The Ruling. In a 6-2 decision issued Tuesday, the Supreme Court once again disagreed with the Federal Circuit and held that a defendant’s good-faith (but incorrect) belief that a patent is invalid is not a defense to an induced infringement claim. Commil USA, LLC v. Cisco Sys., Inc., No. 13-896. The Court also affirmed that induced infringement requires proof that the defendant knew its actions would induce others to infringe.

Evolution of the Case.  Commil held a patent for a method of implementing short-range wireless networks and charged Cisco with induced infringement. In response to this claim, Cisco argued that it could not be liable for induced infringement because it had a good-faith belief that Commil’s patent was invalid. In a trial limited to the issue of induced infringement,[1] the district court did not allow Cisco to present evidence of its good-faith belief of the patent’s invalidity, and a jury awarded Commil $63.7 million. On appeal, the Federal Circuit reversed the district court, holding that Cisco’s evidence should have been admitted because a good-faith belief of invalidity may negate the intent element of induced infringement. Undeterred, Commil sought certiorari. The Supreme Court accepted Commil’s petition and reversed the Federal Circuit, stating that a patent’s validity is a separate issue from infringement,[2] and thus is not relevant to determining induced infringement. The key inquiry in determining induced infringement is whether the defendant had intent to induce others to infringe.

The Court then proceeded to clarify the level of intent required to find induced infringement. Commil argued that only knowledge that a patent exists should be required for a finding of induced infringement. The Court rejected this argument, stating that induced infringement requires more than mere knowledge of a patent; rather, induced infringement requires that the defendant knew its actions would constitute infringement. Thus, the law on the infringement side of the inducement inquiry went unchanged.

The Takeaway.  While the Supreme Court’s opinion stripped defendants of one possible defense to induced infringement, it also solidified the high bar that plaintiffs must surmount in order to prove that the defendant possessed the requisite level of intent. In the ANDA context, a plaintiff must demonstrate that a defendant knew its drug label would induce infringement by physicians. Earlier this month, in Takeda Pharm. U.S.A., Inc. v. Hikma Am., Inc., No. 15-1139 (Fed. Cir. May 6, 2015), the Federal Circuit reaffirmed that to satisfy this intent requirement, the drug label must encourage, recommend, or promote infringement.  A defendant’s mere knowledge of off-label infringing uses is not sufficient to satisfy this requirement. For more on the district court decision in that case, read our blog post.

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[1] Following a first trial, a jury found Commil’s patent valid, but also found that Cisco had not induced infringement. The court set aside the induced infringement verdict as a result of inappropriate comments made by counsel for Cisco, but left the validity verdict intact, resulting in a second trial confined to the issues of induced infringement and damages.

[2] Justice Scalia did not share this opinion. In his dissent, Scalia­­ argues that “saying that infringement cannot exist without a valid patent does not ‘conflate the issues of infringement and validity’ any more than saying that water cannot exist without oxygen ‘conflates’ water and oxygen.”