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26 May 2015Patents

US Supreme Court sides with Commil in Cisco patent dispute

The US Supreme Court has ruled that believing in good faith that a patent is invalid is not a viable defence against an induced infringement claim.

Ruling on the Commil USA v Cisco Systems dispute, the court, in a 6-2 majority, said that “invalidity is not a defence to infringement—it is a defence to liability ... and because of that fact a belief as to invalidity cannot negate the scienter required for induced infringement”.

Judge Anthony Kennedy, who wrote the opinion, added that Cisco had the means to challenge the validity of the patent by either seeking a declaratory judgment at a district court or an inter partes review at the US Patent and Trademark Office.

The dispute concerns licensing company Commil USA’s claim that Cisco infringed US patent 6,430,395, which covers methods for a faster wireless internet communication.

In 2010, Commil USA sued Cisco for alleged infringement at the US District Court for the Eastern District of Texas.

Later that year, the court awarded the licensing company $3.7 million in damages, but this was increased to $64 million following a re-trial a year later.

During the re-trial, the court said Cisco had induced infringement of the patent because it had sold the infringing technology to other networking companies.

But the judgment was overturned by the US Court of Appeals for the Federal Circuit after it agreed with Cisco that it was unfairly prevented from presenting evidence that it believed in good faith that the patent was invalid.

The Supreme Court has now overturned the decision, although  its ruling was not unanimous.

But Judge Antonin Scalia and Chief Justice of the Supreme Court John Roberts dissented.

Scalia, who wrote the dissenting opinion, argued that it is “impossible for anyone who believes that a patent cannot be infringed to induce actions that he knows will infringe it. A good-faith belief that a patent is invalid is therefore a defence to induced infringement of that patent”.

He added: “To infringe a patent is to invade the patentee’s right of exclusivity. An invalid patent confers no such right. How is it possible to interfere with rights that do not exist?”

Stephen Breyer, another of the Supreme Court’s nine judges, did not vote.

The case will now be sent back to the federal circuit.

Mark Werbner, founder of law firm of Sayles Werbner and who represented Commil in the case, said: “I am pleased with the opinion. It stops other parties from using a claim that they did not think the patent was valid as a defence against an infringement claim.”

A spokesperson for Cisco told WIPR that the company will challenge the ruling.

"The federal circuit’s ruling vacating the jury verdict in this case still stands. Today's decision simply eliminates one of many strong defences available to Cisco and we look forward to the re-trial of the case."

Gregory Castanias, partner at law firm Jones Day, said: “The decision continues the trend of the federal circuit's judgments being reversed or vacated by the Supreme Court, a trend that has continued with limited exceptions since 2002.

“But secondly, it departs from a different trend in the Supreme Court’s recent patent decisions, in that it is generally favourable to patent owners,” he added.

Irena Royzman, partner at law firm Patterson Belknap Webb & Tyler, said:  "The federal circuit’s good-faith belief in invalidity defense gutted liability for inducing infringement of such patents, even if they were ultimately found to be valid.

"The Supreme Court’s ruling allows these patents to be enforced against the companies that induce infringement," she added.

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Patents
4 January 2016   The US Court of Appeals for the Federal Circuit has ruled that Cisco did not infringe licensing company Commil USA’s patent in a $74 million dispute.