If you own a patent, you know that you need to be aware of potential and actual infringers.  After all, a patent grants an inventor the exclusive right to make, sell, and use an invention, and what good are those rights if someone else is doing just the same with an identical invention?

Of course, patent holders have a right to sue others infringing (i.e. making, selling, or using) a patented invention.  But, as the Federal Circuit recently held in Commil USA v. Cisco Systems (2013), indirect patent infringers now have a defense against accusations of indirect infringement: if the accused indirect infringer committed the so-accused infringing act because of a good faith belief the patent was invalid, the accused indirect infringer may avoid liability.

Let’s take this step-by-step.  First, what does it mean to be an indirect, as opposed to a direct, infringer?  Direct infringement occurs when a person without authorization makes, uses, offers to sell or sells any patented invention during the term of the patent (or imports the patented invention into the United States).  Indirect infringement is a form of secondary liability for direct infringement of a patent, meaning that a person may be held liable for infringement even though they did not actually engage in “direct” infringing activities (but, for example, a third party did).

There are two types of indirect infringement: induced infringement and contributory infringement.  An induced infringer is one who actually infringes a patent, but only because an alleged inducer knew of the patent and nevertheless knowingly encouraged and specifically intended the induced infringer to commit the infringing acts.  Contributory infringers include companies that knowingly sell either a special-purpose component of a patented device or a special-purpose device used to practice a patented method.  There must be an underlying “direct” infringement of a patent by a third party in order for there to be a finding of contributory infringement, but someone who sells a general purpose product that can be used in non-infringing ways is usually not considered to be a contributory infringer, even if a third party uses that product to infringe a patent.

Once an accused infringer is properly classified as an indirect, not a direct, infringer, how can they use the Commil decision to defend against liability?  The accused indirect infringer may now consider relying on a good faith defense: if the indirect infringer of a patent believed in good faith that the patent at issue was invalid, the indirect infringer may have a defense against charges of infringement.

When evaluating invalidity, it is important to carefully analyze the substance of a patent.  If a patent office issued a patent in error, or if that patent would fail the novelty/usefulness/non-obviousness test applied to all patents, it is appropriate to regard the patent invalid.  Believing in good faith (and likely, after reasonable inquiry) a patent to be invalid may be sufficient for an accused indirect infringer to avoid liability.

In making its ruling, the Federal Circuit reasoned that believing a patent to be invalid may negate the specific intent required to hold that one is an induced indirect infringer.  The ruling applies to contributory indirect infringement as well, because in 2011 the Supreme Court held that the specific intent requirement also applies to contributory indirect infringement.

Nevertheless, the development of this new “good faith” defense does not come without limitations.  It may not be enough for a potential indirect infringer to have obtained a simple invalidity opinion from an attorney in order to be able to successfully assert this defense.  Because the Federal Circuit used the word “may” instead of, for example, “will” or “shall,” a potential indirect infringer ought to perform sufficient due diligence in developing its good faith belief of invalidity.  This may include seeking the opinions of several experienced attorneys and conducting a thorough claim-by-claim analysis of the patent at issue.

So, patent holders will need to prepare themselves for a new good faith defense to infringement, at least in the context of indirect infringement.  This development should create some classic battles between patent holders and potential indirect infringers.

A word to the wise for patent holders – If you are going to track down an indirect infringer, it’s best to make sure your own patent is valid before you do so.

 

Do you have a question about your patent rights or protecting your invention?  Contact The McHattie Law Firm for help.

(Neeraj Joshi)