“Patents, Pez #1” by etorov is licensed under CC BY-SA 2.0.
Mike Chernoff, Associate Member, University of Cincinnati Law Review
I. Introduction
Courts may hold patent infringers liable for the damages caused by their infringement.[1] In cases where a court determines that an infringer acted in a willful manner, that court may triple the damages awarded to the patent owner. Patent infringement can occur through indirect means.[2] Additionally, federal courts have extended the doctrine of willful blindness to satisfy the knowledge requirement of indirect infringement. Recently, the United States District Court for the Eastern District of Texas ruled that the doctrine of willful blindness can also meet the knowledge requirement for willful infringement.[3] This poses the question of whether a plaintiff can always request enhanced damages if willful blindness is proven in the infringement analysis.
II. Background
a. Patent Infringement
United States patent law affords protection to “[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor . . . .”[4] Patents are directly infringed when someone without authority makes, uses, offers to sell, or sells the patented invention within the United States during the term of the patent. Patents may also be infringed indirectly, either by inducement or by contribution.[5]
Induced infringement occurs when one party takes active steps to encourage direct infringement by another party.[6] These steps include advertising an infringing use, instructing how to engage in an infringing use, and assisting in performing an infringing use.[7] In order to prove induced infringement, a party must prove that the infringing party knew of the patent that is allegedly infringed.[8] Further, the accused infringer by inducement must have also had knowledge that the infringer’s actions would lead another to directly infringe the patent.[9]
Contributory infringement requires that a party make, use, sell, or offer to sell within the United States, a “component of a patented machine, manufacture, combination or composition, or a material or an 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 . . . .”[10] This “component of a patented machine, manufacture, combination or composition, or a material or an apparatus for use in practicing a patented process” must not have the ability to be used in a substantial nonfringing use in order for the alleged contributory infringer to be found liable for the contributory infringement.[11] Similar to infringement by inducement, contributory infringement requires the alleged infringer to have knowledge that a valid patent existed on the claimed infringed item and that their actions would lead to direct infringement.[12]
A court may triple a plaintiff’s damages if the court determines that a defendant willfully infringed.[13] The Supreme Court has held that “punitive or ‘increased’ damages” could be recovered in a case considering willful infringement.[14] In Halo Elecs., Inc. v. Pulse Elecs., Inc., the Court clarified that enhanced damages should generally be reserved for “egregious cases typified by willful misconduct.”[15] In Halo, the Court also adjusted the burden of proof requirement of willful infringement from a “clear and convincing” standard to a “preponderance of the evidence” standard.[16]
b. Willful Blindness
While knowledge of a patent is required for a finding of direct infringement, there was a question of whether actual knowledge was required or if “willful blindness” was sufficient to prove knowledge. Willful blindness is a well-established criminal law doctrine that applies when a statute requires proof that a defendant acted knowingly or willfully.[17] Defendants cannot avoid this knowledge requirement by shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances.[18] Criminal law assumes that defendants who act in this manner are just as culpable as those who have actual knowledge of the critical facts.[19] The Supreme Court heard a case in 2011 named Global-Tech Appliances, Inc. v. SEB S.A which asked whether willful blindness could be applied to indirect patent infringement cases.[20]
