Tuesday, May 31, 2011

Supreme Court Affirms Knowledge Requirement for Actively Inducing Infringement

Today the Supreme Court decided Global-Tech Appliances, Inc. v. SEB S.A.  This case involved the level of knowledge required for actively inducing infringement under 35 U.S.C. § 271(b).  The Federal Circuit had imposed liability based on a standard of "deliberative disregard" of a "known risk" of a patent.  Since this standard was arguably less than actual knowledge, the losing party (Pentalpha) asked the Supreme Court to review the case.

The Supreme Court granted cert and affirmed, but on different reasoning than the Federal Circuit.  First, the Court held that § 271(b) requires actual knowledge (largely relying on the 1964 Aro II decision):
Accordingly, we now hold that induced infringement under §271(b) requires knowledge that the induced acts constitute patent infringement.
Slip Opinion at 10.  Second, the Court held that a very narrow form of "willful blindness" is sufficient to support such knowledge.  The Court first noted that "willful blindness" wasn't at issue in MGM v. Grokster:
But the Court had no need to consider the doctrine of willful blindness in that case because the Court found ample evidence that Grokster and StreamCast were fully aware—in the ordinary sense of the term—that their file-sharing software was routinely used in carrying out the acts that constituted infringement (the unauthorized sharing of copyrighted works) and that these acts violated the rights of copyright holders.  See 545 U. S., at 922–927, 937–940.
Slip Opinion at 13.  The Court defined "willful blindness" sufficient to impose liability for active inducement as follows:
While the Courts of Appeals articulate the doctrine of willful blindness in slightly different ways, all appear to agree on 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.  We think these requirements give willful blindness an appropriately limited scope that surpasses recklessness and negligence.  Under this formulation, a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts. See G. Williams, Criminal Law §57, p. 159 (2d ed. 1961) (“A court can properly find wilful blindness only where it can almost be said that the defendant actually knew”). By contrast, a reckless defendant is one who merely knows of a substantial and unjustified risk of such wrongdoing, see ALI, Model Penal Code §2.02(2)(c) (1985), and a negligent defendant is one who should have known of a similar risk but, in fact, did not, see §2.02(2)(d).

The test applied by the Federal Circuit in this case departs from the proper willful blindness standard in two important respects. 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.
Slip Opinion at 13-14 (footnote omitted).  The Court then reviewed Pentalpha's acts and concluded that it acted with such willful blindness; hence, the Court affirmed the outcome (but not the reasoning) of the Federal Circuit.  Seven Justices joined Justice Alito's majority opinion.  Justice Kennedy dissented, as he would have not adopted the above "willful blindness" test -- particularly since it will now apply to all criminal cases involving knowledge, which doubtless will be a surprise to the criminal defense bar, which didn't participate in this case.

Given the other possible outcomes, this seems to be a reasonably good result.

1 comment:

  1. The Court's ruling makes sense because of a very important point: Pentalpha did not tell its attorney that it had purchased and directly, deliberately copied the SEB fryer. If Pentalpha had informed its lawyer as to this fact, then the attorney likely would have found the patent. Because of this deliberate failure to inform the attorney of its copying, the prior art search was just a cover, and "willful blindness" makes complete sense. That considered, I'm glad this patent litigation went in favor of SEB.