Supreme Court Adopts Willful Blindness Standard for Inducement to Infringe Patents in Global-Tech Appliances, Inc. v. SEB, S.A.

May 17, 2011
News | Patents

In 1952, the U.S. Patent Act, relying on case law, recognized the statutory forms of infringement known as inducement and contributory infringement under Sections 271(b) and 271(c), respectively. In 1964, the U.S. Supreme Court, in a “badly fractured decision” applying § 271(c), determined that an infringer must know that its product when used would infringe a patent. In 1999, SEB, holder of a patent for a cool-touch deep fryer for home use, initiated an infringement action against various U.S. retailers and Global-Tech Appliances, a Hong Kong-based manufacturer held to infringe. The May 31, 2011 decision of the U.S. Supreme Court (the Court) held Global-Tech liable under § 271(b) for inducing the retailers to infringe SEB’s patent.

Section 271(b) states, “Whoever actively induces infringement of a patent shall be liable as an infringer.” The Court found this statement to be “short, simple, and … inconclusive” as to the knowledge of the inducer; that is, did the inducer sell a product that just happened to infringe, or did the inducer know that its product infringed a patent? The Court in Global-Tech referred to case law spanning over a century and determined that it was split and inconclusive on this issue. This same issue of the defendant’s knowledge with respect to contributory infringement under § 271(c) had lead to the fractured decision that vexed the Court in 1964, but that decision had not been overruled and thus stood as a guidepost pointing towards a similar result for § 271(b).

The Court held “that induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement” and further that the doctrine of willful blindness may be applied to determine the inducer’s requisite knowledge. The Court borrowed the doctrine of willful blindness from criminal law. Patent law, unlike trademark and copyright law, has no provisions for criminal violations. Per the Court, willful blindness has two basic requirements: “(1) the defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must take deliberate actions to avoid learning of that fact.”

Global-Tech’s case came to the Court after the Federal Circuit had affirmed a finding of inducement, but did so by adopting a standard of “deliberate indifference” to satisfy the element of Global-Tech’s knowledge. It was undisputed that Global-Tech did not have actual knowledge of the patent until April 1998 after one of its U.S. customers was sued by SEB. The Court rejected “deliberate indifference” as an appropriate standard: “First, it permits a finding of knowledge when there is merely a ‘known risk’ that the induced acts are infringing. Second, in demanding only ‘deliberate indifference’ to that risk, the Federal Circuit’s test does not require active efforts by an inducer to avoid knowing about the infringing nature of the activities.”

Nevertheless, the Court affirmed the lower judgment by applying the standard of willful blindness to the facts. Here, the Court was essentially acting as a super jury, since the original trial jury was never instructed as to the newly adopted standard of willful blindness. The Court used the same facts as the Federal Circuit had examined to find deliberate indifference, but those facts now satisfied the higher standard of willful blindness.

SEB’s product, the deep fryer, was an innovative commercial success, and Global-Tech obtained the fryer in Hong Kong and copied all but the cosmetic features. SEB’s overseas product lacked any marking of a U.S. patent, but Global-Tech knew it was producing its copy for U.S. consumption. After copying, Global-Tech obtained a favorable right-to-use opinion from a U.S. patent attorney, but did not inform the attorney of the copying. The attorney’s search failed to disclose SEB’s patent. Global-Tech’s president, Kwong Ho Sham, held 29 U.S. patents.

One additional fact noted by the Federal Circuit was that Global-Tech had worked before with SEB to make a patented product. The Court concluded: “On the facts of this case, we cannot fathom what motive Sham could have for withholding this information [from the attorney] other than to manufacture a claim of plausible deniability in the event that his company was later accused of patent infringement.”

What is the takeaway here? One obvious point is not to withhold information from your patent attorney when seeking an opinion. The adoption of willful blindness should have immediate application to contributory infringement under § 271(c). More broadly, there has been frequent cross fertilization among patent, trademark, and copyright cases in the area of contributory infringement, so willful blindness may grow outside of the patent field, particularly since contributory infringement is not, unlike patent law, part of the statutes for trademarks and copyrights. Willful blindness may perhaps have application to other areas of patent law wherein knowledge is a requisite element; for example, the areas of inequitable conduct and joint infringement, but the backdrop for those areas is not the same as the long history that preceded recognition and development of inducement. Finally, for those patent litigators with a Sherlock Holmes flair, this decision opens the door to investigating criminal law, well cited by the Court, for analogous cases in trying to frame in that defendant who induces others to infringe.

The Court’s decision may have other ramifications in criminal law. The decision was eight to one with Justice Kennedy dissenting that it was inappropriate to mix the concepts of knowledge from criminal law into civil law. Justice Kennedy noted that the Court “received no briefing or argument from the criminal defense bar, which might have provided important counsel on this difficult issue.”

After this decision, judges, attorneys, and commentators may engage in hair-splitting arguments on the different states of mind at hand. For the most part, those differences are resolved, as a practical matter, by the American jury system: the so-called “black box” of decision making that is a hallmark of American jurisprudence. The jury will now receive a correct instruction to look for “willful blindness” and its two above-noted requirements. Armed with little more than that instruction, and the facts at hand, the jury can now make a correct determination as to liability for inducing infringement.


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