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SEB S.A. v. Montgomery Ward & Co., Inc., et al.

United States Court of Appeals, Federal Circuit
594 F.3d 1360 (2010)
ELI5:

Rule of Law:

A defendant can be found liable for inducing patent infringement under 35 U.S.C. § 271(b) on a theory of deliberate indifference to a known risk that a patent exists. Deliberate indifference is a form of actual knowledge and can be inferred from circumstantial evidence, such as copying a competitor's product while withholding that fact from patent counsel.


Facts:

  • SEB S.A., a French company, invented and owned U.S. Patent No. 4,995,312 for a deep fryer with a 'cool touch' feature.
  • In 1997, Pentalpha, a Hong Kong corporation, purchased one of SEB's deep fryers in Hong Kong.
  • Pentalpha copied the design and features of the SEB fryer to develop its own competing product.
  • Pentalpha hired a U.S. attorney to conduct a 'right-to-use' study to determine if its fryer infringed any U.S. patents.
  • During this process, Pentalpha did not inform its attorney that its product was a copy of the SEB fryer.
  • The attorney's study, which did not identify the '312 patent, concluded that Pentalpha's fryer did not infringe on the patents it reviewed.
  • Pentalpha began selling its copycat deep fryers to U.S. retailers, including Sunbeam, Montgomery Ward, and Fingerhut, for resale in the United States.

Procedural Posture:

  • SEB first sued non-party Sunbeam in the U.S. District Court for the District of New Jersey for patent infringement, a case which later settled.
  • In August 1999, SEB sued Montgomery Ward, Global-Tech, and Pentalpha in the U.S. District Court for the Southern District of New York (a trial court) for patent infringement.
  • Following a jury trial, the jury found that Pentalpha had willfully infringed and induced infringement of the '312 patent, awarding SEB $4.65 million in damages.
  • Pentalpha filed post-trial motions for Judgment as a Matter of Law (JMOL) and for a new trial.
  • The district court denied most of Pentalpha's motions but reduced the damages award by $2 million to offset SEB's settlement with Sunbeam.
  • Pentalpha, the defendant, appealed the judgment to the U.S. Court of Appeals for the Federal Circuit. SEB, the plaintiff, cross-appealed a separate ruling on enhanced damages.

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Issue:

Does a defendant possess the requisite specific intent to be liable for inducing patent infringement under 35 U.S.C. § 271(b) if, despite lacking direct evidence of actual knowledge of the patent, they deliberately disregarded a known risk that a patent existed?


Opinions:

Majority - Rader, Circuit Judge

Yes, a defendant possesses the requisite intent for induced infringement if they deliberately disregarded a known risk that a patent existed. The court held that the knowledge requirement for induced infringement under 35 U.S.C. § 271(b) is not limited to direct evidence of actual knowledge. Instead, the requisite 'specific intent' can be established by showing deliberate indifference to a known risk, which is a form of actual knowledge. Here, the evidence was sufficient for a jury to infer Pentalpha's deliberate indifference. Pentalpha copied SEB's product, its president was sophisticated in U.S. patent law, and it hired an attorney for a patent search but concealed the fact that its product was a copy. This conscious shielding of information from counsel was highly suggestive of a deliberate effort to avoid confirming the existence of a patent it likely knew existed.



Analysis:

This decision clarifies the intent standard for induced infringement, establishing that 'willful blindness' or 'deliberate indifference' can satisfy the 'knowledge of the patent' requirement from this court's precedent in DSU Medical. It prevents infringers from escaping liability by intentionally shielding themselves from direct knowledge of a specific patent. By allowing knowledge to be proven through circumstantial evidence of conscious avoidance, the court provides patentees a viable path to prove inducement even without a 'smoking gun' document. This ruling solidifies the principle that one cannot avoid liability by burying one's head in the sand when faced with a high probability of infringement.

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