Commil United States, LLC v. Cisco Sys., Inc.

• Decision Date: 25 October 2013
• Docket Number: No. 2012–1042.,2012–1042.
• Citation: 737 F.3d 699
• Parties: COMMIL USA, LLC, Plaintiff–Appellee, v. CISCO SYSTEMS, INC., Defendant–Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

737 F.3d 699

COMMIL USA, LLC, Plaintiff–Appellee,

v.CISCO SYSTEMS, INC., Defendant–Appellant.

No. 2012–1042.

United States Court of Appeals,Federal Circuit.

Oct. 25, 2013.

Appeal from the United States District Court for the Eastern District of Texas in case no. 07–CV–0341, Magistrate Judge Charles Everingham.

Mark S. Werbner, Sayles Werbner, P.C., of Dallas, TX, filed a petition for rehearing en banc for plaintiff-appellee. With him on the petition were Richard A. Sayles and Mark D. Strachan. Of counsel on the petition were Leslie V. Payne, Nathan J. Davis and Miranda Y. Jones, Heim, Payne & Chorush, of Houston, TX.

William F. Lee, Wilmer Cutler Pickering Hale and Dorr LLP, of Boston, MA, filed a response to the petition for defendant-appellant. With him on the response were Mark C. Fleming, Jonathan W. Andron, and Felicia H. Ellsworth; and William G. McElwain, of Washington, DC. Of counsel on the response were Henry B. Gutman, Simpson Thacher & Bartlett LLP, of New York, NY; and Jeffrey E. Ostrow, Harrison J. Frahn, IV, Patrick E. King, and Jonathan Sanders, of Palo Alto, CA.

Before RADER, Chief Judge, NEWMAN, LOURIE, DYK, PROST, MOORE, O'MALLEY, REYNA, WALLACH, TARANTO, and CHEN, Circuit Judges.¹

REYNA, Circuit Judge, with whom RADER, Chief Judge, NEWMAN, LOURIE, and, WALLACH Circuit Judges, join, dissents from the denial of the petition for rehearing en banc.

NEWMAN, Circuit Judge, with whom RADER, Chief Judge, REYNA and WALLACH, Circuit Judges, join, dissenting from the denial of the petition for rehearing en banc.

ORDER

ON PETITION FOR REHEARING EN BANC

PER CURIAM.

A petition for rehearing en banc was filed by plaintiff-appellee, and a response thereto was invited by the court and filed by defendant-appellant. The petition for rehearing en banc was first referred as a petition for rehearing to the panel that heard the appeal, and thereafter the petition for rehearing en banc and response were referred to the circuit judges who are authorized to request a poll of whether to rehear the appeal en banc. A poll was requested, taken, and failed.

Upon consideration thereof,

It Is Ordered That:

(1) The petition of plaintiff-appellee for panel rehearing is denied.

(2) The petition of plaintiff-appellee for rehearing en banc is denied.

(3) The mandate of the court will issue on November 1, 2013.

REYNA, Circuit Judge, with whom RADER, Chief Judge, and NEWMAN, LOURIE and WALLACH, Circuit Judges, join, dissenting from the denial of the petition for rehearing en banc.

The Commil majority established a substantive, precedential change in patent law by expressly “hold[ing] that evidence of an accused inducer's good-faith belief of invalidity may negate the requisite intent for induced infringement.” Commil USA, LLC v. Cisco Sys., Inc., 720 F.3d 1361, 1368 (Fed.Cir.2013). Its analysis may be summed by its expressed view that because “[i]t is axiomatic that one cannot infringe an invalid patent” there is “no principled distinction between a good-faith belief of invalidity and a good-faith belief of non-infringement for the purpose of whether a defendant possessed the specific intent to induce infringement of a patent.” Id.

By holding that a good faith belief in the invalidity of a patent may negate the requisite intent for induced infringement, the two-judge Commil majority created a new noninfringement defense to induced infringement that is premised on the accused infringer's belief of invalidity. As Judge Newman aptly points out in her dissent, “This absolution applies, according to the panel majority, although the patent receives the presumption of validity, and validity is sustained in litigations.” (Newman, J., dissenting from the denial of the petition for rehearing en banc, at 1.)

Because I believe the Commil majority opinion is without foundation in law and precedent, and for the reasons stated below, I respectfully dissent from the vote taken of the court to not conduct an en banc review of the majority opinion in Commil.

I.

My primary dispute with the majority holding is that it wrongly rearranges the legal foundation that underpins the enforceability of valid patents and the finding of liability for infringement.

