Secondary / Indirect Infringement of Patents

Most business people understand that it is possible to infringe a patent by selling a patented product, or performing a patented series of steps. But infringement can also occur indirectly, and the law surrounding this concept is considerably murkier.

Two types of indirect infringement exist: induced, and contributory. Fortunately, both can usually be avoided by taking prudent steps ahead of time.

INDUCED
According to 35 U.S. Code § 271(b), “[w]hoever actively induces infringement of a patent shall be liable as an infringer.”

The person who holds a patent must show that:
(1) another person (a third party) actually infringed;
(2) the alleged inducer knew of the patent, and, nevertheless;
(3) knowingly induced the infringing acts with a specific intent to encourage infringement by that person.
Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1328 (Fed. Cir. 2009).

The first two elements can usually be readily proved by evidence at trial, such as copies of certified letters sent by the patent holder. Even where evidence is weak, a jury is allowed to infer an element. In i4i Ltd. Partnership v. Microsoft Corp., Microsoft sold a program that was capable of performing a patented method, when activated by a user. Based on Microsoft’s instruction manuals, the jury inferred that at least one user actually did activate the program in this way, and the Federal Circuit upheld the jury verdict. ( 598 F.3d 831, 851 (Fed. Cir. 2010), aff’d, 131 S. Ct. 2238 (2011).)

The knowledge element can of course be met by actual knowledge. More commonly, however, the alleged infringer will not necessarily know that it could be inducing its buyers to infringe patents. The Supreme Court held that there must be more than deliberate indifference to the risk of patent infringement — rather, there must be “willful blindness.” This occurs when a defendant subjectively believes that he may cause others to infringe a patent, but the defendant takes deliberate actions to avoid learning the truth. (Global-Tech, 131 S. Ct. at 2068-71.)

However, if a company has a good faith belief that they are not inducing their customers to infringe patents, they cannot be liable for inducing infringement. The Federal Circuit found that a written infringement opinion, issued by a registered US patent attorney, was sufficient to provide a company with this good faith belief. This is an important point, particularly for business owners who wish to compete in patent-crowded areas. Infringement opinions, while often expensive, can save a company from millions in litigation expenses down the road. (See DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1303-04 (Fed. Cir. 2006). “Thus … the jury was well within the law to conclude that ITL did not induce JMS to infringe by purposefully and culpably encouraging JMS’s infringement. To the contrary, the record contains evidence that ITL did not believe its Platypus infringed. Therefore, it had no intent to infringe.”)( at 1306-07)

CONTRIBUTORY

Sometimes, a business owner can become liable if her product is used as a component in an infringing good. This means that business owners must do more than be aware of what they’re telling individual customers to do with a product: they must also consider the ultimate use of their items.

Contributory infringement may occur in cases when:
(1) someone is directly infringing;
(2) the accused contributory infringer knew its components were designed for a combination which was both patented and infringing;
(3) the component is not a staple good and has no substantial non-infringing uses; and
(4) the component is a material part of the combination.
Fujitsu Ltd. v. NETGEAR Inc., 620 F.3d 1321, 1326 (Fed. Cir. 2010).

Again, the knowledge requirement can be the most slippery of these elements. The Supreme Court held that a defendant needs to possess specific knowledge that the component which it is selling is specifically designed for a device that infringes a particular identified patent. (Aro Mfg. Co. v. Convertible Top Replacement Co. 377 U.S. 476 (1964).)

The substantial non-infringing use factor can also be important. Sellers of staple or common goods do not typically need to be concerned if their products end up in infringing items. Thus, a business selling standard bolts would probably not be liable for contributory infringement, no matter where the bolts were used. However, a 3-D printing shop owner may need to be concerned about liability, if he is warned that his custom-printed items are being used in infringing products. If you receive such a warning letter, ignoring it could create liability for willful infringement. A registered patent attorney can inexpensively help you evaluate and reply to this kind of letter.