ROCHE DIAGNOSTICS CORPORATION v. MESO SCALE DIAGNOSTICS, LLC

Before Newman, Prost, and Taranto. Appeal from the U.S. District Court for the District of Delaware.

Summary: A finding of inducing infringement requires knowledge that the induced acts constitute patent infringement, which can be established by a finding of ‘willful blindness’, a standard of limited scope that surpasses recklessness and negligence.

In 1995 Meso was formed as part of a research agreement with Igen International. The agreement granted Meso an exclusive worldwide license to all technology developed during the research. In 2003 Roche acquired a license from Igen to operate in the field of “human patient diagnostics.” The same year BioVeris took ownership of the patents from Ingen. In 2007 Roche acquired BioVeris and began instructing its customers to ignore the field restriction labels. In 2010 Meso sued, alleging that Roche breached the 2003 deal by violating the field restriction. The Court determined Meso was not a party to the 2003 agreement and that only BioVeris could enforce the field restriction.

In 2017 Roche brought suit seeking a declaratory judgment that it did not infringe Meso’s patent rights arising out of the 1995 license agreement. Meso counterclaimed for patent infringement. At the district court, the jury found that Meso had an exclusive right to the asserted patent claims and that Roche both directly infringed Meso’s patent rights and induced infringement. The district court denied Roche’s post-trial motions challenging infringement, induced infringement, and damages. However, it granted Roche’s motion regarding willfulness, denying Meso’s motion for enhanced damages. The district court also rendered a non-infringement decision with respect to three additional patents on the ground that Meso waived compulsory infringement counterclaims as to those patents.

The Federal Circuit affirmed the claim of direct infringement, reversed the claim of induced infringement, vacated the damages award, and remanded for a new trial on damages.

The Federal Circuit found that in the district court’s denial of Roche’s motion regarding inducing infringement, the court incorrectly applied a negligence standard rather than requiring specific intent. The Federal Circuit highlighted that the district court misstated the specific intent required as “knew or should have known his actions would induce actual infringement.” The Federal Circuit noted the similarity between the intent standard for willfulness and inducement, finding the district court’s ruling contradicted the court’s express finding of Roche’s subjective belief that it was not infringing or inducing infringement.

The Federal Circuit further found that the alleged acts of inducement occurred outside the patent damages limitation period. The district court had relied on a concept of continuing impact; however, the Federal Circuit was wary of this concept. The Federal Circuit went on to say that even if this concept was sound, Meso failed to demonstrate acts of inducement occurring prior to the damages limitation period that actually led to acts of direct infringement within the damages limitation period.

The Federal Circuit also vacated the district courts non-infringement decision regarding the three additional patents. The Court found the compulsory counterclaim rule bars future claims, but that it does not authorize rendering adverse judgment on declaratory judgment claims simply because of a failure to assert compulsory counterclaims. The Court vacated and remanded the district court’s noninfringement judgment for appropriate disposition of properly pled declaratory judgment claims.

Judge Newman dissented, arguing that because Meso did not have a license to the asserted patent claims, both induced infringement and direct infringement should be reversed.

Editor: Paul Stewart

Written by: Kenneth McNeill & Karen Cassidy