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American Intellectual Property Law Association

THE STATUS OF INDUCEMENT

EPI Meeting

Munich, Germany

Joseph A. CalvarusoOrrick, Herrington & Sutcliffe LLP

March 13, 2014

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Applicable Statute

35 U.S.C. § 271 - Infringement of Patent

(a) [W]hoever without authority makes, uses, offers to sell or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

(b) Whoever actively induces infringement of a patent shall be liable as an infringer.

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Proving Inducement

• Alleged infringer’s action induced direct infringement

• Alleged infringer had knowledge that the induced acts constitute patent infringement

• Knowledge means:

—actual knowledge

—willful blindness

Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060 (2011); Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972)

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Proving Intent

– To prove the required intent the fact finder must examine the totality of the circumstances including whether the accused infringer:

1. Investigated the infringement asserted.

2. Explored design around approaches.

3. Took any remedial steps.

4. Obtained legal advice.

Broadcom v. Qualcomm, 543 F.3d 683 (Fed. Cir. 2008)

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Advice of Counsel Under AIA

• 35 U.S.C. § 298 - Advice of Counsel

— “The failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.”

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Advice Of Counsel And Intent To Induce

• Jury will not be instructed to consider that defendant failed to seek an opinion of counsel or that defendants sought an opinion of counsel but did not disclose it.

• If defendant obtained opinion of counsel, waives attorney client privilege and produces the opinion, the jury can consider that defendant obtained an opinion in evaluating defendant’s intent.

• If the defendant obtained an opinion of counsel. But does not waive attorney client privilege and present the opinion, then the jury will not be instructed to consider that the defendant obtained counsel’s opinion.

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Noninfringement Opinion Can NegateIntent

– A good faith belief of noninfringement tends to show that an accused inducer lacked the necessary intent.

DSU Med. Corp. v. JMS Co., Ltd., 471 F.3d 1293 (Fed. Cir. 2006) (en banc); Ecolab, Inc. v. FMC Corp., 569 F.3d 1335 (Fed. Cir. 2009); Bettcher Indus., Inc. v. Bunzl USA, Inc., 661 F.3d 629 (Fed. Cir. 2011)

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Commil USA, LLC v. Cisco Sys., Inc., 720 F.3d 1361 (Fed. Cir. 2013)

• It 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 no infringement.

• A good faith belief of invalidity is evidence that may negate the specific intent to encourage another’s infringement, which is required for induced infringement.

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Suprema, Inc. v. ITC, 2013 WL 6510929 (Fed. Cir. 2013)

• Patent directed to method for capturing and processing a fingerprint image.

• Respondents imported into the U.S. scanners that the patentee alleged directly infringed the patented method when combined with software in the U.S.

• Patentee conceded the scanners have substantial noninfringing uses and that the scanners only infringed after importation when the software was added.

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Suprema, Inc. v. ITC, 2013 WL 6510929 (Fed. Cir. 2013)

ITC found a violation:

• the scanners directly infringed in the U.S. when they were combined with certain software.

• the non-U.S. respondent induced by encouraging the infringing combination in the U.S.

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Suprema, Inc. v. ITC, 2013 WL 6510929 (Fed. Cir. 2013)

Federal Circuit reversed:

• Section 337 sets forth the following conduct as being unlawful:

* * *

(B) The importation into the United States, the sale for importation, or the sale within the United States after importation. . . of articles that –

(i) infringe a valid and enforceable United States patent. . . .

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Suprema, Inc. v. ITC, 2013 WL 6510929 (Fed. Cir. 2013)

Federal Circuit reversed:

• To prevail on inducement, the patentee must show, first that there has been a direct infringement.

• There is no completed inducement until there has been a direct inducement.

• The only pertinent articles are those which directly infringe at the time of importation.

• §337 cannot extend to alleged inducement where the acts of underlying direct infringement occur post-importation.

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Limelight Networks, Inc. v. Akamai Techs., Inc., No. 12-786 (Sup. Ct.)

• Federal Circuit En Banc Decision (692 F.3d 1301)

J It is well settled that there can be no indirect infringement without direct infringement.

J All the steps of a claimed method must be performed to find induced infringement but it is not necessary to prove that all steps were performed by single entity.

J A party that performs some steps of a patented process and actively induces another to commit the remaining steps may be liable for inducement of infringement under Section 271(b), even though no party in that scenario would be liable for direct infringement under Section 271(a).

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Limelight Networks, Inc. v. Akamai Techs., Inc., No. 12-786 (Sup. Ct.)

• Question Presented:

J Whether the Federal Circuit erred in holding that a defendant may be held liable for inducing patent infringement under 35 U.S.C. § 271(b) even though no one has committed direct infringement under § 271(a).

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Thanks for your attention! Questions?

Joseph A. CalvarusoPartner

Orrick, Herrington & Sutcliffe LLP51 West 52nd Street

New York, N.Y. 10019

(212) 506-5140(914) 414-5174

jcalvaruso@orrick.comJoseph A. Calvaruso