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DSU Medical Corp. v. JMS Co. Ltd.Strategic Considerations for the
New Inducement Landscape
Kathi [email protected]
Christian [email protected]
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The Case
DSU brought suit against JSM & ITL for Patent Infringement: Direct, Inducement, ContributoryJSM sold ITL devices; JSM’s activities found to infringeQuestion: Does ITL infringe?
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The Technology
Medical DevicePatent directed to a guarded, winged-needle assembly needle + needle guardUsed to prevent needle stick injuries
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The Claims
Claim 1 requires “[a] guard slidably enclosing a sliding assembly comprising a needle and a winged needle hub . . . .”Trial Ct: term “requires that the guard substantially contain the needle-assembly at all times.”
– Thus, for direct infringement need: (1) needle + (2) guard where the needle is substantially within the guard
Fed. Cir. agrees
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The Accused Device
Platypus Needle GuardA configured piece of plastic adapted only for use in the patented combinationSold in open configuration without needle
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D.Ct. Ruling
JSM (who sells ITL products) directly infringesITL does not infringe, directly or otherwise
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Infringement
Infringement35 U.S.C. § 271
Direct Infringement§ 271(a)
Indirect Infringement§ 271(b-c)
Contributory Infring.§ 271(c)
Induced Infring.§ 271(b)
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Contributory Infringement§ 271(c)
Induced Infringement§ 271(b)
Indirect Infringement
Liable if one supplies a component or material especially adapted for infringing use.
“(c) Whoever offers to sell or sells . . . or imports . . . a component . . . , or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.”
“(b) Whoever actively induces infringement of a patent shall be liable as an infringer.”
Liable by actively and knowingly aiding and abetting another's direct infringement of the patent.
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Direct Infringement
No direct infringement by ITL because ITL sells the guard opened and without the needle assembly inside
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Contributory Infringement
Section 271(c) has a territorial limitation requiring contributory acts to occur in US
– ITL’s activities occurred outside of US
No contributory infringement by ITL because:– “[t]he record does not show that the Platypus guards ITL shipped
into the United States in the open-shell configuration were ever put into an infringing configuration, i.e., closed-shell”
No direct infringement based on ITL acts in US no contributory infringement
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Contributory Infringement
Court did find that “minimal intent” required for contributory infringement was met because Platypus was only adapted to be used in the patented combination (thus intent presumed) (knowledge v. intent?)Court noted that beyond minimum intent, ITL had knowledge of the patent and that it was made for use in an infringing manner
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Inducement of Infringement
Before the panel decided the inducement issue, the court took the matter en banc to resolve conflicting precedent re the required intent for inducement
– No amicus briefs requested or filed– Judges Schall and Mayer do not believe that there was conflicting
precedent (see concurrence)
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Intent to Induce
The Law: Pre-DSULiability for inducement requires that the conduct being induced constitutes direct infringement. [Nat’l Presto Indus., Inc. v. West Bend Co., 76 F.3d 1185, 1194, (Fed. Cir. 1996).]
Affirmative Act of Inducement
Direct Infringement
No inducement from failure to take legal or other steps to prevent infringement by another. [Tegal Corp. v. Tokyo Electron Co., Ltd., 248 F.3d 1376, (Fed. Cir. 2001).]There must be an affirmative act of inducement, such as licensing others, designing the infringing product or process, advertising, labeling, or providing instructions or directions.
Conflict between Manville Sales and HP.
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Pre-DSU.: “Intent” Std Not Clear –No Knowledge of Patent Required
Hewlett-Packard Co. v. Bausch & Lomb Inc., 909 F.2d 1464, 1469
(Fed. Cir. 1990)
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Pre-DSU: “Intent” Std Not Clear –Knowledge of Patent Required
Manville Sales Corp. v. Paramount Systems, Inc., 917 F.2d 544, 553
(Fed. Cir. 1990)
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DSU Medical:
The New Legal LandscapeDSU Med. Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1304-06 (Fed. Cir. 2006) (en banc as to section III.B.)
– Overrules HP v. Bausch & Lomb?– Adopts higher standard of Manville.
Inducer must now know of the patent.Mere knowledge of possible infringement or underlying acts (alleged to constitute infringement) is no longer sufficient.
En Banc Opinion (§ III.B.)
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DSU Medical:
The New Legal Landscape, cont.Induced infringement requires “specific intent to encourage another’s infringement.”
– “[T]he inducer must have an affirmative intent to cause direct infringement.”
– Inducer must knowingly induce infringement, not just the underlying acts
– Circumstantial evidence is enough.– Adopts “knew or should have known
standard”Blesses DSU jury instruction for induced infringement, which includes “should have known” language.
En Banc Opinion (§ III.B.)
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DSU Medical:
The New Legal Landscape, cont.“Should have known”?
– Negligence standard – Conflicts with stricter language in other
portion of opinion– Not defined– What triggers the “should have known”
element?• Licensing letters?• Knowledge of patent alone?• Strength of direct infringement case?
En Banc Opinion (§ III.B.)
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DSU Medical:
Applying the New RuleIn merits panel portion of DSU Med., 471 F.3d at 1306-07, Judge Rader (with Schall and Linn, JJ.) applies new en banc rule. Merits panel sustained jury verdict of noinducement based on the following substantial evidence:
– Commercial transactions between alleged direct and inducing infringers, including inducer’s intent to sell accused product.
