June.09.2011
On May 31, 2011, the U.S. Supreme Court held induced infringement requires knowledge that the induced acts constitute patent infringement. Global-Tech Appliances, Inc., et al. v. SEB S.A.,563 U.S. ___(2011). The Court followed its prior holding in Aro Mnfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964) (Aro II) concerning contributory infringement, stating that the level of knowledge required for induced infringement is the same level of knowledge for contributory infringement. Contributory infringement requires knowledge of the existence of the patent that is infringed. Thus, the Court rejected the "deliberate indifference to a known risk" test adopted by the Federal Circuit. The Supreme Court, however, affirmed the Federal Circuit's judgment because the evidence of the case was sufficient to find defendant Pentalpha (a wholly owned subsidiary of Global-Tech) had knowledge under the doctrine of willful blindness.
"Willful blindness" is a well established criminal doctrine that the Court now applies to civil lawsuits: defendants "cannot escape liability by deliberately shielding themselves from the clear evidence of critical facts that are strongly suggested by the circumstances." The Supreme Court articulated a two-part rule: (1) the defendant must subjectively believe there is a high probability a fact exists and (2) the defendant must take deliberate actions to avoid learning of that fact. According to the Court, "a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts." By contrast, a reckless defendant "is one who merely knows of a substantial and unjustified risk of such wrongdoing, whereas a negligent defendant "is one who should have known of a similar risk but, in fact did not."
The Federal Circuit held the defendant had induced infringement under 35 U.S.C. § 271(b) because the infringer knew or should have known his actions would induce actual infringements. The Federal Circuit, despite having no direct evidence of defendant Pentalpaha's actual knowledge of the patent at issue until SEB sued Sunbeam, found there was adequate proof Pentalpha "deliberately disregarded a known risk" that SEB had a patent and that disregard was a form of actual knowledge.
In the instant case, Pentalpha believed SEB's product was valuable and decided to copy the features of the product except for the cosmetic features. Pentalpha also purposely copied an overseas model that was devoid of U.S. patent markings. Then, Pentalpha decided not to inform its own patent attorney that the product to be evaluated for a "right to use" opinion was copied from an SEB product. The Court found that "[t]aken together, this evidence was more than sufficient for a jury to find that Pentalpha subjectively believed there was a high probability that SEB's fryer was patented, that Pentalpha took deliberate steps to avoid knowing that fact, and it therefore willfully blinded itself to the infringing nature of Sunbeam's sales."