__ U.S. __ (2015), 13-896, Commil USA, LLC v. Cisco Systems, Inc.

Docket Nº:13-896
Citation:__ U.S. __, 135 S.Ct. 1920, 191 L.Ed.2d 883, 83 U.S.L.W. 4331
Opinion Judge:KENNEDY, JUSTICE.
Party Name:COMMIL USA, LLC, PETITIONER v. CISCO SYSTEMS, INC
Attorney:Mark S. Werbner argued the cause for petitioner. Ginger D. Anders argued the cause for the United States, as amicus curiae, by special leave of the court. Seth P. Waxman argued the cause for respondent.
Judge Panel:KENNEDY, J., delivered the opinion of the Court, in which GINSBURG, ALITO, SOTOMAYOR, and KAGAN, JJ., joined, and in which THOMAS, J., joined as to Parts II-B and III. SCALIA, J., filed a dissenting opinion, in which ROBERTS, C. J., joined. BREYER, J., took no part in the consideration or decisio...
Case Date:May 26, 2015
Court:United States Supreme Court
SUMMARY

Commil, holder of a patent for a method of implementing short-range wireless networks, sued, claiming that Cisco Systems, a maker and seller of wireless networking equipment, had directly infringed Commil’s patent in its networking equipment and had induced others to infringe the patent by selling the infringing equipment for use. After two trials, Cisco was found liable for both direct and... (see full summary)

 
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Page __

__ U.S. __ (2015)

135 S.Ct. 1920, 191 L.Ed.2d 883, 83 U.S.L.W. 4331, 25 Fla.L.Weekly Fed. S 277

COMMIL USA, LLC, PETITIONER

v.

CISCO SYSTEMS, INC

No. 13-896

United States Supreme Court

May 26, 2015

[135 S.Ct. 1921] Argued March 31, 2015.

Editorial Note:

This opinion is uncorrected and subject to revision before publication in the printed official reporter.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

720 F.3d 1361, vacated and remanded.

SYLLABUS

[135 S.Ct. 1922] [191 L.Ed.2d 886] Petitioner Commil USA, LLC, holder of a patent for a method of implementing short-range wireless networks, filed suit, claiming that respondent Cisco Systems, Inc., a maker and seller of wireless networking equipment, had directly infringed Commil's patent in its networking equipment and had induced others to infringe the patent by selling the infringing [191 L.Ed.2d 887] equipment for them to use. After two trials, Cisco was found liable for both direct and induced infringement. With regard to inducement, Cisco had raised the defense that it had a good-faith belief that Commil's patent was invalid, but the District Court found Cisco's supporting evidence inadmissible. The Federal Circuit affirmed the District Court's judgment in part, vacated in part, and remanded, holding, as relevant here, that the trial court erred in excluding Cisco's evidence of its good-faith belief that Commil's patent was invalid.

Held : A defendant's belief regarding patent validity is not a defense to an induced infringement claim. Pp. 5-14.

(a) While this case centers on inducement liability, 35 U.S.C. § 271(b), which attaches only if the defendant knew of the patent and that " the induced acts constitute patent infringement," Global-Tech Appliances, Inc.

v. SEB S. A., 563 U.S. __, __, 131 S.Ct. 2060, 179 L.Ed.2d 1167, the discussion here also refers to direct infringement, § 271(a), a strict-liability offense in which a defendant's mental state is irrelevant, and contributory infringement, § 271(c), which, like inducement liability, requires knowledge of the patent in suit and knowledge of patent infringement, Aro Mfg. Co.

v. Convertible Top Replacement Co., 377 U.S. 476, 488, 84 S.Ct. 1526, 12 L.Ed.2d 457, 1964 Dec. Comm'r Pat. 760 ( Aro II ). Pp. 5-6.

(b) In Global-Tech, this Court held that " induced infringement . . . requires knowledge that the induced acts constitute patent infringement," 563 U.S., at __, 131 S.Ct. 2060, 2068, 179 L.Ed.2d 1167, 1177, relying on the reasoning of Aro II, a contributory infringement case, because the mental state imposed in each instance is similar. Contrary to the claim of Commil and the Government as amicus, it was not only knowledge of the existence of respondent's patent that led the Court to affirm the liability finding in Global-Tech, but also the fact that petitioner's actions demonstrated that it knew it would be causing customers to infringe respondent's patent. 563 U.S., at __, 131 S.Ct. 2060, 179 L.Ed.2d 1167. Qualifying or limiting that holding could make a person, or entity, liable for induced or contributory infringement even though he did not know the acts were infringing. Global-Tech requires more, namely proof the defendant knew the acts were infringing. And that opinion was clear in rejecting any lesser mental state as the standard. Id., at ___. Pp. 6-9.