– Patentee’s lawyer informed inducer that accused product infringed patent.Panel Opinion (§ III.C
.)
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DSU Medical:
Applying the New Rule, cont.Merits panel sustained jury verdict of noinducement based on the following substantial evidence:
…
– Opinion by inducer’s foreign counsel that accused product does not infringe patent.
– Written opinion by U.S. patent counsel advising inducer and direct infringer that accused product does not infringe.
– Trial testimony by inducer’s owner that inducer had no intent to infringe.
Panel Opinion (§
III.C.)
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DSU Medical:
Lessons from Panel Opinion
Merits panel cited opinion by foreign counsel re noninfringement. Merits panel cited written opinion by U.S. patent counsel re noninfringement.
Defense: Evidence of State of Mind
Defense: Opinion of Counsel
Merits panel cited trial testimony of alleged inducer’s owner re no intent to infringe.
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Is opinion of counsel a complete defense?Even if so, after a finding of direct infringement can an injunction issue?Can summary judgment be used?Must inducer show actual reliance?
Post DSU Med:Opinion of Counsel
Scope of Defense Nature of Opinion Consequences
Consider same factors as in willfulness?
– Must opinion of counsel be in writing?
– Must opinion of counsel be “competent”?
Is an opinion of invalidityusable as a defense?
Waiver of privilege? If so, is it waiver of broad “subject matter”?Rethink staging/ bifurcating willfulness?As P, file TRO/PI to get early waiver?Waiver extending to in-house counsel?Waiver of trial counsel’s work-product immunity?
Predictions (… but not legal advice): CAFC likely to borrow rules from willfulness area, making invalidity opinions usable but subjecting all facts to “totality of circumstances” test, with
required waiver of privilege upon assertion of defense.
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DSU Med. en banc opinion appears to equate knowledge and intent…. Is mere knowledge of patent enough, or must there be more?What does “specific intent” mean? Should there be analogies to criminal law?What is the standard for “should have known?”
Post DSU Med.:
Open IssuesKnowledge/Intent Burdens of Proof Willfulness?
Inducement usually requires preponderance.But burdens related to proof of intent (e.g., willfulness, inequitable conduct) often requires “clear & convincing.”What is burden to show intent or knowledge?Who has burden of showing intent (or lack thereof)?
Given similarities to willfulness doctrines, does an inducement finding necessarily require a finding of willfulness?Is “clear & convincing”standard for willfulness enough to separate it from inducement?
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What Now?Since DSU was just following Manville line of cases, arguably there is nothing new hereReinforces the potential role of opinions of counsel (troubling in light of Seagate/EchoStar)Whether test was tightened will depend on how the “should have known” element is applied
– Uncertainty in district courts until Fed. Cir. addressesReinforces that one should adopt best practices akin to those one would adopt for willfulness
– No discussing patent in written form– Formally document evidence re good intent
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What Now?Secondary effect: More emphasis on contributory infringement if easier to prove?In prosecution, need to be more careful about drafting claims that read directly on accused productsCase more relevant to software or method claims? May be a timing issue. Is one willful before they obtain advice of counsel? What happens if they later receive an adverse ruling from the court? On claim construction? MSJ? Final resolution at trial level? On appeal? When do the actions again become willful? Get a noninfringement (versus invalidity) opinion just in case; decide after Seagate whether to rely on opinion?
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About the Authors:Kathi Lutton is the incoming head of Fish & Richardson’s National Litigation Practice which includes the firm’s patent litigation practice; complex commercial litigation practice; white collar, government and securities litigation practice; ITC litigation practice; labor and employment practice and appellatepractice. Ms. Lutton also maintains an active patent litigation practice, leading and trying high-stakes, high-tech litigation in a myriad of technologies, including semiconductor technology, telecommunications, circuits and systems, computer technology and software and Internet applications. She advises clients ranging from Fortune 100 companies to start-ups on pre-litigation and litigation strategy, portfolio management, patent prosecution, patent reform and other intellectual property matters. Ms. Lutton works closely with clients to devise inventive ways of achievingoptimal success. Ms. Lutton is often asked to speak on a wide range of topics, including the patent reform currently pending before Congress, strategic prosecution, hot topics in litigation, reexamination strategies in litigation and willfulness.
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About the Authors:Christian Chu is an attorney in the Washington, D.C. office of Fish & Richardson P.C. His practice emphasizes intellectual property and technology litigation, including all aspects of patent litigation, trade secret litigation, trademark and unfair competition litigation and copyright litigation. Mr. Chu was previously a Judicial Clerk for the Honorable Raymond C. Clevenger, III, United States Court of Appeals for the Federal Circuit (2002-2003), and for Chief Judge Marilyn L. Huff, United States District Court for the Southern District of California (2001-2002). Mr. Chu has technical experience as an Associate Consultant for the healthcare and pharmaceutical management consulting firm Axon Group, Inc. (1997-1998), as a Research Associate for Howard Hughes Medical Institute (1995-1997), and as a Research Assistant for the University of California at Irvine (1992-93).
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Thank You!
