Inducing Infringement: Knowledge-of-Patent Element Satisfied by “Deliberate Indifference”

SEB (T-Fal) v. Montgomery Ward & Co. (Fed. Cir. 2010)

Part of the SEB decision revolved around the question of induced infringement. Under 35 U.S.C. 271(b) “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” The defendant argued that it could not have induced infringement because it had no actual knowledge of the patent. That argument is supported by the Federal Circuit’s 2006 holding in DSU Medical v. JMS that the “requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent.”

In this case, the Federal Circuit further fleshed-out that requirement of knowledge after first suggesting that the quoted DSU Medical statement was dicta. “The facts of DSU Medical did not require this court to address the scope of the knowledge requirement for intent.” Despite the “knowledge” language of DSU Medical, the SEB court here held that “deliberate indifference” to potential patent rights is be sufficient to satisfy the knowledge requirement of inducement charges.  Thus, “a claim for inducement is viable even where the patentee has not produced direct evidence that the accused infringer actually knew of the patent-in-suit.”

To be clear, the court made a distinction between “deliberate indifference” and a “should-have-known” standard.

At the outset, this court notes that the Supreme Court has indicated, in a different civil context, that “deliberate indifference” is not necessarily a “should have known” standard. Farmer v. Brennan, 511 U.S. 825, 840 (1994). The latter implies a solely objective test, whereas the former may require a subjective determination that the defendant knew of and disregarded the overt risk that an element of the offense existed. . . . For example, an accused infringer may defeat a showing of subjective deliberate indifference to the existence of a patent where it shows that it was genuinely “unaware even of an obvious risk.” More importantly, and as courts have observed in a variety of settings, the standard of deliberate indifference of a known risk is not different from actual knowledge, but is a form of actual knowledge. See, e.g., United States v. Carani, 492 F.3d 867 (7th Cir. 2007) (“Deliberate avoidance is not a standard less than knowledge; it is simply another way that knowledge may be proved.”).

Here, the Federal Circuit agreed with the district court that there was “adequate evidence to support a conclusion that [the Defendant] deliberately disregarded a known risk that SEB had a protective patent.” In particular, the Federal Circuit noted (1) that the defendant had copied SEB’s product; and (2) that the defendant hired a patent attorney to conduct a right-to-use study but did not tell the patent attorney that it had copied the SEB product; and (3) that the defendant’s president was well versed in US patent law. Taking these facts together, the court found “considerable evidence of deliberate indifference.”

A failure to inform one’s counsel of copying would be highly suggestive of deliberate indifference in most circumstances.

Jury Verdict of Inducement Affirmed

34 thoughts on “Inducing Infringement: Knowledge-of-Patent Element Satisfied by “Deliberate Indifference”

  1. 34

    Upshot is, if you think your competitor might have patents, then:

    – to avoid inducing infringement you must perform a search.

    – to avoid direct infringement you are under no obligation to perform a search.

  2. 32

    “and then tell law firm B that you “absolutely do not want to receive any information about prior art rejections, just get some claims allowed and let us know when you do.””

    Like that happens…

    More evidence of the fanciful, paranoid and largely make believe world that Mooney lives in.

  3. 31

    searching all the patents of a single competitor can still be a pretty big problem.

    based upon the sheer number of patents that are issued

    Are you people still moseying on over to the PTO and flipping through these things by hand? They have computers now. Makes searching much more manageable.

    Even so…

    the large businesses have no incentive to perform such searches

    Probably the biggest incentive to perform clearance searches is if you’re generally aware that there are some patents in the field, your business can’t tolerate an injunction, and there’s still time/money to license/design around whatever you find.

  4. 30

    Steve M,

    It’s not in the corporation’s interest based upon the sheer number of patents that are issued and an inability to see every way claim terms may be tortured later on in court to show how one or more of the business’ products are within the scope of a claim on one of those patents. That on its own is not necessarily a reason not to do a search, but couple that to the CAFC’s inequitable conduct and willful infringement jurisprudence and the large businesses have no incentive to perform such searches.

    With respect to the public interest, I did not mean to imply it would be against the public interest for such searches to be performed, but I meant that there is no benefit to the public for the reasons given in the first paragraph.

  5. 29

    Just visiting, I suppose my initial comment was unclear. But as the example of IBM shows, searching all the patents of a single competitor can still be a pretty big problem.

  6. 28

    While I agree with the standard, I am patiently waiting for Judge Rader to apply the “deliberate indifference = intent” formulation to inequitable conduct.

    I don’t know about Rader applying the standard in an IC case, but I think an equivalent rationale has been used already.

    You would not be able to get away, I think, with farming one’s foreign prosecution to law firm B and one’s US prosecution to law firm A, and then tell law firm B that you “absolutely do not want to receive any information about prior art rejections, just get some claims allowed and let us know when you do.”

