May 26, 2015

Supreme Court Decides Commil USA, LLC v. Cisco Systems, Inc.

On May 26, 2015, the United States Supreme Court decided Commil USA, LLC v. Cisco Systems, Inc., No. 13-896, holding that a defendant’s belief regarding patent validity is not a defense to a claim of induced patent infringement.

Commil USA holds a patent on a method to implement short-range wireless networks. Commil sued Cisco alleging that Cisco had infringed on Commil’s patent by performing the patented method and by inducing its customers to do the same. A jury awarded Commil $3 million for direct infringement, but denied Commil relief for induced infringement. The district court granted Commil a partial new trial on the issues of induced infringement and damages. At the second trial, the district court excluded Cisco’s proffered evidence that it had a good faith belief that Commil’s patent was invalid, which Cisco offered to rebut Commil’s allegation of induced infringement. The jury awarded Commil $63.7 million in damages. On appeal, the Federal Circuit reversed on the evidentiary issue, finding that the court had erred in excluding Cisco’s evidence of its good faith belief that Commil’s patent was invalid.

The Supreme Court reversed, holding that a defendant’s belief regarding patent validity is not a defense to a claim of direct or induced patent infringement. At the threshold, the Court made clear that although the case before it involved induced infringement, its discussion applied to direct and contributory infringement as well. The Court noted that because induced infringement and validity are separate issues and have separate defenses under the Patent Act, a defendant’s belief regarding validity cannot negate §271(b)’s scienter requirement of “actively induce[d] infringement.” Invalidity is an affirmative defense through which the alleged infringer seeks to preclude “enforcement of a patent against otherwise infringing conduct.” “[I]f the patent is indeed invalid, and shown to be so under proper procedures, there is no liability,” because “invalidity is not a defense to infringement, it is a defense to liability.” Because of that distinction, the Court held, “a belief as to invalidity cannot negate the scienter required for induced infringement.”

Justice Kennedy delivered the opinion of the Court, in which Justices Ginsburg, Alito, Sotomayor, and Kagan joined in full. Justice Thomas joined only as to the opinion’s last five pages. Justice Antonin Scalia wrote a dissenting opinion, joined by Chief Justice Roberts. Justice Breyer took no part in the Court’s consideration or decision of the case.

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