SEB, the Plaintiff in Global-Tech, was a French manufacturer of home appliances.[21] In the late 1980s, SEB invented a deep fryer with “cool-touch” technology; a design which kept the controls of the fryer from becoming hot due to the temperature of the metal frying pot.[22] SEB was granted a patent for this invention in 1991 and later manufactured and sold the product in the United States under the “T-Fal” brand.[23] SEB’s deep fryer was a commercial success in the American market.[24]
Sunbeam Products, Inc. (“Sunbeam”) approached Pentalpha Enterprises, Ltd. (“Pentalpha”) in 1997 asking that Pentalpha supply Sunbeam with deep fryers meeting certain specifications.[25] Pentalpha is a wholly owned subsidiary of Global-Tech Appliances, Inc. and a Hong Kong maker of home appliances.[26] In developing the deep fryer for Sunbeam, Pentalpha purchased an SEB deep fryer in Hong Kong and copied everything but the cosmetic features.[27] This deep fryer bore no United States patent markings because the deep fryer was purchased outside of the United States.[28] Pentalpha retained an attorney to conduct a right-to-use study after copying the SEB deep fryer, but Pentalpha did not alert the attorney that the design of the new deep fryer was copied from SEB’s deep fryer.[29] The attorney failed to locate the SEB “cool-touch” patent and issued an opinion letter to Pentalpha stating Pentalpha’s deep fryer would not infringe any patents.[30] Immediately after this letter in August 1997, Pentalpha began selling these deep fryers to Sunbeam, and Sunbeam began to resell the deep fryers in the United States under its own branding.[31] Due to the low production costs of Sunbeam’s manufacturer, Sunbeam’s deep fryer was able to undercut SEB’s deep fryer in the United States market.[32] SEB sued Sunbeam in March 1998 alleging Sunbeam’s deep fryer infringed upon SEB’s patent.[33] Although Sunbeam alerted Pentalpha of the lawsuit in April 1998, Pentalpha continued to market its deep fryer.[34] Pentalpha then began selling deep fryers to Fingerhut Corp. (“Fingerhut”) and Montgomery Ward & Co. (“Montgomery Ward”) for these companies to sell the Pentalpha deep fryers under their respective brands.[35]
SEB settled the lawsuit with Sunbeam and subsequently filed suit against Pentalpha.[36] SEB alleged two theories in the lawsuit against Pentalpha: (1) that Pentalpha had directly infringed SEB’s patent by selling or offering to sell the deep fryers, and (2) that Pentalpha actively induced Sunbeam, Fingerhut, and Montgomery Ward to sell Pentalpha’s infringing deep fryer.[37] Following trial, the jury found in favor of SEB on both theories of infringement and also found Pentalpha’s infringement to have been willful.[38] In post-trial motions, Pentalpha argued that there was insufficient evidence to support the finding of induced infringement because Pentalpha did not actually know of SEB’s patent until Sunbeam alerted Pentalpha of the lawsuit in April 1998.[39] The District Court and the Court of Appeals for the Federal Circuit rejected this argument; the Supreme Court subsequently granted certiorari to consider whether the sale of a product with “deliberate indifference of a known risk” that an infringement may occur satisfies the intent element for actively inducing infringement.[40]
In the Petitioner’s Brief, Pentalpha argued that actual knowledge of the patent was required for induced infringement.[41] Although the Supreme Court agreed with Pentalpha’s argument, the Court chose to use the doctrine of willful blindness as a basis for finding induced infringement.[42] The long history of acceptance of willful blindness gave the Court “no reason why the doctrine should not apply in civil lawsuits for induced patent infringement . . . .”[43] While developing the deep fryer for Sunbeam, Pentalpha conducted “market research” and knew of the success of SEB’s deep fryer.[44] Pentalpha was also aware that United States patent markings would not be on a foreign-purchased deep fryer.[45] The Court reasoned that these facts combined with the lack of communication of the copying process to Pentalpha’s attorney, was more than sufficient for a jury to find that Pentalpha believed there was a strong chance SEB’s deep fryer was patented and that Pentalpha took deliberate steps to avoid this fact.[46] Thus, Pentalpha willfully blinded itself to the infringing nature of the deep fryer sales.[47]