    Even in the Therasense case, I seem to recall from the Federal Circuit or district court decision that a key piece of evidence supporting the decision was the fact that in-house discussions were known to have taken place — for years — specifically concerning how to deal with the prior art and the EP prosecution. Which resulted in some unsupportable contradictory statements made in declarations in the US. *AND* the deliberate decision was made to keep the EP examination out of the hands of the US. The majority recognize that taking extreme measures to pretend that something which is obviously material is not material is equivalent to an intent to deceive.

    According to Linn’s dissent, on the other hand, if there is the slightest chance that the inventors actually believed their own bullcrxp, then you have to forgive and forget. Thankfully, Linn was and is wrong.

  7. 27

    TJ poses the question:

    if you are “deliberately indifferent” to whether the examiner would find a piece of prior art material, you are guilty of IE?

    Interesting question. What would the SC make of FC law saying that searches are not required?

    “Presumably the only way to avoid a finding of “deliberate indifference” is to do an exhaustive search of all competitor patents (imagine the competitor is IBM).”

    In the case at hand, searching for patents issued to the particular competitor whose products you are copying would have been enough.

  8. 26

    While I agree with the standard, I am patiently waiting for Judge Rader to apply the “deliberate indifference = intent” formulation to inequitable conduct. So if you are “deliberately indifferent” to whether the examiner would find a piece of prior art material, you are guilty of IE?

    Note especially that “deliberate indifference” in this case apparently consists of (1) knowing that a competitor has some patents generally, and (2) then copying an unmarked product. Presumably the only way to avoid a finding of “deliberate indifference” is to do an exhaustive search of all competitor patents (imagine the competitor is IBM).

  9. 25

    “just say no to substance abuse…”

    We have been encouraging Mooney for years, but alas.

  10. 23

    NAL: “we actually have a thread here with substance”

    Hardly unusual. Frankly, this case doesn’t strike me as particularly interesting or surprising.

    MD “For example, take a global corporate titan that takes a deliberate decision not to monitor the flow of Patent Office A and WO publications in its technical field. Is it guilty of deliberate indifference?”

    No. This case suggests there would have to be more. I think IANAE captured it well upthread: Deliberate indifference is more like choosing not to search when you know exactly what you’re going to find.

  11. 22

    Liability for sales in the US: Defendant knew of and disregarded the overt risk that goods sold in China would have a US shipment destination and intended US retail location.

    Why bother? There’s currently no knowledge requirement at all. They just check the shipping address.

  12. 21

    Here’s two of PatentlyO’s recent headlines:

    “Goods sold f.o.b. China considered sold “within the United States” for infringement purposes”

    “Inducing Infringement: Knowledge-of-Patent Element Satisfied by “Deliberate Indifference””

    So here’s the new rule

    Liability for sales in the US: Defendant knew of and disregarded the overt risk that goods sold in China would have a US shipment destination and intended US retail location.

  13. 20

    “we actually have a thread here with substance”

    NAL,

    I agree with you completely. There’s been quite a few “thought-provoking” comments here on the SEB case.

  14. 19

    seemed to attribute to potential infringers a dubious presumption that products not marked with a patent number are indeed patented:

    I don’t think it goes that far. It simply says it’s disingenuous to presume an unmarked product was not patented if that particular article wasn’t subject to US statutory marking provisions.

  15. 18

    NAL, I think you meant “bait” instead of “bate,” but I’m not trying to prove anything…

    A lot of typos here today…

  16. 17

    “a dubious presumption that products not marked with a patent number are indeed patented”

    dubious – Agreed. Or are we assuming that the copied item was or was not marked? (Serious question – I don’t know if this fact is disclosed, and I’m traveling today so I will not be checking it myself).

  17. 16

    I would venture to say that the next Federal Circuit panel to address this issue will likewise deem the SEB “deliberate indifference” rule to have been dicta and, instead, assess whether there was sufficient evidence to support an inference of knowledge. In that regard, the panel, principally relying on the defendant’s copying of plaintiff’s product, seemed to attribute to potential infringers a dubious presumption that products not marked with a patent number are indeed patented:

    “Pentalpha’s brief implies that it should be excused because the SEB deep fryer that it copied was not marked with a U.S. patent number. But Pentalpha does not argue that it relied on the lack of a mark to come to a belief that the deep fryer was not patented. And even if it had, such an argument would likely lack credibility unless it were supplemented by an explanation for why one would expect an SEB deep fryer purchased in Hong Kong to have U.S. patent markings.” [at 25]

  18. 15

    MaxDrei,

    Yes – I wish I could use some magic to remove my typo. It’s a good thing you have turned on you rcritical faculties and could figure out what I intended to say.

