB, a Aix-en-Provence, France, small-appliance and cookware conglomerate with international brands such as Krups, Rowenta, All-Clad, and T-Fal, among others, and involved – of all things – a deep fryer.
In the late 1980s, SEB invented and patented a cool-to-the-touch deep fryer, obtained a US patent for it in 1991, and began selling it in the US under its T-Fal brand. The fryer was a success.
In 1997, the US company Sunbeam asked Pentalpha Enterprises, a Hong Kong home-appliance maker and subsidiary of Global-Tech Appliances, to supply them with a deep fryer that Alito referred to as "meeting certain specifications" – presumably meaning cool-to-the-touch, as well.
Pentalpha then bought an SEB deep fryer in Hong Kong and copied "all but its cosmetic features," Alito writes. Since the SEB fryer was being sold in a foreign market, it had no US patent markings.
"After copying SEB's design," Alito writes, "Pentalpha retained an attorney to conduct a right-to-use study, but Pentalpha refrained from telling the attorney that its design was copied directly from SEB's." The lawyer's search didn't turn up SEB's patent.
Sunbean began selling the Pentalpha deep fryer – which used SEB's patented design – in the US in late 1997. SEB then sued Sunbeam for patent infringement in March 1998.
"Undeterred," Alito writes, "Pentalpha went on to sell deep fryers to Fingerhut Corp. and Montgomery Ward & Co., both of which resold them in the United States under their respective trademarks."
After settling its suit with Sunbeam, SEB sued Pentalpha for – among other things – inducing Sunbeam, Fingerhut, and Montgomery Ward to sell Pentalpha's patent-infringing deep fryers. A jury sided with SEB and awarded them $4.65 million.
Pentalpha argued that it didn't know about the SEB patent until Sunbeam sued them, and so it could not be liable for infringment.
A District Court, however, upheld the jury's decision against Pentalpha, saying that "Pentalpha deliberately disregarded a known risk that SEB had a protective patent," and that their disregard was "not different from actual knowledge, but is a form of actual knowledge."
From there, the case escalated to the US Supreme Court – or, as Alito stated in legalese: "We granted certiorari."
And on Tuesday, the Court came down on SEB's side. Despite raising the bar for patent-infringment inducement to either actual proven knowledge or willful blindness, the Court said that SEB's case met their newly imposed test. ®