Section 271(b) of the U.S. Patent Act states that “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” Earlier this month, the U.S. Supreme Court issued its decision in Hikma v. Amarin, a case that elaborates on what it means to induce an act of patent infringement under U.S. law. As summarized by Justice Jackson in her unanimous opinion in Hikma, previous case law has established that a plaintiff asserting a claim under § 271(b) must prove (1) that there was “direct infringement by a third party”; (2) that the defendant knew that “the induced acts constitute patent infringement”; and (3) that the defendant took “active steps . . . to encourage direct infringement.” Hikma, slip op. at 4-5 (internal citations omitted). In this specific case, Hikma had obtained authorization from the U.S. Food and Drug Administration (FDA) to market a generic drug, subject to a carve-out for Amirin’s patented method of using the drug “to reduce cardiovascular risk in hypertriglyceridemia patients who already take statins” (id. at 5). Hikma then marketed the drug with a so-called “skinny label” that included only the indication for a different use of the drug, but which otherwise (in accordance with FDA requirements) was identical to Amarin’s label. Himan also described its product as “generic” Vascepa (the brand-name drug) in press releases, and its website “listed the drug’s therapeutic category as ‘[h]ypertriglyceridemia’, a category that includes but is broader than” the unpatented method of use (id. at 6). The Federal Circuit held that this conduct was sufficient to sustain a finding of inducement, because it was “at least plausible that a physician could read the label, website, and press releases ‘as an instruction or encouragement to prescribe’” the generic drug for any approved use, including the use that still remained under patent. The Supreme Court reversed, however, holding that a defendant can be liable for inducement only if it expressly or implicitly provides clear and affirmative encouragement to infringe. It is not enough that it may be “plausible” or “possible” that third parties might read the defendant’s statements in such a way that will cause them to infringe; for liability to attach, the statute requires active, not passive, inducement. See id. at 8-12.
The reversal was not surprising, especially in view of the Court’s recent restrictive reading of indirect infringement in the context of copyright law in Cox v. Sony, also decided this term; and in my view the Hikma decision is correct as a matter of policy as well. For purposes of this blog, however, I want to highlight a couple of remedies-related questions pertaining to induced infringement that may deserve further attention.
First, there is the question of how damages should be assessed when a defendant is found liable for induced (or contributory) infringement. To my knowledge, the late Dmitri Karshtedt’s article Damages for Indirect Patent Infringement, 91 Wash. U. L. Rev. 911 (2014), previously noted on this blog here, remains the leading piece addressing the conflicting case law on whether royalties for induced infringement should be limited to “proven, enumerated acts of direct infringement of the asserted patents (‘the atomistic approach’),” or instead whether “the extent of directly infringing use of the patent should be viewed as one of many pieces of evidence for measuring the extent of damages (‘the evidentiary approach’).” Professor Karshtedt argued in favor of the latter standard, noting inter alia that, but for the infringement, practical evidentiary considerations might motivate the hypothetical bargainers to agree, ex ante, to a royalty that depends on estimates of third parties’ direct use of the patented technology, rather than atomistic, ex post calculation of such use. I am inclined to think he was right, for reasons Norman Siebrasse and I discussed in our New Framework article in evaluating Federal Circuit cases such as Hanson v. Alpine Valley Ski Area (a case Professor Karshtedt cited with approval in his article as well). But given the renewed focus on matters relating to indirect infringement, I would like to give the matter some more thought over the coming weeks, and may have more to say about it then.
