Commil v. Cisco Systems: Nixing Good Faith Belief in Invalid Patent

On May 26, 2015, the United States Supreme Court decided in Commil USA, LLC v. Cisco Systems, Inc., that a defendant's good faith belief that a patent is invalid is no defense to a claim for induced infringement of that patent under 35 U.S.C. § 271(b).

Justice Kennedy, writing for the majority, first clarified the scienter element of induced infringement, which was set forth in the Court's 2011 decision in Global-Tech Appliances, Inc. v. SEB S.A. Under Global-Tech, to prove induced infringement, "it is necessary for the plaintiff to show that the alleged inducer knew of the patent in question and knew the induced acts were infringing."

Yet the Court concluded in Commil that it does not follow that a defendant's good faith belief that a patent is invalid is tantamount to a good faith belief that the patent is not infringed and thus that the defendant does not "know" under Global-Tech that the actions it induced were infringing. First, infringement and validity are separate issues under the Patent Act, and thus belief regarding validity cannot negate the scienter required for induced infringement. Second, to create a good faith belief in invalidity defense would undermine a patent's statutory presumption of validity and circumvent the clear and convincing evidence standard required to rebut that presumption. Third, invalidity is not a defense to infringement, but a defense to liability for infringement, so a belief as to invalidity cannot negate the scienter required for induced infringement. Fourth, accused infringers already have numerous proper ways to challenge the validity of a patent: in declaratory judgment actions, inter partes reviews, ex parte reexaminations, and of course by raising invalidity as an affirmative defense in a district court action for patent infringement. Fifth, such a defense would increase the burdens of litigation, motivating defendants to multiply their invalidity theories, increasing discovery costs and potentially creating confusion for the jury, who would have to separate the issue of the defendant's belief regarding validity of the patent from the actual question of validity. Finally, principles of tort and criminal law make clear that an act can still be intentional even though the actor does not think it violates the law.

The result in Commil clearly favors patent holders. And so perhaps prodded by the statement in Justice Scalia's dissent (joined by Chief Justice Roberts) that the Court's decision "increases the in terrorem power of patent trolls," the majority opinion concludes with a brief but noteworthy discussion of companies who "may use patents as a sword to go after defendants for money, even when their claims are frivolous." In light of this threat, the majority found it "necessary and proper to stress that district courts have the authority and responsibility to ensure frivolous cases are dissuaded." To do so, they may seek to impose Rule 11 sanctions against attorneys who file frivolous lawsuits, and award attorney's fees to prevailing parties in exceptional cases, consistent with the Court's ruling in Octane Fitness, LLC v. ICON Health & Fitness, Inc. This exhortation is remarkable because, as the Court states, "[n]o issue of frivolity has been raised by the parties in this case, nor does it arise on the facts presented to this Court." Thus it appears that the Court was simply looking for an opportunity to express its serious concern about the harmful effects of frivolous patent lawsuits. Many patent defendants have complained about this problem for years. They will thus take heart—and likely frequent quotations for Rule 11 and attorney fee motions—from the Commil opinion for years to come. Keywords: intellectual property, litigation, patent, infringement, good faith, invalid, Commil, Cisco Systems

_{James L. Day and Erik C. Olson are with Farella Braun + Martel LLP in San Francisco, California.}

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