A recent decision from the Federal Circuit Court of Appeals demonstrates the importance of full disclosure between an inventor and patent attorney hired to conduct a prior rights analysis, such as a freedom-to-operate opinion. Under Section 271(b) of the U.S. Patent Act, "whoever actively induces infringement of a patent shall be liable as an infringer." The "inducer" must have actual or constructive knowledge of the patent-in-suit and must have "specific intent to encourage another's infringement," where specific intent is not defined so narrowly as to allow an accused wrongdoer to actively disregard a known risk. In SEB S.A. and T-Fal Corp. v Montgomery Ward & Co., Inc. et al. the Federal Circuit Court of Appeals established that deliberate indifference of a patent can satisfy the "knowledge of patent" element in an inducement claim and determined that the district court record demonstrated adequate deliberate indifference by co-defendant Pentalpha Enterprises, Ltd. as to the existence of the patent-in-suit. In SEB, the record demonstrated that: (1) Pentalpha had copied SEB's product, (2) Pentalpha had hired a patent attorney to conduct a patent prior-art search, but did not advise the attorney that it had copied the SEB device, and (3) Pentalpha's president was knowledgeable of U.S. patent law. The Federal Circuit concluded that this was "adequate evidence to support a conclusion that [Pentalpha] deliberately disregarded a known risk that SEB had a protective patent."
On appeal from the district court decision of inducement to infringe, as well as willful infringement, Pentalpha argued that SEB had not presented any direct evidence that Pentalpha had actual knowledge of the patent-in-suit before the lawsuit was filed. Pentalpha argued that the Federal Circuit's decision in DSU Medical v JMS supported its position by holding that the "requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent."
The SEB Court embarked in a detailed analysis of the "knowledge" requirement as it pertains to inducement-to-infringe claims, including discounting the cited language from the DSU Medical decision as dicta. While the DSU Medical language certainly appeared to support Pentalpha's position, the DSU Medical decision did not hinge on the "knowledge" requirement as the accused infringer had actual knowledge of the patent-in-suit. The court held that "deliberate indifference" to potential patent rights is sufficient to satisfy the "knowledge" requirement of inducement charges. While the district court record did not include direct evidence that Pentalpha was aware of the patent-in-suit, the record did provide adequate details of Pentalpha's deliberate indifference to SEB's patent rights.
Vol. 53, June 2010