III. Motiva Patents, LLC v. Sony Corp.
Motiva Patents, LLC (“Motiva”) owns the patent rights to five United States Patents that claim human movement measurement systems that can be used as a part of a virtual reality system in video games.[48] Motiva brought suit against Sony Corporation, HTC Corporation (“HTC”), and Facebook Technologies, LLC alleging that the each Defendant infringed Motiva’s patents.[49] Motiva alleged that various HTC products directly and indirectly infringed Motiva’s patents.[50] The alleged infringements included the hardware, software, and resulting tasks performed by the HTC products.[51]
Motiva alleged indirect infringement by HTC under theories of induced infringement and contributory infringement.[52] Motiva claimed that HTC had knowledge of Motiva’s patents before the lawsuit was filed.[53] Motiva relied on a theory of willful blindness to demonstrate HTC’s knowledge of Motiva’s patents.[54] Motiva asserted that HTC operated its business in a willfully blind manner to the patents of others because HTC had a policy or practice to not review the patents of others, including instructing its employees to not review the patents of others.[55] To support the theory of induced infringement, Motiva alleged that HTC took specific, affirmative, and intentional steps to induce infringement through contractual relationships with others with the specific intent to cause others to use the products in a manner which constitutes infringement.[56] Regarding contributory infringement, Motiva claimed that HTC’s products contained a software processing system that had no substantial noninfringing use.[57] Motiva asserted that HTC’s infringement of Motiva’s patents was “willful, intentional, deliberate, and/or in conscious disregard of Motiva’s rights under the patent.”[58]
On December 17, 2018, HTC filed a motion to dismiss on the grounds that Motiva failed to present adequate facts to support allegations of indirect infringement and willful infringement.[59] HTC argued that Motiva failed to support its allegations that HTC had knowledge of Motiva’s patents, HTC intended to induce infringement, and HTC’s products lacked substantial noninfringing uses.[60]
The court ruled that Motiva adequately pled both causes of action.[61] Motiva successfully alleged that HTC had the knowledge required for induced infringement in the form of willful blindness.[62] Also, Motiva successfully raised a plausible inference that HTC had intent to induce infringement.[63] For contributory infringement, Motiva adequately pled that HTC had the requisite knowledge and that HTC’s product plausibly lacked any substantial noninfringing uses.[64]
In its motion to dismiss, HTC argued that although Motiva may have successfully pled that HTC had requisite knowledge for induced infringement through willful blindness, this could not extend to an adequate plea for willful infringement.[65] However, the court disagreed and ruled that willful blindness was sufficient to state a claim for willful infringement.[66] In coming to this decision, the court first reasoned that this stemmed from the Global-Tech decision.[67] The court held that willful blindness is a satisfactory substitute for actual knowledge for infringement and could extend as a substitute for willful infringement as well.[68] This court also referenced the culpability rationale in Global-Techas a reason to extend the willful blindness doctrine to willful infringement.[69] Finally, the court held that Halo’sdescription of subjective willfulness suggests that willful blindness would be satisfactory to meet the requirement of willful infringement.[70] This is the first instance of the doctrine of willful blindness being extended to possibly satisfy a claim of willful infringement.
IV. Discussion
The sudden application of the willful blindness doctrine to willful infringement will significantly impact the future of patent infringement litigation. This change will increase the frequency of willful infringement claims and force companies to rethink any internal policy that suggests avoiding checks for patents.
Before the willful blindness doctrine was extended to willful infringement claims, plaintiffs only had a reason to claim willful infringement if they believed that the infringing party had actual knowledge of the infringed patents. However, the decision will lower the standard for willful infringement claims if this doctrine expands through the federal courts. A party will only need to plausibly believe that an infringer had actual knowledge of a patent or had avoided finding a patent to assert a claim for willful infringement. This may increase the number of infringers that are found liable of willfully infringing; therefore, increasing the average damages in patent infringement suits. This is likely to further motivate alleged infringers to engage in early settlement negotiations. However, plaintiffs in willful patent infringement suits may become less likely to settle because of the potential upside of a victory at trial.
In response to these changes, potential infringers will have to adapt in their methods of mitigating intellectual property risk. Thorough checks for prior patents will be necessary for companies that intend to release advanced products. Motiva alleged that HTC had a policy to not check for any patents on new products, and this alleged policy was enough for the court to apply a willful blindness standard to HTC’s knowledge.[71] Other companies that employ a similar policy or practice will be forced to utilize patent checks to protect themselves from potential infringement lawsuits. While this doctrinal change will most likely help protect patent holders, it places a new burden on potential infringers to ensure that they have not violated any patents.
