Global-Tech Appliances, Inc., Et Al. v. Seb S. A.
The issue in the case was whether a party who “actively induces infringement of a patent” under 35 U. S. C. §271(b) must know that the induced acts constitute patent infringement.
The case concerned a patent for an innovative deep fryer designed by respondent SEB S. A., a French maker of home appliances. In the late 1980’s, SEB invented a “cool touch” deep fryer, that is, a deep fryer for home use with external surfaces that remain cool during the frying process. SEB obtained a U. S. patent for its design in 1991, and sometime later, SEB started manufacturing the cool-touch fryer and selling it in the US.
In 1997, Sunbeam Products, Inc., a U. S. competitor of SEB, asked petitioner Pentalpha Enterprises, Ltd., to supply it with deep fryers meeting certain specifications. Pentalpha a Hong Kong maker of home appliances and a wholly owned subsidiary of petitioner Global-Tech Appliances, Inc. In order to develop a deep fryer for Sunbeam, Pentalpha purchased an SEB fryer in Hong Kong and copied all but its cosmetic features. Because the SEB fryer bought in Hong Kong was made for sale in a foreign market, it bore no U. S. patent markings. After copying SEB’s design, Pentalpha retained an attorney to conduct a right-to-use study, but Pentalpha refrained from telling the attorney that its design was copied directly from SEB’s.
The attorney failed to locate SEB’s patent, and he issued an opinion letter stating that Pentalpha’s deep fryer did not infringe any of the patents that he had found. That same month, Pentalpha started selling its deep fryers to Sunbeam, which resold them in the United States under its trademarks. SEB sued Sunbeam in March 1998, alleging that Sunbeam’s sales infringed SEB’s patent. Sunbeam notified Pentalpha of the lawsuit the following month. Undeterred, Pentalpha went on to sell deep fryers to Fingerhut Corp. and Montgomery Ward & Co., both of which resold them in the United States under their respective trademarks.
SEB settled the lawsuit with Sunbeam, and then sued Pentalpha, asserting two theories of recovery: First, SEB claimed that Pentalpha had directly infringed SEB’s patent in violation of 35 U. S. C. §271(a), by selling or offering to sell its deep fryers; and second, SEB claimed that Pentalpha had contravened §271(b) by actively inducing Sunbeam, Fingerhut, and Montgomery Ward to sell or to offer to sell Pentalpha’s deep fryers in violation of SEB’spatent rights.
Following a 5-day trial, the jury found for SEB on both theories and also found that Pentalpha’s infringement had been willful. Pentalpha filed post-trial motions seeking a new trial or judgment as a matter of law on several grounds. Pentalpha argued that there was insufficient evidence to support the jury’s finding of induced infringement under §271(b) because Pentalpha did not actually know of SEB’s patent until it received the notice of the Sunbeam lawsuit in April 1998.
The District Court rejected Pentalpha’s argument, as did the Court of Appeals for the Federal Circuit.
Pentalpha argued that active inducement liability under §271(b) required more than deliberate indifference to a known risk that the induced acts may violate an existing patent. Pentalpha maintained that actual knowledge of the patent was needed.
After discussing the language of §271(b), the pre-1952case law and its previous decision in Aro II, the Supreme Court held that induced infringement under §271(b) require knowledge that the induced acts constitute patent infringement.
Though the Supreme Court agreed with Pentalpha that deliberate indifference to a known risk that a patent exist is not the appropriate standard under §271(b), yet it affirmed the judgment of the Court of Appeals because the evidence in the case was plainly sufficient to support a finding of Pentalpha’s knowledge under the doctrine of willful blindness.
After discussing the doctrine of willful blindness in criminal law, the Supreme Court observed that given the long history of willful blindness and its wide acceptance in the Federal Judiciary, the Court could see no reason why the doctrine should not apply in civil lawsuits for induced patent infringement under 35 U. S. C. §271(b). Pentalpha urged not to take the step, arguing that §271(b) demanded more than willful blindness with respect to the induced acts that constitute infringement. But the Court observed that there was no need to invoke the doctrine of willful blindness to establish that Pentalpha knew that the retailers who purchased its fryer were selling that product in the American market; Pentalpha was indisputably aware that its customers were selling its product in this country.
The test applied by the Federal Circuit in the present case departed from the proper willful blindness standard in two important respects. First, it permitted a finding of knowledge when there was merely a “known risk” that the induced acts are infringing. Second, in demanding only “deliberate indifference” to that risk, the Federal Circuit’s test did not require active efforts by an inducer to avoid knowing about the infringing nature of the activities.
In spite of the flaws, Supreme Court held that the evidence when viewed in the light most favorable to the verdict for SEB was sufficient under the correct standard. The jury could have easily found that before April 1998 Pentalpha willfully blinded itself to the infringing nature of the sales it encouraged Sunbeam to make.
After discussing the evidence the Court held that there was more than sufficient evidence for a jury to find that Pentalpha subjectively believed there was a high probability that SEB’s fryer was patented, that Pentalpha took deliberate steps to avoid knowing that fact, and that it therefore willfully blinded itself to the infringing nature of Sunbeam’s sales.
The judgment of the United States Court of Appeals for the Federal Circuit was thus affirmed.