(c) Because induced infringement and validity are separate issues and have separate defenses under the Act, belief regarding validity cannot negate § 271(b)'s scienter requirement of " actively induce[d] infringement," i.e., the intent to " bring about the desired result" of infringement, 563 U.S., at __, 131 S.Ct. 2060, 2065, 179 L.Ed.2d 1167, 1174. When infringement is the issue, the patent's validity is not the question to be confronted. See Cardinal Chemical Co.

v. Morton Int'l, Inc., 508 U.S. 83, 113 S.Ct. 1967, 124 L.Ed.2d 1. Otherwise, the long held presumption that a patent is [135 S.Ct. 1923] valid, § 282(a), would be undermined, permitting circumvention of the high bar--the clear and convincing standard--that defendants must surmount to rebut the presumption. See Microsoft Corp.

v. i4i Ltd. Partnership, [191 L.Ed.2d 888] 564 U.S. __, ___-___, 131 S.Ct. 2238, 180 L.Ed.2d 131. To be sure, if a patent is shown to be invalid, there is no patent to be infringed. But the orderly administration of the patent system requires courts to interpret and implement the statutory framework to determine the procedures and sequences that the parties must follow to prove the act of wrongful inducement and any related issues of patent validity.

There are practical reasons not to create a defense of belief in invalidity for induced infringement. Accused inducers who believe a patent is invalid have other, proper ways to obtain a ruling to that effect, including, e.g., seeking ex parte reexamination of the patent by the Patent and Trademark Office, something Cisco did here. Creating such a defense could also have negative consequences, including, e.g., rendering litigation more burdensome for all involved. Pp. 9-13.

(d) District courts have the authority and responsibility to ensure that frivolous cases--brought by companies using patents as a sword to go after defendants for money--are dissuaded, though no issue of frivolity has been raised here. Safeguards--including, e.g., sanctioning attorneys for bringing such suits, see Fed. Rule Civ. Proc. 11--combined with the avenues that accused inducers have to obtain rulings on the validity of patents, militate in favor of maintaining the separation between infringement and validity expressed in the Patent Act. Pp. 13-14.

720 F.3d 1361, vacated and remanded.

Mark S. Werbner argued the cause for petitioner.

Ginger D. Anders argued the cause for the United States, as amicus curiae, by special leave of the court.

Seth P. Waxman argued the cause for respondent.

KENNEDY, J., delivered the opinion of the Court, in which GINSBURG, ALITO, SOTOMAYOR, and KAGAN, JJ., joined, and in which THOMAS, J., joined as to Parts II-B and III. SCALIA, J., filed a dissenting opinion, in which ROBERTS, C. J., joined. BREYER, J., took no part in the consideration or decision of the case.

OPINION

KENNEDY, JUSTICE.[*]

A patent holder, and the holder's lawful licensees, can recover for monetary [135 S.Ct. 1924] injury when their exclusive rights are violated by others' wrongful conduct. One form of patent injury occurs if unauthorized persons or entities copy, use, or otherwise infringe upon the patented invention. Another form of injury to the patent holder or his licensees can occur when the actor induces others to infringe the patent. In the instant case, both forms of in-jury--direct infringement and wrongful inducement of others to commit infringement--were alleged. After two trials, the defendant was found liable for both types of injury. The dispute now before the Court concerns the inducement aspect of the case.

I

The patent holder who commenced this action is the petitioner here, Commil USA, LLC. The technical details of Commil's patent are not at issue. So it suffices to say, with much oversimplification, that the patent is for a method of implementing short-range wireless networks. Suppose an [191 L.Ed.2d 889] extensive business headquarters or a resort or a college campus wants a single, central wireless system (sometimes called a Wi-Fi network). In order to cover the large space, the system needs multiple base stations so a user can move around the area and still stay connected. Commil's patent relates to a method of providing faster and more reliable communications between devices and base stations. The particular claims of Commil's patent are discussed in the opinion of the United States Court of Appeals for the Federal Circuit. 720 F.3d 1361, 1364-1365, 1372 (2013).

Commil brought this action against Cisco Systems, Inc., which makes and sells wireless networking equipment. In 2007, Commil sued Cisco in the United States District Court for the Eastern District of Texas. Cisco is the respondent here. Commil alleged that Cisco had infringed Commil's patent by making and using networking equipment. In addition Commil alleged that Cisco had induced others to infringe the patent by selling the infringing equipment for them to use, in contravention of Commil's exclusive patent rights.

At the first trial, the jury concluded that Commil's patent was valid and that Cisco had directly infringed. The jury awarded Commil $3.7 million in damages. As to induced infringement, the jury found Cisco not liable. Commil filed a motion for a new trial on induced infringement and damages, which the District Court granted because of certain inappropriate comments Cisco's counsel had made during the first trial.

A month before the second trial Cisco went to the United States Patent and Trademark Office and asked it to reexamine the validity of Commil's patent. The Office granted the request; but, undoubtedly to Cisco's disappointment, it confirmed the validity of Commil's patent. App. 159, 162.

Back in the District Court, the second trial proceeded, limited to the issues of inducement and damages on that issue and direct infringement. As a defense to the claim of inducement, Cisco argued it had a good-faith belief that Commil's patent was invalid. It sought to introduce evidence to support that assertion. The District Court, however, ruled that Cisco's proffered evidence of its good-faith belief in the patent's invalidity was inadmissible. While the District Court's order does not provide the reason for the ruling, it seems the court excluded this evidence on the assumption that belief in invalidity is not a defense to a plaintiff's claim that the defendant induced others to infringe.

At the close of trial, and over Cisco's objection, the District Court instructed the [135 S.Ct. 1925] jury that it could find inducement if "...

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