Tuesday, September 28, 2021

Federal Circuit Clarifies That "Deliberate" or "Intentional" Infringement Is "Willful"

The case is SRI Int’l, Inc. v. Cisco Sys., Inc., precedential opinion by Judge Stoll, joined by Judges Lourie and O’Malley.  This first case came before the Federal Circuit in 2019, when the court affirmed on liability but vacated the district court’s finding of willfulness and an award of enhanced (here, double) damages.  (For previous discussion on this blog, see here.)  On remand . . . well, here, I’ll let the court explain what happened:

On remand, the district court reasonably read our opinion to require a more stringent standard for willful infringement than our other cases suggest—conduct rising to “the level of wanton, malicious, and bad-faith behavior.” SRI Int’l, Inc. v. Cisco Sys., Inc. (SRI III), Civil Action No. 13-1534-RGA, 2020 WL 1285915, at *1 (D. Del. Mar. 18, 2020). Based on this standard, the district court in SRI III held that substantial evidence did not support the jury verdict of willful infringement after May 8, 2012 (p.4).

Reasonable or not, the Federal Circuit now says, the understanding that the court was imposing a “more stringent” standard (wantonness, malice, or bad faith) is not correct:


The district court . . . noted that “the Court of Appeals is not entirely consistent in its use of   adjectives to describe what is required for willfulness.” SRI III, 2020 WL 1285915, at *1 n.1. To eliminate the confusion created by our reference to the language “wanton, malicious, and bad-faith” in Halo, we clarify that it was not our intent to create a heightened requirement for willful infringement.Indeed, that sentence from Halo refers to “conduct warranting enhanced damages,” not conduct warranting a finding of willfulness. Halo, 136 S. Ct. at 1932 (“The sort of conduct warranting enhanced damages has been variously described in our cases as willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate.”) As we said in Eko Brands, “[u]nder Halo, the concept of ‘willfulness’ requires a jury to find no more than deliberate or intentional infringement.”  Eko Brands, LLC v. Adrian Rivera Maynez Enters., Inc., 946 F.3d 1367, 1378 (Fed. Cir. 2020) (citing Halo, 136 S. Ct. at 1933) (pp. 9-10).

Based on the evidence presented at trial, moreover, the court states that the jury’s finding of willful infringement was supported by substantial evidence, including “the jury’s unchallenged findings on induced infringement, when combined with Cisco’s lack of reasonable bases for its infringement and invalidity defenses” (p.9) 

Two other matters of interest going forward:  first, the court notes that neither party challenged on appeal the district court’s willfulness instruction, which (1) “directed the jury to consider whether Cisco “‘acted despite a high likelihood that [its] actions infringed a valid and enforceable patent’” (p.4); (2) if so, to “determine whether Cisco ‘actually knew or should have known that its actions constituted an unjustifiably high risk of infringement of a valid and enforceable patent’” (id.); and (3) “[t]o determine whether Cisco had this state of mind . . . to consider the following factors:


One, whether or not defendant acted in accordance with the standards of commerce for its industry.


Two, whether or not defendant intentionally copied a product of plaintiff’s that is covered by the patents-in-suit.


Three, whether or not there is a reasonable basis to believe that defendant did not infringe or had a reasonable defense to infringement.


Four, whether or not defendant made a good-faith effort to avoid infringing the patents-in-suit, for example, whether defendant attempted to design around the patents-in-suit.


And, five, whether or not defendant tried to cover up its infringement (pp. 4-5).

I would imagine other courts may view these instructions as persuasive precedent in other cases.  Second, the court notes that


. . . a finding of induced infringement does not compel a finding of willfulness Indeed, the standard required for willful infringement is different than that required for induced infringement (p.9).

I mention this because there has been some discussion over the past few years whether a finding of willful blindness, which can count as “actual knowledge” for purposes of determining liability for induced infringement, is also sufficient for purposes of finding willful infringement.  (For previous discussion on this blog, see here, here, here, and here.)  I’m not sure, but the court may be hinting that willful blindness isn’t enough, by itself, for willful infringement.

Finally, the court reinstates the double damages award and affirms an award of fees (pp. 11-15).   


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