  19. 13

    “Definitely not. It is not in the economic interest of the corporation, nor is it in the public interest generally to review patent office publications.”

    Lionel,

    This seems counter-intuitive. Could you explain why you believe this to be the case?

    Thank you.

  20. 12

    “There appears to be a typo…”

    Mooney is channeling his frustration for not making Notes Editor on Law Review. Or even making Law Review. Or even going to law school.

  21. 11

    “More importantly, and as courts have observed in a variety of settings, the standard of deliberate indifference of a known risk is not different from actual knowledge, but is a form of actual knowledge. See, e.g., United States v. Carani, 492 F.3d 867 (7th Cir. 2007) (“Deliberate avoidance is not a standard less than knowledge; it is simply another way that knowledge may be proved.”).”

    I’d say it applies to any area of the law where showing actual knowledge of anything is relevant.

    Carani was a criminal case, FWIW.

  22. 10

    Anyone have a comment about whether this law would apply to contributory infringement’s knowledge requirement?

  23. 9

    For example, take a global corporate titan that takes a deliberate decision not to monitor the flow of Patent Office A and WO publications in its technical field. Is it guilty of deliberate indifference?

    Deliberate indifference is more like choosing not to search when you know exactly what you’re going to find.

    Think of criminal law, where intent is more commonly at issue. Deliberate indifference is like willful blindness, and is considered as culpable as specific intent. What you described is more like recklessness.

  24. 8

    “For example, take a global corporate titan that takes a deliberate decision not to monitor the flow of Patent Office A and WO publications in its technical field. Is it guilty of deliberate indifference?”

    MD,

    What you propose would likely not be enough under even the SEB standard for inducing infringement in the US. Inducing infringement under 35 USC 271(b) requires a specific item that the accused is allegedly inducing infringement of. Simply choosing not to review the sources of such patents/published applications would normally not evidence “deliberate indifference” with regard to a specific item.

    As Dennis pointed out above, there wasn’t just one factor that “cooked” the accused infringer (Pentalpha) in this case (pardon the pun), but instead at least 3 factors. The third factor alone (knowledge of US patent law) wouldn’t be enough in my opinion for “deliberate indifference,” but the first two factors mentioned (copying the patentee’s product and not informing the attorney of same) make it very hard to see Pentalpha as being an “innocent infringer.” That Pentalpha’s president was US patent law savvy simply reinforced the lack of professed “innocence.”

  25. 7

    Maxdrei

    Definitely not. It is not in the economic interest of the corporation, nor is it in the public interest generally to review patent office publications.

  26. 6

    Ah, Noise, you are quite right. Readers surely don’t want to hear me on the proclivities of nondescript Europeans, or again on obviousness (which I think is a Y/N binary question about a fact). I am not competent to engage with you on how obviousness is actually being decided, post-KSR, to the detriment of the small American inventor. Perhaps other readers will step forward.

    BTW, I’m hoping you meant “slight”, rather than a reference to the sleight-ness of your hand.

  27. 5

    Thanks MaxDrei,

    But I would rather keep the focus on my reply to the initial question concerning what established guilt of deliberate indifference. No sleight intended, but I care more for how the US law is developing on this accord, rather than the proclivities of European litigation.

    How to contend with the small inventor and the near-omniscient PHOSITA when it comes to exactly what is the inventive subject being indifferently treated. If an invention can be obvious in view of any disparate art that touches upon a solution, shouldn’t the reach of this topic also address that same breadth? If not, why not?

  28. 4

    Noise, Europe might not have willful infringement but it does have the notion of innocent infringement to beat off what might otherwise be damages or an account of profits to be given to the patent owner. Manufacturers are given short shrift when they plead innocence. If ever a small inventor were to be sued for infringement, I imagine she would have no difficulty establishing the defence of innocent infringement. Apart from all that though, patentees litigate in Europe primarily to get the injunction. Damages and attorney fees are usually secondary.

  29. 3

    Good question MaxDrei,

    I would answer yes, the global corporate titan is guilty of deliberate indifference when such a deliberate decision is made – but what about the many small inventors? Does the culpability arise for them in the same manner as the behemoths that can well afford to staff a patent watcher? Should it matter? After all, how difficult is it to identify your particular niche and check the public websites on some scheduled basis?

    One thorn to contend with is how you would handle the KSR-fortified PHOSITA who is not limited to a particular field. With the power to (often applied in hindsight) place any ideas from any disparate fields together, the responsibility to monitor every field is simply not something a person having ordinary skill can, or would do.

  30. 2

    I’m curious how prevalent a “deliberate indifference” mindset is, even amongst the scions of the establishment. In practice, is “deliberate indifference” the only way to survive? For example, take a global corporate titan that takes a deliberate decision not to monitor the flow of Patent Office A and WO publications in its technical field. Is it guilty of deliberate indifference?

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