Second, a question that I am planning to address in my current paper on extraterritoriality is the following. Suppose that an entity outside the U.S. induces an entity within the U.S. to infringe a U.S. patent, and that the patentee wants to sue the inducer for damages. The Federal Circuit has held on more than one occasion that an extraterritorial act that induces the domestic infringement of a U.S. patent is actionable under U.S. law, notwithstanding the general presumption against extraterritorial application of U.S. law. The court has yet to address, however, whether this rule is consistent with the Supreme Court’s WesternGeco v. ION decision, under which (absent a clear indication that Congress intended to displace the presumption against extraterritoriality) a court should consider whether the “conduct relevant to the focus” of the statutory provision at issue is domestic conduct. Here—though I am still thinking through the issue—my initial take is that it seems more natural to think of the “focus” of § 271(b), and conduct relevant to that focus, as the inducing act, rather than the direct infringement. But if that is right, then it would seem to follow that extraterritorial inducement is not actionable after all, notwithstanding the Federal Circuit case law to the contrary. See Robert H. Stier, Jr., Extraterritoriality and the Active Inducement of Infringement, 19 UIC 204 (2024) (essentially making this argument). And yet this result seems kind of odd. In WesternGeco, although the infringing conduct was domestic (the act of supplying a component from the United States), the sales the plaintiff lost were foreign; nevertheless, because the conduct relevant to the focus was the domestic act of supplying components, the plaintiff could recover the profits it lost on those sales outside the U.S. (I happen to think this was the correct outcome, for reasons I have explained on numerous occasions elsewhere, but I also can understand how someone might reach the opposite conclusion.) The hypothetical with which I began this paragraph can be thought of as the mirror image of WesternGeco, in that the financial impact, if any, would be domestic, while the relevant conduct would be foreign activity that had (and was intended to have) effects within the United States; but if the conduct relevant to the focus of § 271(b) is that foreign conduct, then those effects might not be sufficient to render the foreign actor liable under U.S. law. (Of course, the patentee could, in principle, seek to recover from the domestic direct infringer(s); but that is not always a practical option, which is precisely why indirect liability exists.) This thought experiment makes me wonder whether, in such a case, excluding the foreign actor from liability would amount to an overly wooden interpretation of WesternGeco. One way to avoid such an interpretation would be to consider the inducing act and the direct infringement to be coequal focuses of § 271(b), though I wonder whether that would be a plausible extension of the Supreme Court’s current extraterritoriality jurisprudence.
The preceding analysis also calls to mind the UPC Court of Appeal’s recent decision, also handed down while I was away earlier this month, in Kodak GmbH v. Fujifilm Corp. I should probably blog about this decision at length sometime soon, but for now I will note only that one of the questions presented was whether the UPC could find the German defendant Kodak Graphic Communications GmbH liable for infringing the U.K. portion of the European Patent at issue. Under the CJEU’s 2025 decision in BSH v. Electrolux, the Court holds, the lower court had jurisdiction to consider this issue—but under U.K. substantive law, there could be no liability unless the German defendant was a joint tortfeasor with the relevant (non-party) U.K. entity, Kodak Ltd. For this to be the case, the Court of Appeal states:
Under UK law, merely supplying outside the jurisdiction goods to a party in the UK who later sells them within the jurisdiction is not enough for joint tortfeasorship, even if the supplier knows his customer intends so to sell in the UK (Generics v Lundbeck [2006] EWCA Civ 1261, para. 25). As Fujifilm acknowledges, joint tortfeasorship arises when multiple entities jointly commit a tort by acting pursuant to a common design.
. . . [E]ven though liability for patent infringement is strict and does not require any awareness of its unlawfulness, for a person to be liable as a joint tortfeasor it is necessary to show (1) that he had procured the company to infringe or been joined in common design with the company; and (2) knew of the essential facts which make the act done wrongful (because a person cannot be allowed to escape liability by relying on ignorance of the law it, knowledge of patent infringement cannot be required). As such, knowledge of the existence of the UK designation of the Patent and that the attacked embodiments disclose all the features of the claim(s) of the Patent would be required. . . . [I]t is not evident – and Fujifilm has not shown – that such knowledge actually existed with any of the Kodak companies prior to Fujifilm’s allegation that the attacked embodiment infringes the UK designation of the Patent (paras. 326-27).
For these reasons, among others, the lower court erred in granting an injunction against the German defendants with respect to sales within the U.K.
Assuming that the above interpretation of U.K. substantive law is accurate (which it appears to be, based upon the cited cases), the standards for indirect liability under U.K. and U.S. law post-Hikma seem not so far apart. Moreover, if I am understanding correctly, in a case (unlike the present one) in which the prerequisites for liability under U.K. substantive law were present neither the UPC nor the U.K. would have a problem in finding a German entity liable for inducing a U.K. entity to infringe a U.K. patent within the U.K. In this respect, then, the UPC and U.K. case law would seem to align with the Federal Circuit’s current understanding of § 271(b) of the U.S. Patent Act. Whether that current understanding itself aligns with WesternGeco is nevertheless unclear, though as suggested above perhaps the “conduct relevant to the focus” test should be applied with some degree of flexibility to the tort of induced infringement, in view of the potentially substantial domestic effects of foreign inducement.
If readers have any thoughts they would like to share on these issues, please let me know.
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