Global-Tech Appliances, Inc. v. SEB S.A.

• Citation: 563 U.S. 754,131 S.Ct. 2060,179 L.Ed.2d 1167
• Decision Date: 31 May 2011
• Docket Number: No. 10–6.,10–6.
• Parties: GLOBAL–TECH APPLIANCES, INC., et al. v. SEB S.A.
• Court: United States Supreme Court

563 U.S. 754

131 S.Ct. 2060

179 L.Ed.2d 1167

GLOBAL–TECH APPLIANCES, INC., et al.

v.SEB S.A.

No. 10–6.

Supreme Court of the United States

Argued Feb. 23, 2011.

Decided May 31, 2011.

William Dunnegan, New York City, for Petitioners.

R. Ted Cruz, Houston, TX, for Respondent.

William Dunnegan, Laura Scileppi, Dunnegan LLC, New York, New York, for Petitioners.

Norman H. Zivin, Wendy E. Miller, Cooper & Dunham LLP, New York, New York, R. Ted Cruz, Allyson N. Ho, James B. Tarter, Morgan, Lewis & Bockius LLP, Houston, Texas, for Respondent.

Justice ALITO delivered the opinion of the Court.

We consider whether a party who "actively induces infringement of a patent" under 35 U.S.C. § 271(b) must know that the induced acts constitute patent infringement.

I

This case concerns a patent for an innovative deep fryer designed by respondent SEB S.A., a French maker of home appliances. In the late 1980's, SEB invented a "cool-touch" deep fryer, that is, a deep fryer for home use with external surfaces that remain cool during the frying process. The cool-touch deep fryer consisted of a metal frying pot surrounded by a plastic outer housing. Attached to the housing was a ring that suspended the metal pot and insulated the housing from heat by separating it from the pot, creating air space between the two components. SEB obtained a U.S. patent for its design in 1991, and sometime later, SEB started manufacturing the cool-touch fryer and selling it in this country under its well-known "T–Fal" brand. Superior to other products in the American market at the time, SEB's fryer was a commercial success.

In 1997, Sunbeam Products, Inc., a U.S. competitor of SEB, asked petitioner Pentalpha Enterprises, Ltd., to supply it with deep fryers meeting certain specifications. Pentalpha is a Hong Kong maker of home appliances and a wholly owned subsidiary of petitioner Global–Tech Appliances, Inc.¹

In order to develop a deep fryer for Sunbeam, Pentalpha purchased an SEB fryer in Hong Kong and copied all but its cosmetic features. Because the SEB fryer bought in Hong Kong was made for sale in a foreign market, it bore no U.S. patent markings. After copying SEB's design, Pentalpha retained an attorney to conduct a right-to-use study, but Pentalpha refrained from telling the attorney that its design was copied directly from SEB's.

The attorney failed to locate SEB's patent, and in August 1997 he issued an opinion letter stating that Pentalpha's deep fryer did not infringe any of the patents that he had found. That same month, Pentalpha started selling its deep fryers to Sunbeam, which resold them in the United States under its trademarks. By obtaining its product from a manufacturer with lower production costs, Sunbeam was able to undercut SEB in the U.S. market.

After SEB's customers started defecting to Sunbeam, SEB sued Sunbeam in March 1998, alleging that Sunbeam's sales infringed SEB's patent. Sunbeam notified Pentalpha of the lawsuit the following month. Undeterred, Pentalpha went on to sell deep fryers to Fingerhut Corp. and Montgomery Ward & Co., both of which resold them in the United States under their respective trademarks.

SEB settled the lawsuit with Sunbeam, and then sued Pentalpha, asserting two theories of recovery: First, SEB claimed that Pentalpha had directly infringed SEB's patent in violation of 35 U.S.C. § 271(a), by selling or offering to sell its deep fryers; and second, SEB claimed that Pentalpha had contravened § 271(b) by actively inducing Sunbeam, Fingerhut, and Montgomery Ward to sell or to offer to sell Pentalpha's deep fryers in violation of SEB's patent rights.

Following a 5–day trial, the jury found for SEB on both theories and also found that Pentalpha's infringement had been willful. Pentalpha filed post-trial motions seeking a new trial or judgment as a matter of law on several grounds. As relevant here, Pentalpha argued that there was insufficient evidence to support the jury's finding of induced infringement under § 271(b) because Pentalpha did not actually know of SEB's patent until it received the notice of the Sunbeam lawsuit in April 1998.

