Marc Morgan
Apr 5, 2011

The State of Induced Infringement Law

SEB S.A. v. Montgomery Ward & Co., Inc., 594 F.3d 1360 (Fed. Cir. 2010) has served to confuse the state of the law pertaining to induced infringement. The SEB decision has unnecessarily combined an intent-based language with a negligence-based approach language for induced infringement. The new test basically requires intent to infringe to be proved along with what has been titled “deliberate indifference to patent rights”.  


The test set forth by the SEB Court does not require the existence of knowledge of a patent violation on the part of the inducer. The 1952 Patent Act embodies the intent of Congress but unfortunately SEB's knowledge standard is contrary to what was intended by the original drafter in Congress. The ruling of the court ought to be questioned because it smells of judicial advocacy. The decision in effect introduced a knowledge based component which has the effect of rewriting the statute. Amendment of a statute is an act that should only be done by policymakers in Congress.


The Judiciary ought not to make decision that in effect rewrite the legislation crafted by Congressmen. The proper approach for the Court to adopt would be strictly induce liability in the case of all acts intended to lead to infringement. That approach focuses properly on protecting patent rights and it does not create a safe harbor from liabilities to those who encourage or induce the infringement. See Hewlett-Packard Co. v. Bausch & Lomb Inc., 909 F.2d 1464, 1469 (Fed. Cir. 1990).  

From a policy point of view it does not make sense to require proof of knowledge and intent to commit a patent violation. This would act to increase the burden of proof and would not be consistent with the strict liability penalties for direct infringement. An infringer is not required to know of a patent before he can be held liable for direct infringement.  


The purpose of granting patent rights would be undermined by a requirement to have knowledge of a patent violation before an active inducer can be held liable for infringement. In effect it would encourage the irresponsible practice of ignoring patents. Manufacturers should be given incentivizes to pay attention to patent reviews, but the effect of the SEB S.A. Decision would have the opposite effect. Patent reviews would be ignored intentionally by manufacturers. They would deliberately elect to be oblivious and public interest would be negatively impacted if a business can evade inducement liability by simply turning a blind eye to infringements.


The language of § 271(b) of the statute clearly supports a standard that would consider acts such as advising, facilitating and marketing to be active inducement that gives rise to the infringement. The inducement statute should therefore be centered around punishing active support of conduct which will lead to an end result of patent infringement. The protection of the section will be watered down if further limits are placed on the breadth of the provision.  


Congress by means of legislation has provided a variety of circumstances in which an actor can encourage infringement by others in 35 U.S.C. §271(b). This written language of the legislation does not contain any references that suggest that liability should be limited based on the intent or knowledge of an inducer. The Court in Grokster makes it abundantly clear that evidence of statements and actions done to promote infringement is required for active infringement.  


The general objective of the 1952 Act was to codify the common law that existed in regards to patents, this includes inducing infringement.  Congress was aware that issues could arise centered around knowledge and determined that the best solution would be to deliberately omit any such knowledge requirement in the legislation. One drafter of these statutory provisions, none other than the late Judge Giles, explained that one of the benefits of this codification is that it would “resurrect” inducement of infringement. In his evaluation, the significant issue of contributory and induced infringement only continued in the common law in the world of theory and that in the world of practice it was “entirely dead.”   


In Grokster, the Court defined the contours of the “active inducement” as inducing infringement and did not concern itself with any analysis of knowledge of violations of the copyright. Acts of inducement have a nature that is “purposeful, culpable expression and conduct”. This definition gels with the patent cases relied upon for contributory copyright infringement.     


Tort principles can be relied upon to support inducement liability without there being a need for proof of possession of knowledge. Strict liabilty ought to be the penalty applied against any direct infringer. Inducing infringers play a direct role in the events that lead to infringement and should not be protected from strict liability.  


It is an illusion propagated by commercial interests that the act of limiting inducement liability will alleviate the hurdles in the market that prevent clearing of products.  Corporations, should not be empowered to ignore patents that others have invested time and money in developing. Extreme caution should be exercised when changing Patent laws in a manner that affects the efforts and investment of patent owners.