First, the induced infringement statute states simply that “[w]hoever actively inducesinfringement of a patent shall be liable as an infringer.” 35 U.S.C. § 271(b). The law recognizes that the statute's use of the words “actively induces” imparts an intent requirement into the statute. As stated by the Supreme Court, “[t]he addition of the adverb ‘actively’ suggests that the inducement must involve the taking of affirmative steps to bring about the desired result.” Global–Tech. Appliances, Inc. v. SEB S.A., ––– U.S. ––––, 131 S.Ct. 2060, 2065, 179 L.Ed.2d 1167 (2011). In § 271(b), the “desired result” that a party accused of inducement must be affirmatively seeking to bring about is defined in the statute as simply “infringement.”

The term “infringement” is used consistently throughout § 271 to mean that all of the limitations of a patent claim are satisfied by an accused product or accused conduct. See, e.g., TecSec, Inc. v. Int'l Bus. Mach. Corp., 731 F.3d 1336, 1351 (Fed.Cir.2013) (citations omitted) (“An act of infringement occurs when all the elements of a claimed product or method are met by the accused device or process.”). In Global–Tech, the Court concluded that in order to satisfy the intent element of induced infringement under § 271(b), an accused infringer must possess “knowledge that the induced acts constitute patent infringement,” Global–Tech., 131 S.Ct. at 2068, but it did not alter the fundamental meaning of “infringement.” Our recent en banc decision in Akamai further confirms that “infringement” in the context of “induced infringement” is resolved solely with reference to the limitations of a patent claim. See Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301, 1306 (Fed.Cir.2012) (“we hold that all steps of a claimed method must be performed in order to find induced infringement”).

The legislative history explains that the language of § 271(b) “recites in broad terms that one who aids and abets an infringement is likewise an infringer.” H.R.Rep. No. 82–1923, at 9. Neither the statute nor its legislative history provides that one who knowingly and successfully induces another to engage in conduct that infringes a valid patent can escape liability by showing it held a good faith belief that the patent was invalid. Indeed, the rationale for imposing liability on the party who is inducing infringement is simple: one who causes, urges, encourages, or aids in an infringement is just as, if not more, culpable for the invasion of the patentee's exclusive rights than those who actually perform the acts of infringement. See generally Akamai, 692 F.3d at 1309–13. Yet, under the majority's holding, an accused inducer that is deriving a benefit by knowingly and intentionally inducing an unsuspecting third party to directly infringe patent rights can itself escape liability based on a belief that the patent is invalid while the unsuspecting third party cannot. This situation is directly contrary to the plain language and purpose of the induced infringement statute.

II.

Second, infringement and invalidity are separate issues under the patent code and our precedent. This is not controversial. We have “long recognized that patent infringement and invalidity are separate and distinct issues.” Pandrol USA, LP v. Airboss Ry. Prods., Inc., 320 F.3d 1354, 1365 (Fed.Cir.2003). This distinction is further reflected in the organization of the patent code, which places the issues of infringement and invalidity in separate “Parts.” Compare35 U.S.C. §§ 251–329 (Part III: “Patents and Protection of Patent Rights”), with35 U.S.C. §§ 100–212 (Part II: “Patentability of Inventions and Grant of Patents”).

Given this, there is no reasonable basis to impute questions of invalidity or liability into § 271(b) through the term “infringement.” If a patent is found invalid, that is a complete defense to liability because it negates the patent's existence and thereby extinguishes any exclusionary rights. Conversely, if there is a patent—i.e., it is not invalid—then the question is merely whether there has been conduct that actively induces acts of infringement per se. This too is not controversial under our precedent because we have long recognized that “[t]hough an invalid claim cannot give rise to liability for infringement, whether it is infringed is an entirely separate question capable of determination without regard to its validity.” Medtronic, Inc. v. Cardiac Pacemakers, Inc., 721 F.2d 1563, 1583 (Fed.Cir.1983) (emphasis added).

Despite that “Supreme Court precedent and our cases make clear that patent infringement and patent validity are treated as separate issues,” Pandrol, 320 F.3d at 1365, the Commil majority nevertheless imputes questions of invalidity into induced infringement under the guise of “intent.” It attempts to justify this departure from controlling precedent on the premise that “[i]t is axiomatic that one cannot infringe an invalid patent.” Commil, 720 F.3d at 1368. But this “axiom” is materially wrong in the present context and does not withstand scrutiny in view of controlling precedent. See, e.g.,Medtronic, 721 F.2d at 1583. A more accurate statement of our precedent is that liability for patent infringement depends on an infringed claim being valid and enforceable; that is, one cannot be liable for infringement of an invalid patent.

III.

Third, the Commil majority holding wrongly conflates the defense of noninfringement with the defense of invalidity. “An important limitation on the scope of induced infringement is that inducement gives rise to liability only if the inducement leads to actual infringement.” Akamai, 692 F.3d at 1308. The Commil majority expands the inquiry regarding noninfringement to include invalidity on grounds that it “see[s] no principled...