V. Conclusion
The extension of the willful blindness doctrine to willful patent infringement is an expansion of the protection of patent holders, but a threatening situation for potential infringers with lenient internal patent policies. Patent attorneys throughout the country will be closely watching whether this decision is appealed. The outcome of this decision may have a large impact on patent lawsuits and the role and need for patent counsel.
[1]35 U.S.C. § 271(a) (2019).
[2]35 U.S.C. § 271(a) (2019).
[3]35 U.S.C. § 271(b) (2019); 35 U.S.C. § 271(c) (2019).
[4]Motiva Patents, LLC v. Sony Corp., No. 9:18-CV-00180-JRG-KFG, 2019 U.S. Dist. LEXIS 166549, at *33-34 (E.D. Tex. Sep. 27, 2019).
[5]U.S. Const. art. I, § 8, cl. 8; 35 U.S.C. § 101.
[6]35 U.S.C. § 271(b) (2019); 35 U.S.C. § 271(c) (2019).
[7]Motiva Patents, 2019 U.S. Dist. LEXIS 166459, at *12 (quoting Barry v. Medtronic, Inc., 914 F.3d 1310, 1334 (2019)).
[8]Motiva Patents, 2019 U.S. Dist. LEXIS 166459, at *12 (citing Barry, 914 F.3d at 1334).
[9]Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 765 (2011).
[10]DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1305 (2006).
[11]35 U.S.C. § 271(c) (2019).
[12]Id.
[13]Global-Tech, 563 U.S. at 755 (citing Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 488 (1964)).
[14]35 U.S.C. § 284 (2019).
[15]Aro Mfg. Co., 377 U.S. at 505.
[16]Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1934 (2016).
[17]Id.
[18]Global-Tech, 563 U.S. at 766.
[19]Id.
[20]Id.
[21]Id.
[22]Id. at 757.
[23]Id.
[24]Id. at 757-758.
[25]Id. at 758.
[26]Id.
[27]Id.
[28]Id.
[29]Id.
[30]Id.
[31]Id.
[32]Id.
[33]Id.
[34]Id.
[35]Id.
[36]Id.
[37]Id.
[38]Id. at 759.
[39]Id.
[40]Id.
[41]Id.; Petition for a Writ of Certiorari at 7, Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011) (No. 10-6).
[42]Brief for Petitioner at 26, Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011) (No. 10-6).
[43]Id. at 766.
[44]Id. at 768.
[45]Id. at 770.
[46]Id. at 771.
[47]Id.
[48]Id.
[49]Motiva Patents, LLC v. Sony Corp., No. 9:18-CV-00180-JRG-KFG, 2019 U.S. Dist. LEXIS 166549, at *3 (E.D. Tex. Sep. 27, 2019).
[50]Motiva Patents, LLC v. Sony Corp., No. 9:18-CV-00180-JRG-KFG, 2019 U.S. Dist. LEXIS 141284, at *2-3 (E.D. Tex. Aug. 20, 2019).
[51]Motiva Patents, 2019 U.S. Dist. LEXIS 166549, at *3.
[52]Id. at *4.
[53]Id. at *5.
[54]Id.at *6.
[55]Id.
[56]Id.
[57]Id.
[58]Id. at *7.
[59]Id. at *8.
[60]Id. at *8-9.
[61]Id. at *9-10. In order for a motion to dismiss to succeed in the United States District Court for the Eastern District of Texas, the plaintiff must be found to have failed to state a claim for relief that is plausible on its face and have not raised a reasonable expectation that discovery will reveal evidence.
[62]Id. at *19-33.
[63]Id. at *25-28
[64]Id. at *18-25.
[65]Id. at *28-33.
[66]Id. at *33.
[67]Id.
[68]Id. at *34-35; See Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 769 (2011).
[69]Motiva Patents, 2019 U.S. Dist. LEXIS 166459, at *34-35; See Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 769 (2011).
[70]Motiva Patents, 2019 U.S. Dist. LEXIS 166459, at *36; Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1933 (2016).
[71]Motiva Patents, 2019 U.S. Dist. LEXIS 166459, at *6.
