Supreme Court Rules Patent Invalidity is Not a Defense to Induced Patent Infringement Claim in Commil USA Case Against Cisco Systems

The U.S. Supreme Court has issued an opinion today in the case of Commil USA v. Cisco Systems finding that patent invalidity is no defense to a claim of induced infringement.

In making its determination, the Court determined that infringement and invalidity appeared in two distinct parts of the Patent Act: the right to be free from infringement appeared in Part III of the Patent Act which addresses "Patents and Protection of Patent Rights" and what constitutes a valid patent appears in Part II of the Patent Act which addresses "Patentability of Inventions and Grants of Patents."  The Court also noted that noninfringement and invalidity are two separate defenses that can be raised independently of one another or together.

Also relevant to the Court's  decision was its determination that allowing the defense of patent invalidity would undermine the longstanding presumption that patents are "presumed valid," since a defendant would be able to win an induced infringement case simply by proving that he or she held a reasonable belief that patent at issue was invalid.

The Court also cited "practical reasons not to create a defense based on a good-faith belief in invalidity," noting that a defendant who believed that a patent that a patent holder was attempting to enforce against him was invalid was not left without recourse, and had the option of filing a declaratory judgment, seeking inter partes review of the patent at the Patent Trial and Appeal Board, seeking ex parte reexamination of the patent by the Patent and Trademark Office (the "PTO"), and even of raising the affirmative defense of patent invalidity.   The majority deemed it relevant that  a defendant would not be found liable for infringing an invalid patent.

Although acknowledging the truths that "an invalid patent cannot be infringed" and that "someone cannot be induced to infringe an invalid patent", the majority still opined that the distinction is that "invalidity is not a defense to infringement; it is a defense to liability."

In his dissenting opinion, Justice Scalia rejected the rationale of the majority, asserting that "Only valid patents confer this right to exclusivity. . . .  It follows, as night the day, only valid patents can be infringed.  To talk of infringing an invalid patent is to talk nonsense."

Justice Scalia also dismissed the arguments of the majority as "unpersuasive."  Regarding the majority's argument that the Patent Act treats infringement and validity as distinct issues, Justice Scalia asserted that this was "true" but "irrelevant." Justice Scalia similarly dismissed the argument that the statutory presumption of validity would be diminished by finding a good faith belief in invalidity to be a defense to induced infringement, distinguishing avoidance of liability for a third party's infringement of a valid patent from presumed validity of a valid patent.  As to the Court's assertion that "invalidity is not a defense to infringement, it is a defense to liability," Justice Scalia opined that the statement itself is "an assertion, not an argument" and asked "How is it possible to interfere with rights that do not exist?"  Finally, as to what Justice Scalia regards as the majority's "weakest" argument--the practicality argument--Justice Scalia dismissed this majority argument on the strict interpretation grounds, asserting that the Court's job is "to interpret the Patent Act" and to decide what it provides, obviously implying that this this is not what the majority did in this particular case.

What does this holding mean for Silicon Valley companies?

Well, I would argue that the ruling may have the effect of motivating more companies to challenge the validity of patents they believe to be invalid at an earlier stage than they've previously done, if there is any possibility that they could be deemed to be infringing.  Also, the decision may prompt more companies to develop around weak but potentially problematic patents, where the companies might have not found a workaround previously. Finally, the ruling may have the effect of simply making the possibility of licensing a weak patent more attractive than it has been to date  in cases where a company believes that a patent that it will potentially infringe is invalid.

In light of the very procedural "in the weeds" nature of the ruling, though, its most significant impact may be simply on how patent infringement litigation defense is conducted going forward, as the corporate calculations on how to deal with weak third party patents that could be enforced against them may not really change that much as a result of this ruling from what they were previously.  Companies have long had to decide how to proceed with product development when a weak third party patent is identified that they potentially could be deemed to infringe, and the calculations of whether or not the patent invalidity defense will be available in light of an induced infringement claim may not have a significant impact on a company's overall decisionmaking processes.






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