Orthokinetics, Inc. v. Safety Travel Chairs, Inc., et al.
806 F.2d 1565 (1986)
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Rule of Law:
Corporate officers who actively aid and abet their corporation's patent infringement may be held personally liable for inducing infringement under 35 U.S.C. § 271(b). Personal liability for direct infringement under § 271(a) can be imposed on officers who personally participated in or directed the tortious acts, without requiring a finding of willful infringement or piercing the corporate veil.
Facts:
- Orthokinetics, Inc. manufactures and holds patents for pediatric wheelchairs, including the '586 patent for a chair with scoliosis pads and the '867 patent for a collapsible travel chair.
- In 1978, Safety Travel Chairs, Inc. (STC) began selling chairs that were similar to those patented by Orthokinetics.
- The chairs sold by STC were manufactured by a related company, Entron, Inc.
- William J. Pivacek, Clark Chipman, and William J. Cole established STC and were the sole stockholders and officers of both STC and Entron.
- Pivacek, Cole, and Chipman were directly responsible for the design and production of the allegedly infringing chairs.
- These three corporate officers were the only individuals who stood to benefit financially from the sale of the chairs in question.
Procedural Posture:
- Orthokinetics, Inc. sued Safety Travel Chairs, Inc., Entron, Inc., and its officers (Pivacek, Chipman, and Cole) in the U.S. District Court for the Northern District of Ohio for patent infringement.
- Safety answered that the patents were invalid and counterclaimed for patent misuse.
- A six-member jury heard the case and returned verdicts favorable to Orthokinetics on patent validity, infringement, willful infringement, and the personal liability of the corporate officers.
- Safety filed a motion for Judgment Notwithstanding the Verdict (JNOV), asking the judge to overrule the jury.
- The district court granted Safety's JNOV motion in part, holding the patents invalid, finding the corporate officers not personally liable, and finding no willful infringement.
- The district court also conditionally granted Safety a new trial on the issue of patent validity if the JNOV were to be overturned.
- Orthokinetics appealed the district court's JNOV orders to the U.S. Court of Appeals for the Federal Circuit.
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Issue:
Are corporate officers personally liable for their corporation's patent infringement if they actively aid and abet the infringing acts, even without a finding of willful infringement?
Opinions:
Majority - Markey, Chief Judge
Yes. Corporate officers who actively aid and abet their corporation's infringement are personally liable for inducing infringement, regardless of whether the corporation is their alter ego. The district court erred in holding that a finding of willful infringement was a prerequisite for imposing personal liability on corporate officers for their company's direct infringement. Infringement is a tort, and officers are personally liable for tortious conduct of the corporation if they personally took part in the commission of the tort or specifically directed others to commit the tortious act. Here, the evidence firmly established that Pivacek, Cole, and Chipman were directly responsible for the design and production of the infringing chairs and were the sole beneficiaries of the infringing sales. This evidence was fully sufficient to support the jury's verdict imposing personal liability on them for both direct infringement and inducing infringement.
Analysis:
This decision clarifies and reinforces the scope of personal liability for corporate officers in patent infringement cases. It establishes that officers cannot shield themselves behind the corporate entity if they are actively involved in the infringing conduct. The ruling lowers the threshold for personal liability from willful infringement to active aiding and abetting, significantly increasing the legal risk for officers of closely-held corporations that engage in infringement. Furthermore, the court's reversal of the JNOV reaffirms the high standard for overturning a jury verdict, emphasizing that a court may not substitute its own judgment for the jury's when the verdict is supported by substantial evidence.
