more details High Court Nixes 'Good Faith' Induced Infringement Defense
By Ryan Davis
Law360, New York (May 26, 2015, 10:20 AM ET) -- The U.S. Supreme Court ruled Tuesday that a good faith belief that a patent is invalid is not a defense to induced infringement, saying that the Federal Circuit erred when it created the defense and vacated a $74 million verdict against Cisco Systems Inc.
In a 6-2 decision by Justice Anthony Kennedy, the justices held that while a company's belief that a patent is not infringed means that it does not have the intent needed to be found liable for induced infringement, the same is not true of a belief that the patent is invalid. A belief that a patent is invalid cannot be a defense to infringement, the court said.
"Under the Patent Act...a patent is 'presumed valid.' That presumption takes away any need for a plaintiff to prove his patent is valid to bring a claim," the court wrote. "If belief in invalidity were a defense to induced infringement, the force of that presumption would be lessened to a drastic degree, for a defendant could prevail if he proved he reasonably believed the patent was invalid."
The Federal Circuit held in 2013 that if a company accused of induced infringement believes that the patent is invalid, "it can hardly be said" that it intended to induce infringement.
The appeals court ordered a new trial to allow Cisco to argue that it believed Commil USA LLC's wireless networking patent is invalid.
The justices heard oral arguments in March, and some of them suggested that allowing a belief in invalidity to serve as defense to induced infringement could go too far in excusing liability.
Chief Justice John Roberts questioned why patent owners should be at risk of losing a case just because a company they accused of induced infringement believed the patent was invalid, but ultimately turned out to be wrong.
"Why shouldn't you bear that risk?" he asked asked Cisco's attorney. "Why do you require the patent holder to lose the value of his patent until you get around to deciding the validity or the infringement suit is resolved?"
The patent-in-suit is U.S. Patent Number 6,430,395.
Commil USA LLC is represented by Richard Sayles, Mark Werbner, Mark Strachan and Darren Nicholson of Sayles Werbner PC and Leslie Payne, Nathan Davis and Miranda Jones of Heim Payne & Chorush LLP.
Cisco Systems Inc. is represented by Seth Waxman, William F. Lee, Mark C. Fleming, Felicia H. Ellsworth, Eric F. Fletcher and Francesco Valentini of WilmerHale and Henry B. Gutman, Jeffrey E. Ostrow, Harrison J. Frahn IV, Patrick E. King and Jonathan Sanders of Simpson Thacher & Bartlett LLP.
The case is Commil USA LLC v. Cisco Systems Inc., case number 13-896, in the U.S. Supreme Court.
--Editing by Rebecca Flanagan.
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