Good-Faith Belief Of Invalidity May Negate Intent For Inducement

In Commil USA, LLC v. Cisco Systems, Inc., No. 12-1042 (Fed. Cir. June 25, 2013), the Federal Circuit affirmed the district court's grant of a new trial, vacated the jury's verdict on induced infringement, and remanded for a new trial. Specifically, the Court held that as a defense to an induced infringement claim, Cisco Systems, Inc. ("Cisco") should have been allowed to present evidence showing its good-faith belief of invalidity.

Commil USA, LLC ("Commil") owns U.S. Patent No. 6,430,395 ("the '395 patent"), covering a method of providing mobile devices traveling throughout a network area with faster and more reliable transfers from one base station to another. Commil sued Cisco, alleging certain Cisco WiFi access points and controllers infringed the claims of the '395 patent. Following an initial trial in which the jury found Cisco liable for direct infringement but not for induced infringement, the district court granted Commil's motion for a partial new trial on the issues of induced infringement and damages. The district court found that Cisco's counsel's inflammatory statements during trial may have had a prejudicial effect on the jury, influencing the outcome.

Prior to the second trial, Cisco proffered evidence showing its good-faith belief that the '395 patent was invalid. The district court excluded the evidence but did not issue a written opinion explaining its reasoning. Based on jury instructions imposing liability for inducers that were at least negligent to the fact that their actions would induce infringement, the jury held Cisco liable and awarded Commil $63.7 million in damages.

On appeal, Cisco raised two main arguments. First, Cisco argued that the jury instruction on inducement was erroneous in light of the Supreme Court's decision in Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011), because it allowed the jury to find inducement based on mere negligence. Second, Cisco contended that the district court improperly excluded evidence of its good-faith belief of invalidity, which would have shown it lacked the requisite intent for induced infringement. Cisco also challenged the district court's grant of a partial new trial and its construction of the claimed term "short-range communication protocol."

"It is axiomatic that one cannot infringe an invalid patent. Accordingly, one could be aware of a patent and induce another to perform the steps of the patent claim, but have a good-faith belief that the patent...