Federal Circuit Will Not Hear En Banc Inducement of Wireless Patent Infringement

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By Tony Dutra  

Oct. 28 --An accused infringer's belief that a patent is invalid may negate the required showing of specific intent to encourage infringement, as the U.S. Court of Appeals for the Federal Circuit 6-5 denied a petition for rehearing en banc of a split panel ruling (Commil USA, LLC v. Cisco Sys., Inc., Fed. Cir., No. 2012-1042, 10/25/13).

Two opinions dissenting to the denial were filed, each chastising the panel majority for infusing validity concerns into the infringement analysis.

Two Trials at Lower Court

Commil USA L.L.C. is an Israel-based company that owns a patent (U.S. Patent No. 6,430,395) on a method of improving the handoff between mobile base stations when the user of a mobile device moves throughout a network area.

Cisco Systems Inc. makes WiFi access points and switches. Commil sued Cisco and three other wireless network device makers in the U.S. District Court for the Eastern District of Texas.

A first jury found Cisco liable for direct infringement and awarded $3.7 million in damages. Citing Cisco's counsel's inappropriate posturing at trial, Magistrate Judge Charles Everingham granted Commil's motion for retrial, but limited it to indirect infringement and damages only, and not invalidity. The second jury found in favor of Commil and awarded $63.8 million, and Everingham added $10.3 million in prejudgment interest. Cisco appealed on multiple grounds.

Appeals Court Splits on Separate Issues

The Federal Circuit panel ruled that the jury instructions in the second trial were erroneous in light of the U.S. Supreme Court's decision on inducement under 35 U.S.C. §271(b) in Global-Tech Appliances Inc. v. SEB S.A., 131 S. Ct. 2060, 2011 BL 142067, 98 U.S.P.Q.2d 1665 (2011) .

All three panel members agreed on that point in the appeal. 720 F.3d 1361, 2013 BL 167369, 107 U.S.P.Q.2d 1290 (Fed. Cir. 2013) . However, in partial dissent, Judge Pauline Newman said “A good-faith belief of patent invalidity may be raised as a defense to willfulness of the infringement, but it is not a defense to the fact of infringement.” She said that Global-Tech “relates to knowledge of infringement, not knowledge of validity.”

And in another partial dissent, Judge Kathleen M. O'Malley faulted the majority for allowing a partial retrial solely on the question of inducement and damages for such inducement.

“In other words, we find that Cisco was denied the right to a fair trial on Commil's induced infringement claim because it was denied the opportunity to pursue a valid defense,” O'Malley said. “In the same breath, however, the majority concludes it is appropriate to retry the case in a posture that would dilute that defense.”

Commil's Rehearing Request

Commil sought rehearing en banc on the argument raised in Newman's dissent.

In the first opinion dissenting to the petition denial, Judge Jimmie V. Reyna focused on the statutory scheme of the Patent Act.

“If a patent is found invalid, that is a complete defense to liability because it negates the patent's existence and thereby extinguishes any exclusionary rights,” he said. “Conversely, if there is a patent--i.e., it is not invalid--then the question is merely whether there has been conduct that actively induces acts of infringement per se.”

Newman generally echoed the comments from her panel dissent. She particularly criticized the panel majority's view that it is “axiomatic that one cannot infringe an invalid patent,” given the court's precedent that whether or not a patent is infringed “is an entirely separate question capable of determination without regard to its validity,” quoting Medtronic, Inc. v. Cardiac Pacemakers, Inc., 721 F.2d 1563, 1583, 220 U.S.P.Q. 97 (Fed. Cir. 1983).

Cisco's Rehearing Request

Separately, Cisco sought rehearing by the panel or en banc based on O'Malley's concerns. Its argument was essentially that the partial retrial violated its Seventh Amendment right.

The court denied that petition (Commil USA, LLC v. Cisco Sys., Inc., Fed. Cir., No. 2012-1042, 10/25/13). O'Malley dissented but did not file an opinion.

However, Newman addressed the issue in the next-to-last paragraph of her dissent noted above, saying, “the issues of infringement and validity are interwoven in the new defense of subjective 'belief', and the restricted remand procedure can impart 'confusion and uncertainty, which would amount to a denial of a fair trial,' ” citing Anderson v. Siemens Corp., 335 F.3d 466, 475-76 (5th Cir. 2003).

Mark S. Werbner of Sayles Werbner P.C., Dallas, represented Commil. William F. Lee of Wilmer Cutler Pickering Hale and Dorr LLP, Boston, represented Cisco.


To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com

Text is available at http://www.bloomberglaw.com/public/document/Commil_USA_LLC_v_Cisco_Systems_Inc_Docket_No_1201042_Fed_Cir_Oct_/4.

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