Fryer Forgery: Attempting To Define A Standard For Induced Patent Infringement

Fryer Forgery: Attempting To Define A Standard For Induced Patent Infringement

Andrew Baker is an LLB/BCL candidate at McGill University Faculty of Law.

In Global-Tech Appliances, Inc. v. SEB S.A., the US Supreme Court has clarified an ambiguous standard surrounding induced patent infringement by borrowing from the doctrine of wilful blindness potentially putting an end to a long-standing debate surrounding the ambiguous statutory provision.

SEB invented an innovative fryer, obtained a US patent, and commercialized the product.  Sunbeam Products asked Hong Kong appliance maker Pentalpha, a wholly-owned subsidiary of Global-Tech Appliances, to develop a fryer for the US market.  Pentalpha purchased a foreign market SEB fryer, which therefore lacked US patent markings, and copied all but the cosmetic features.  Pentalpha sold the fryer to Sunbeam who marketed them in the US under its own trademark thereby undercutting SEB.

Upon learning about the product similarities, SEB sued Sunbeam who informed Pentalpha of the issue.  Yet, Pentalpha continued selling its fryer.  Despite settling with Sunbeam, SEB still sued Pentalpha under 35 USC s. 271(b) for inducing Sunbeam to sell fryers in violation of SEB’s patent.  The question before the court was whether or not Pentalpha’s activities constituted an inducement of patent infringement.

Both the District Court and Federal Circuit Court found in favour of SEB, but the standard of induced patent infringement remained unclear.  The Federal Court found that Pentalpha should have known that their actions would cause real infringement, but nevertheless disregarded a known risk.  Some commentators noted that if the Supreme Court were to maintain this standard they would risk setting a precedent for an overly broad interpretation by not requiring that the party committing induced infringement know for certain that their actions would lead to infringement.

Pentalpha was not aware that SEB held a US patent for its fryer, but several factors demonstrated a degree of culpability.  The fact that Pentalpha had completely reverse-engineered the functional components of SEB’s fryer, purposely purchased a foreign fryer knowing that it would not bear US patent markings, and that they failed to inform the lawyer who performed their patent search of these facts suggested more than simple indifference.

In an 8-1 decision the Supreme Court held Pentalpha liable for induced infringement, but clarified the interpretation of s. 271(b).  In order to avoid the broad “ought-to-have-known” standard of the lower courts, Justice Alito clarified that induced infringement requires, “Knowledge that induced acts constitute patent infringement.”  Nevertheless, Pentalpha was still liable under the doctrine of wilful blindness which requires that defendants cannot escape the reach of a statute by, “Deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances.”

The sole dissent, written by Justice Kennedy, was wary of importing wilful blindness doctrine to satisfy the knowledge requirement under s. 271(b).  In so doing, Justice Kennedy warns that the court would incorrectly “Broaden legislative prescription by analogy.”

The significance of the decision is yet to be determined.  Some explain that the Supreme Court’s narrowing of the standard from the lower courts’ interpretation now requires, “A belief in a high probability that a product is patented and taking active steps to avoid learning about it” in order to prove induced infringement.  The case also raises the question of the role of what subjective standards ought to be considered in like cases.  The majority decision hinged greatly on Pentalpha’s particular approach to product development.  While the holding imposes a lesser obligation on product-developers to avoid potential induced infringement, it still sets a standard above absolute knowledge which will need to be applied to future cases.