In general, a patent is infringed by one who makes, uses, sells, offers to sell, or imports a patented invention without the permission of the patent owner. This would mean that a wholesaler is liable for sales it makes to retailers, but not for the sales that retailers make to customers. These types of actions are generally referred to as direct infringement of the patent.
There are also two forms of indirect patent infringment–contributory infringement and induced infringement. No party can be liable for indirect infringement unless a direct infringement of the patent has occured.
Contributory infringement permits the patent owner to sue one who supplies a component of a patented machine or process, knowing that it may be used to infringe a patent. Contributory infringement is set forth in 35 U.S.C. § 271(c):
Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, 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.
The elements of contributory infringement include the supplying of a component of a patented machine, manufacture, or material that can be used in a patented process; the knowledge that it may be used to infringe a patent; and that the supplied component is not simply a staple product that may have substantial non-infringing uses. Unlike direct infringement, contributory infringement includes a knowledge requirement. In general, one has to be aware of the patent to be guilty of contributorily infringing that patent.
Induced infringement is covered by 35 U.S.C. § 271(b):
Whoever actively induces infringement of a patent shall be liable as an infringer.
Congress provided much less guidance for how to determine if one is liable for induced infringement. Courts have generally required liability for induced infringement to result from an intent to lead a party to directly infringe the patent. This could occur by including instructions or other types of assistance to a third party to infringe the patent. Thus, the requirement for liability for induced infringement requires that the infringer “knew or should have known” that its actions would induce infringement. Previously, Federal Circuit cases required that the infringer have actual knowledge of the patent. The Federal Circuit also has noted that liability requires a specific intent to encourage another’s infringement.
SEB S.A. v. Montgomery Ward & Co., Inc.
Last week, the Federal Circuit issued its opinion in SEB S.A. v. Montgomery Ward & Co., Inc. In SEB, there was no evidence that the infringer had knowledge of the patent at the time it was found to be liable for induced infringement.
The Federal Circuit found that because the infringer had deliberately disregarded a known risk that the plaintiff had a patent, it should be liable for induced infringement. The infringer hired a patent attorney to perform a freedom-to-operate search, but did not tell the attorney that it had based its own product on the plaintiff’s product. While the infringer did not know that the product was covered by a patent, it might have at least had its attorney check this fact when he did the search. The record included evidence that the infringer had experience with patents and thus should have appreciated the risk.
A failure to inform one’s counsel of copying would be highly suggestive of deliberate indifference in most circumstances.
Thus, the Federal Circuit affirmed that jury verdict of induced infringement.