This case began in 2007, when Commil, a creator of wireless networking equipment, brought action Cisco in the U.S. District Court of Eastern District of Texas, for infringement of U.S. Patent No. 6,430,395. In the lower court, the jury was instructed that it could find inducement, if "Cisco actually intended to cause the acts that constitute direct infringement" and "that Cisco knew or should have known that its actions would induce actual infringement." As a result, the jury found Cisco liable for induced patent infringement, and awarded Commil $63.7 million in damages.
After this verdict was rendered, the Supreme Court delievered a decision in Global-Tech Appliances Inc. v. SEB SA (2001), which held that in an action for induced infringement, it is necessary for the claimant to show that the alleged inducer had knowledge of the patent in question, and had knowledge of that the induced acts were infringing. Under this precedent, Cisco argued on appeal that the jury instructions were incorrect because it did not state the scienter element. Accordingly, in view of Global-Tech, the CAFC concluded that the District Court had erred in giving its jury instructions. In its decision for Cisco, the CAFC held that "evidence of an accused inducer's good-faith belief of invalidity may negate the requisite intent for induced infringement." In other words, if a defendant believes that a patent is invalid, how then can the defendant know that his or her acts are infringing?
The Supreme Court answered this question by separating the issues of validity and infringement. That is, the issues of infringement and validity are distinct issues, and have two separate defenses, each bearing different burdens, presumptions, and evidence. In essence, the primarly question under section 35 U.S.C. 271(b) is one of infringement, and not validity. Belief regarding validity has no effect on whether there was intention to bring about infringement. Invalidity, after all is not a defense to infringement, it is only a defense to liability.
Notably, the Supreme Court also revisited its holding in Global-Tech, offering rather strong dicta as to the scienter requirement. That is, in order to find inducement, the accused defendant must both (1) know of the patent-in-suit; and (2) know that the actions induced constitute patent infringement. The Supreme Court clarified that Global-Tech requires "proof the defendant knew the acts were infringing. And the Court's opinion was clear in rejecting any lesser mental state as the standard."
In sum, it appears that this is diametric decision for patent holders. While the Supreme Court rejected the good-faith inducement infringement defense, it also reaffirmed the heightened standard in order to find inducement in the first place.
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