Global-Tech, Inc. v. SEB, S.A. - A Changing Standard For Active Inducement Of Patent Infringement?

Originally published March 22, 2011

Induced infringement applies to the sale of products necessary to perform a claimed process – even when the product has non-infringing uses – if the product was sold with express instructions for use in the infringing manner. Asserting induced infringement has also become an effective weapon for U.S. patent holders against foreign manufacturers when the patent covers a product sold by the foreign manufacturer to a U.S. distributor for importation into the U.S. Increasingly, federal courts have disregarded defenses raised by foreign manufacturers who assert that their sale was outside of the U.S. and that they should not be held liable for the distributors' actions.

While active inducement of infringement has traditionally required that the actor "knew or should have known" that his actions would induce infringement, thereby requiring actual knowledge of a U.S. patent that covers the infringing process or product, this "state of mind" requirement is being reexamined by the U.S. Supreme Court in the case of Global-Tech v. SEB S.A.

This case centers around Global-Tech's agreement to manufacture deep-fryers to be sold in the U.S. by Sunbeam. After Global-Tech purchased several deep-fryers (including SEB's "Cool Touch" fryer, which was not marked with any U.S. patents), Global-Tech reverse-engineered and manufactured deep-fryers that were very similar to SEB's "Cool Touch" product for sale to Sunbeam. SEB sued both Sunbeam (the U.S. distributor) for direct infringement and Global-Tech (the foreign manufacturer) for induced infringement. Even after Sunbeam and SEB settled the direct infringement claim, SEB continued to pursue the induced infringement claim against Global-Tech.

After a jury trial, Global-Tech was found to have induced infringement by selling to Sunbeam products that Global-Tech knew would be resold in the U.S. The trial judge, however, did not instruct the jury that they were required to find that the defendant had knowledge of the patent-in-suit when they sold the infringing goods to Sunbeam.

On appeal, the Federal Circuit affirmed the decision of the district court. In doing so, the Federal Circuit moved away from its previous requirement that the inducer have knowledge of the infringed patent, and instead held that "deliberate indifference" by Global-Tech was enough to meet the standard for actively inducing infringement. The Federal Circuit noted that Global-Tech reverse-engineered the SEB...