Global-Tech Appliances Inc. v. SEB S.A.

October 15, 2010 – Blog Post

The Supreme Court granted a writ of certiorari on Tuesday, October 12 to clarify the legal standard for the state of mind element of a claim for actively inducing patent infringement. The case, Global-Tech Appliances Inc. v. SEB S.A., on appeal from the Federal Circuit, involves petitioner Pentalpha, an accused infringement inducer who sold deep fryers. Pentalpha purchased a deep fryer from respondent SEB and copied certain features in designing its own product. Pentalpha then sought a legal opinion as to whether its deep fryer infringed any patent rights without notifying its counsel that it copied SEB’s deep fryer. The attorney’s opinion was one of noninfringement, and Pentalpha then sold its deep fryers to companies that marketed and sold them in the United States. Pentalpha alleges, and the record does not contradict, that Pentalpha did not actually know that SEB had patent protection for its deep fryer until Pentalpha learned of a SEB suit against one of its customers in the U.S.

To be liable for inducement of patent infringement, one must “actively” induce infringement, as stated in 35 U.S.C. § 271(b). In February, Judge Rader, writing for the Federal Circuit, applied a “deliberate indifference” standard to an accused inducer’s knowledge of a patent. Though the evidence did not directly show that Pentalpha knew of SEB’s patent before it became aware of other lawsuits, the Federal Circuit found that Pentalpha’s copying and failure to inform counsel of copying showed deliberate disregard for the known risk that SEB had such a patent. The court therefore found inducement. The Federal Circuit also noted that it did not purport, in this decision, to set the outer boundaries for knowledge of a patent for induced infringement, which may include constructive knowledge with persuasive evidence of disregard for clear patent markings.

In petitioning for a writ of certiorari, Pentalpha asked the Supreme Court to rule that knowledge for induced patent infringement requires a “purposeful, culpable expression and conduct” standard from the copyright case MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 937 (2005), rather than the “deliberate indifference” standard from the Federal Circuit decision. Pentalpha argued that these two standards are at odds with one another. SEB argued against granting a writ of certiorari, stating that the “deliberate interference” test is well-grounded in precedent and not inconsistent with Grokster.

In the Grokster decision, the Supreme Court adopted the inducement rule for patent law found in 35 U.S.C. § 271(b) to a copyright decision, applying the patent law rule as one in which “one who distributes a device with the object of promoting its use to infringe [a patent], as shown by clear expression or other affirmative stepstaken to foster infringement, is liable for the resulting acts of infringement by third parties.” Grokster, 545 U.S. at 936-37 (emphasis added). The court went on to require “purposeful, culpable expression and conduct” so as to avoid imposing infringement liability for legitimate, lawful commerce and innovation. Id. at 937. In the SEB case at hand, the Federal Circuit cited other federal appellate courts’ decisions equating specific intent, intentional misconduct, and deliberate indifference. The Federal Circuit further reasoned that the deliberate indifference standard requires a “subjective determination that the defendant knew of and disregarded the overt risk that an element of the offense existed,” making deliberate indifference another form of actual knowledge or another way of proving actual knowledge. Thus, the issue before the Supreme Court seems to turn on whether or not courts can infer clear expression or purposeful conduct from evidence of an accused inducing infringer’s “deliberate indifference” to a risk of patent infringement.