December 12, 2016

“A Finding of Induced Infringement Requires Actual Inducement”

In Power Integrations, Inc., v. Fairchild Semiconductor International, Inc., [2015-1329, 2015-1388] (December 12, 2016), a complicated action where each party claimed the other directly and indirectly infringed its patents, the Federal Circuit affirmed the jury’s verdict that the asserted claims of the ’876 patent were not anticipated; vacated the jury’s verdict that Fairchild induced infringement of the asserted claims of the ’876 and ’851 patents; reversed the jury’s verdict that the asserted claims of the ’605 patent were not anticipated; and affirmed the district court’s construction of the ’972 patent.

On this issue of induced infringement, the Federal Circuit noted that induced infringement is defined in 35 U.S.C. § 271(b): “Whoever actively induces infringement of a patent shall be liable as an infringer.”  Fairchild’s proposed jury instruction tracked the then-current Federal Circuit Bar Association model, while Power Integrations’ proposal was a variation of an instruction given in a prior trial in the District of Delaware.  The district court adopted an instruction that largely tracked the one proposed by Power Integrations:

Each party alleges that the other is liable for infringement by actively inducing others to directly infringe the patents in suit. The direct infringement may either be literal or under the doctrine of equivalents. A party induces patent infringement if it purposefully causes, urges, or encourages another to use a product in a manner that infringes an asserted claim. Inducing infringement cannot occur unintentionally.

A party is liable for active inducement only if the patent owner proves by a preponderance of the evidence that:

  1. the party took some action during the time the patents in suit were in force intending to encourage or assist actions by others;
  2. the party was aware of the patent and knew that the acts, if taken, would constitute infringement of that patent or the party believed there was a high probability that the acts, if taken, would constitute infringement of the patent but deliberately avoided confirming that belief; and
  3. use by others of the party’s product infringes one or more of the asserted claims of the patent.

In order to establish active inducement of infringement, it is not sufficient that others directly infringe the claim. Nor is it sufficient that the party accused of infringement was aware of the acts by others that directly infringe. Rather, in order to find inducement, you must find that the party accused of infringement intended others to use its products in at least some ways that would infringe the asserted claims of the patent. However, that infringement need not have been actually caused by the party’s actions. All that is required is that the party took steps to encourage or assist that infringement, regardless of whether that encouragement succeeded, or was even received.

Intent to encourage or assist the acts that constitute direct infringement must be proven by evidence of active steps taken to encourage direct infringement, such as providing products, advertising any infringing use, or instructing how to engage in any use that is infringing. Proof of intent to induce infringement may be based on circumstantial evidence, rather than direct evidence.

The Federal Circuit said that this instruction left the jury with the incorrect understanding that a party may be liable for induced infringement even where it does not successfully communicate with and induce a third-party direct infringer.  The Federal Circuit said that the Supreme Court in Global-Tech Appliances explained that the term “induce” as it is used in § 271(b) “means ‘[t]o lean on; to influence; to prevail on; to move by persuasion.”  Each definition requires successful communication between the alleged inducer and the third-party direct infringer.

The Federal Circuit noted that in Dynacore Holdings it held that “[t]o prevail under a theory of indirect infringement, [plaintiff] must first prove that the defendants’ actions led to direct infringement of the [patent-in-suit].”  And that in DSU Med. Corp. it held that the plaintiff has the burden of showing that the alleged infringer’s actions induced infringing acts.  The Federal Circuit concluded that under this precedent, a finding of induced infringement requires actual inducement, although this inducement may be proven via circumstantial evidence.

In other words, liability for inducement requires proof that: (1) a third party directly infringed the asserted claims of the patent; (2) the defendant induced those infringing acts; and (3) defendant knew the acts it induced constituted infringement.