Supreme Court Round-up – Part 2 of 3: “Willful Blindness” Induced Infringement as Culpable as Actual Knowledge in Global-Tech
Global-Tech Appliances v. SEB
In Global-Tech Appliances v. SEB, the Court affirmed the decision of the Federal Circuit finding induced infringement but on different reasoning. The Court set aside the Federal Circuit’s “knew or should have known” standard for establishing induced infringement and articulated a new standard in its place based on “knowledge or willful blindness”. In invoking this so called “willful blindness” doctrine to bring those who lack knowledge within the §271 prohibition, the Court turned first to deciding whether “knowledge” is indeed required for induced infringement.
In finding that §271(b) requires “knowledge”, the Court noted that what the 1952 Patent Act treated as two separate actions – namely, §271(b) induced infringement and 271(c) contributory infringement – was, before the 1952 Patent Act was enacted, treated under the one action of contributory infringement. Slip Op. 5. Hence, §271(b) and §271(c) have the same origin and so the scienter element for each should be similarly interpreted. Finding the 271(b) language short, simple, and in connection with the issue of knowledge inconclusive (Slip Op. 4), the Court looked to its 1965 decision in Aro II for guidance where a narrow majority held that a violator of §271(c) must know “that the combination for which his component was especially designed was both patented and infringing”. Slip Op. 7-8. The Court found that conclusion requires the same knowledge for liability under §271(b).
Turning then to the question of the knowledge scienter required to establish induced infringement, the Court observed that in criminal cases “actual knowledge” is not always capable of being established. And yet, under criminal law precedent, defendants who are without the requisite knowledge cannot escape the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances. Slip Op. 10. “Defendants who behave in this manner are just as culpable as those who have actual knowledge,” the Court observed. Slip Op. 10. The Court found no reason not to apply this so called “willful blindness” doctrine to effectively constructively impute a scienter almost commensurate with knowledge to civil lawsuits for induced infringement under 35 U.S.C. §271(b). Slip op. 12. Under this doctrine of willful blindness, the scienter required by §271(b) can be met if two basic requirements are satisfied: “(1) the defendant subjectively believes that there is a high probability that a fact exists, and (2) the defendant takes deliberate actions to avoid learning of that fact. Slip Op. 13.
Applying the “willful blindness” doctrine to the facts in the case, the Court found that Pentalpha (a Hong Kong manufacturer and subsidiary of Global-Tech) willfully blinded itself to the infringing nature of the sales it encouraged its customer Sunbeam to make in the U.S. since “Pentalpha subjectively believed there was a high probability that SEB’s [patentholder’s] fryer product was patented, that Pentalpha took deliberate steps to avoid knowing that fact, and that it therefore willfully blinded itself to the infringing nature of Sunbeam’s sales.” Slip Op. 16 Particularly probative was the fact that Pentalpha designed its product based upon reverse engineering a product of the patent holder’s that was bought in Hong Kong and not in the U.S. which is without U.S. patent marking requirements and Pentalpha’s decision not to inform its patent attorney from whom Pentalpha sought a right-to-use opinion that the product to be evaluated was simply a knock-off of the patent holder’s product. Slip Op. 15. As stated by the Court “[o]n the facts of this case, we cannot fathom what motive [Pentalpha] could have had for withholding this information other than to manufacture a claim of plausible deniability in the event that this company was later accused of patent infringement. Slip Op. 15.
In a lone dissent, Justice Kennedy took issue with the Majority’s invocation of willful blindness to bring those who lack knowledge within the §271(b) prohibition. “Willfull blindness is not knowledge; and judges should not broaden a legislative proscription by analogy,” Justice posited. Slip Op., Kennedy Dissent, at 1.
Global-Tech has ushered in a new standard for meeting the scienter required to establish induced infringement under §271(b) – namely, one based on “knowledge” or “willfull blindness” involving manufactured claims of plausible deniability where a company subjectively believes there to be a high probability of a patent, the company takes deliberate steps to avoid knowing that fact, and therefore willfully blinds itself to the infringing nature of the induced sales. Given the familial relationship of §271(b) with §271(c) contributory infringement, the same willful blindness doctrine is likely to apply to §271(c) by extension.
The Juhasz Law Firm can help you to better understand the effect of Global-Tech on your patents. For more information regarding Global-Tech and advice on how this decision may affect your patents, please contact The Juhasz Law Firm.
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For an analysis on Prometheus v. Mayo go to Supreme Court Round-up – Part 1 of 3: Certiorari Granted in Prometheus.
For an analysis on Stanford v. Roche go to Supreme Court Round-up – Part 3 of 3: Only If There is an Assignment, Only Then If the Employer is a Federal Contractor Does Bayh-Dole Apply in Stanford v. Roche.