The District Court rejected Pentalpha's argument, as did the Court of Appeals for the Federal Circuit, which affirmed the judgment, SEB S.A. v. Montgomery Ward & Co., 594 F.3d 1360 (2010). Summarizing a recent en banc decision, the Federal Circuit stated that induced infringement under § 271(b) requires a "plaintiff [to] show that the alleged infringer knew or should have known that his actions would induce actual infringements" and that this showing includes proof that the alleged infringer knew of the patent. Id., at 1376. Although the record contained no direct evidence that Pentalpha knew of SEB's patent before April 1998, the court found adequate evidence to support a finding that "Pentalpha deliberately disregarded a known risk that SEB had a protective patent." Id., at 1377. Such disregard, the court said, "is not different from actual knowledge, but is a form of actual knowledge." Ibid.

We granted certiorari. 562 U.S. ––––, 131 S.Ct. 458, 178 L.Ed.2d 286 (2010).

II

Pentalpha argues that active inducement liability under § 271(b) requires more than deliberate indifference to a known risk that the induced acts may violate an existing patent. Instead, Pentalpha maintains, actual knowledge of the patent is needed.

A

In assessing Pentalpha's argument, we begin with the text of § 271(b) —which is short, simple, and, with respect to the question presented in this case, inconclusive. Section 271(b) states: "Whoever actively induces infringement of a patent shall be liable as an infringer."

Although the text of § 271(b) makes no mention of intent, we infer that at least some intent is required. The term "induce" means "[t]o lead on; to influence; to prevail on; to move by persuasion or influence." Webster's New International Dictionary 1269 (2d ed.1945). The addition of the adverb "actively" suggests that the inducement must involve the taking of affirmative steps to bring about the desired result, see id., at 27.

When a person actively induces another to take some action, the inducer obviously knows the action that he or she wishes to bring about. If a used car salesman induces a customer to buy a car, the salesman knows that the desired result is the purchase of the car. But what if it is said that the salesman induced the customer to buy a damaged car? Does this mean merely that the salesman induced the customer to purchase a car that happened to be damaged, a fact of which the salesman may have been unaware? Or does this mean that the salesman knew that the car was damaged? The statement that the salesman induced the customer to buy a damaged car is ambiguous.

So is § 271(b). In referring to a party that "induces infringement," this provision may require merely that the inducer lead another to engage in conduct that happens to amount to infringement, i.e., the making, using, offering to sell, selling, or importing of a patented invention. See § 271(a).² On the other hand, the reference to a party that "induces infringement" may also be read to mean that the inducer must persuade another to engage in conduct that the inducer knows is infringement. Both readings are possible.

B

Finding no definitive answer in the statutory text, we turn to the case law that predates the enactment of § 271 as part the Patent Act of 1952. As we recognized in Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 84 S.Ct. 1526, 12 L.Ed.2d 457 (1964) (Aro II), "[t]he section was designed to ‘codify in statutory form principles of contributory infringement’ which had been ‘part of our law for about 80 years.’ " Id ., at 485–486, n. 6, 84 S.Ct. 1526 (quoting H.R.Rep. No. 1923, 82d Cong., 2d Sess., 9 (1952)).

Unfortunately, the relevant pre–1952 cases are less clear than one might hope with respect to the question presented here. Before 1952, both the conduct now covered by § 271(b) (induced infringement) and the conduct now addressed by § 271(c) (sale of a component of a patented invention) were viewed as falling within the overarching concept of "contributory infringement." Cases in the latter category—i.e., cases in which a party sold an item that was not itself covered by the claims of a patent but that enabled another party to make or use a patented machine, process, or combination—were more common.

The pre–1952 case law provides conflicting signals regarding the intent needed in such cases. In an oft-cited decision, then-Judge Taft suggested that it was sufficient if the seller of the component part intended that the part be used in an invention that happened to infringe a patent. He wrote that it was "well settled that where one makes and sells one element of a combination covered by a patent with the intention and for the purpose of bringing about its use in such a combination he is guilty of contributory infringement." Thomson–Houston Elec. Co. v. Ohio Brass Co., 80 F. 712, 721 (C.A.6 1897).³

On the other hand, this Court, in Henry v. A.B. Dick Co., 224 U.S. 1, 32 S.Ct. 364, 56 L.Ed. 645 (1912), overruled on other grounds, Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 37 S.Ct. 416, 61 L.Ed. 871 (1917), stated that "if the defendants [who were accused of contributory infringement] knew of the patent and that [the direct infringer] had unlawfully made the patented article ... with the intent and purpose that [the direct infringer] should use the infringing article ... they would assist in her infringing use." 224 U.S., at 33, 32 S.Ct. 364 (emphasis added and deleted).⁴ Our decision in Metro–Goldwyn–Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005), which looked to the law of contributory patent infringement for guidance in determining the standard to be applied in a case claiming contributory copyright infringement, contains dicta that may be read as interpreting the pre–1952 cases this way. In Grokster, we said that "[t]he inducement rule...