Supreme Court Decides Global-Tech Appliances, Inc. v. SEB S.A.

On May 31, 2011, the Supreme Court decided Global-Tech Appliances, Inc. v. SEB S.A., No. 10-6, holding that induced patent infringement under 35 U.S.C. § 271(b) requires knowledge that the induced acts constituted patent infringement. Deliberate indifference to a known risk that a patent exists does not satisfy the knowledge requirement under Section 271(b). 

SEB, a French maker of home appliances, obtained a U.S. patent in 1991 for its invention of a "cool-touch" deep fryer. In 1997, Sunbeam Products asked Pentalpha Enterprises (a wholly-owned subsidiary of Global-Tech Appliances) to supply it with deep fryers that met certain specifications. Pentalpha purchased an SEB fryer in Hong Kong (where it was sold without U.S. patent markings) and copied all but its cosmetic features. Pentalpha then hired an attorney to conduct a right-to-use study, but Pentalpha did not tell him that it had copied the fryer from SEB. The attorney did not locate SEB's patent, and issued an opinion letter stating that Pentalpha's fryer did not infringe any of the patents that he had found. Pentalpha then started selling the fryers to Sunbeam, which resold them in the United States under its trademarks at a much lower price than SEB charged for its fryers.

SEB sued Sunbeam for patent infringement in 1998. Pentalpha continued to sell the fryers to other companies that resold them in the United States under their trademarks. After SEB settled its lawsuit against Sunbeam, it sued Pentalpha for both direct infringement under 35 U.S.C. § 271(a) and active inducement of infringement under 35 U.S.C. § 271(b). A jury ruled in favor of SEB on both claims and found willful infringement. Pentalpha argued that there was insufficient evidence to support the jury's finding of induced infringement under Section 271(b) because it did not actually know of SEB's patent until SEB sued Sunbeam in 1998. The District Court rejected the argument, as did the Federal Circuit on appeal, on the ground that Section 271(b) required proof that the alleged infringer "knew or should have known that his actions would induce actual infringements" and sufficient evidence that Pentalpha "deliberately disregarded a known risk that SEB had a protective patent."

The Supreme Court affirmed the judgment in SEB's favor, but on different grounds. The Court held that Section 271(b) requires actual knowledge that the induced acts constitute patent infringement, and that deliberate indifference to a known risk that a patent exists is not sufficient under Section 271(b), but that the evidence was sufficient to support a finding that Pentalpha had actual knowledge under the doctrine of willful blindness, under which deliberately shielding oneself from clear evidence of critical facts is equivalent to actual knowledge. The Court began by concluding that the language of Section 271(b) is not conclusive on the level of knowledge that it requires. But the Court concluded that its decision in Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964), answered the question. Aro held that a violator of Section 271(c) must know that "the combination for which his component was especially designed was both patented and infringing." Because Section 271(b) was enacted at the same time as Section 271(c), and both were aimed at the issue of contributory infringement, the Court held that the Aro standard of actual knowledge should apply to Section 271(b) as well, thus requiring knowledge that the induced acts constitute patent infringement.

The Court therefore disagreed with the Federal Circuit that deliberate indifference to a known risk that a patent exists is not sufficient under Section 271(b), but the Court affirmed the judgment on the ground that the evidence supported a finding that Pentalpha had the requisite knowledge under the doctrine of "willful blindness." Under the doctrine of willful blindness, which was adopted most prominently in criminal law, one who takes deliberate actions to avoid confirming a high probability of wrongdoing is just as culpable of one who has actual knowledge. The Court held that that formulation of willful blindness applies to civil lawsuits for induced patent infringement under 35 U.S.C. § 271(b).

Justice Alito delivered the opinion of the Court, in which all Justices except Justice Kennedy joined.  Justice Kennedy filed a dissenting opinion.

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