Supreme Court Applies Criminal Law’s Willful Blindness Test to Liability for Inducing Patent Infringement

On May 31, 2011 the United States Supreme Court issued its opinion in Global-Tech Appliances v. SEB S.A., 563 U.S.______(2011) addressing whether a party accused of inducing patent infringement under 35 U.S.C. Section 271(b) must know that the accused acts constitute infringement. The decision essentially stands for the proposition that a defendant that takes deliberate steps to avoid confirming that there is a high probability of wrongdoing is deemed to have actually known of facts establishing liability. The facts of the case show a defendant that was knowledgeable about patent law and took steps for no other apparent motive than “to manufacture a claim of plausible deniability” in the event that a patent infringement claim was asserted against the company. SEB S.A. obtained a patent on a deep fryer and the product became a commercial success in the United States. Sunbeam asked Pentalpha Enterprises, Ltd., a Hong Kong manufacturer of home appliances, to make a deep fryer for Sunbeam. Pentalpha purchased the SEB fryer and copied the design. Pentalpha’s president was a named inventor on several U.S. patents and was well aware that the SEB fryer that was purchased was made for markets outside the U.S. and therefore would not bear any U.S. patent markings. Pentalpha hired an attorney to conduct a right to use study, but did not tell the attorney that it had copied the SEB design. This was a particularly telling fact in the Court’s analysis. If the attorney had been advised of the SEB product, it is highly likely that he would have searched for patents assigned to SEB and found the patent that was asserted against Pentalpha. As it was, he did not find the SEB patent and issued a freedom to use opinion. SEB sued Sunbeam and, after settling that case, sued Pentalpha for both direct infringement and inducement of infringement. The jury returned verdicts on both theories in favor of SEB. On appeal to the Federal Circuit, Pentalpha argued that since it did not actually know of the SEB patent until it was sued, the jury’s finding of induced infringement was in error. The Federal Circuit affirmed holding that inducement could be established where there is a “known risk” of infringement and a “deliberate disregard” of that risk. The Supreme Court rejected that standard and adopted the “willful blindness” test. The Court discussed the development of the doctrine of willful blindness existing in the criminal law. Proof that a defendant acted knowingly and willfully under criminal statutes can be satisfied by showing that the defendant deliberately shielded himself from “clear evidence of critical facts that are strongly suggested by the circumstances”. The Court held that induced infringement does require that knowledge that the induced acts constitute patent infringement. The Court said that such knowledge can be satisfied by two elements: (1) the defendant must subjectively believe that there is a high probability that a fact exists, and (2) the defendant must take deliberate actions to avoid learning of that fact. Though the Court found that the standard applied by the Federal Circuit was wrong, it concluded that that there was more than enough evidence that Pentalpha willfully blinded itself to the infringement. Justice Kennedy dissented writing that the majority had gone too far in invoking “willful blindness to bring those who lack knowledge within Section 271(b)’s prohibition”. This was in his opinion a substitution for the statute’s requirement of actual knowledge. He concluded that the circumstantial evidence in the case may well have suggested knowledge and that the jury could have so found without resort to the “willful blindness” test.