DSU Medical Corporation v. JMS Co., Ltd.
471 F.3d 1293 (2006)
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Rule of Law:
Liability for actively inducing patent infringement under 35 U.S.C. § 271(b) requires proof that the defendant specifically intended to encourage another's infringement, not merely that the defendant knew of the acts that constituted infringement. The plaintiff must show the alleged infringer knew or should have known their actions would induce actual infringements.
Facts:
- DSU Medical Corporation (DSU) owned the '311 patent for a guarded, winged-needle assembly designed to prevent accidental needle-stick injuries.
- ITL Corporation, an Australian company, manufactured a stand-alone plastic needle guard called the 'Platypus' in Malaysia and Singapore in a non-infringing 'open-shell' configuration.
- JMS Company, a Japanese medical supplier, entered into an agreement with ITL to distribute the Platypus worldwide.
- JMS purchased the open-shell Platypus guards from ITL and, for most units sold in the U.S., attached them to needle sets, putting them into an infringing 'closed-shell' configuration.
- DSU's lawyer informed ITL in 1997 that the Platypus infringed the '311 patent.
- Following this notice, ITL and JMS obtained opinions from U.S. patent counsel advising that the Platypus product did not infringe the '311 patent.
- ITL also shipped some Platypus guards directly to U.S. customers in the non-infringing open-shell configuration at JMS's request.
Procedural Posture:
- DSU Medical Corporation and Medisystems Corporation sued JMS Company and ITL Corporation in the U.S. District Court for the Northern District of California for patent infringement.
- The district court issued a claim construction order interpreting disputed patent terms.
- On summary judgment, the court ruled that the accused product in its 'closed-shell' configuration literally infringed certain patent claims.
- After a six-week trial, a jury found JMS liable for direct, contributory, and induced infringement but found ITL not liable for contributory or induced infringement.
- The jury also found several of DSU's patent claims to be invalid as obvious.
- The district court entered a final judgment consistent with the jury's verdict.
- DSU moved for a new trial regarding the jury's verdict of non-infringement for ITL, which the district court denied.
- DSU, the plaintiff-appellant, appealed the district court's final judgment and denial of its post-trial motions to the U.S. Court of Appeals for the Federal Circuit.
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Issue:
Does liability for actively inducing patent infringement under 35 U.S.C. § 271(b) require only that the defendant intended to cause the acts that constitute infringement, or must the defendant also possess a specific intent to encourage another's infringement?
Opinions:
Majority - Rader, J.
No, liability for actively inducing patent infringement requires more than intent to cause the acts of infringement; it requires a specific intent to encourage another's infringement. The court, sitting en banc for this issue, clarified that the plaintiff must prove the alleged infringer's actions induced infringing acts and that the infringer 'knew or should have known' their actions would induce actual infringements, which necessarily includes knowledge of the patent. This standard aligns with the Supreme Court's reasoning in MGM Studios, Inc. v. Grokster, Ltd., which premises inducement liability on 'purposeful, culpable expression and conduct.' Merely having knowledge of the direct infringer's activities is insufficient. The trial court's jury instruction, which required proof that the defendant knowingly induced infringement with the intent to encourage it, was therefore correct. Given that ITL had obtained legal opinions of non-infringement and its principal testified to a lack of intent to infringe, the jury had substantial evidence to conclude ITL lacked the requisite specific intent.
Concurring - Michel, C.J.
No, the standard requires specific intent, and the court's analysis on this point is correct. However, an en banc hearing was unnecessary because there was no genuine conflict in the court's prior precedents, specifically Hewlett-Packard and Manville. The plaintiff, DSU, simply misinterpreted Hewlett-Packard. The panel could have affirmed the district court's jury instruction without involving the full court. Furthermore, this opinion does not establish a new standard for the 'knowledge of the patent' requirement, as ITL's actual knowledge of the patent was not in dispute.
Analysis:
This en banc decision resolves a perceived conflict in Federal Circuit precedent and solidifies the intent standard for induced infringement, making it more difficult for patent holders to succeed on such claims. By requiring evidence of a 'specific intent to encourage another's infringement,' the court elevated the standard beyond mere knowledge of the infringing acts. This holding provides a stronger defense for accused inducers, as evidence of a good-faith belief of non-infringement, such as an opinion of counsel, can now more effectively negate the 'purposeful, culpable conduct' required for liability. The decision aligns patent law's inducement standard with that of copyright law as articulated in Grokster, emphasizing a higher culpability requirement for indirect infringement.
