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WASHINGTON, D.C. -- The U.S. Supreme Court heard oral arguments on Feb. 23 in a case that poses the question of what "state of mind" is necessary for a showing of actively induced patent infringement and whether actual knowledge of the patent's existence is required (Global-Tech Appliances Inc. and Pentalpha Enterprises Ltd. v. SEB S.A., No. 10-06, U.S. Sup.).
In response to questioning from Justice Anthony Kennedy, R. Ted Cruz, arguing on behalf of respondent SEB S.A., suggested that the standard of knowledge for direct infringement could be the same as the standard for active inducement.
"I think there is a reasonable statutory argument to be made that it is the same, namely, that it is strict liability. We are not pressing that as the only way to prevail, but I think there is certainly a reasonable statutory argument," Cruz said.
Petitioners Global-Tech Appliances Inc. and Pentalpha Enterprises Ltd.'s petition for certiorari seeks a determination of whether an infringement-by-inducement plaintiff must show "deliberate indifference of a known risk" that an infringement may occur or, rather, "purposeful, culpable expression and conduct." The petitioners seek review of a February 2010 ruling by the Federal Circuit U.S. Court of Appeals, which affirmed an adverse verdict of induced infringement rendered by a federal jury. According to the Federal Circuit, the petitioners "deliberately ignored" the risk that a product they copied was protected by a patent.The product in question, a deep fryer with an insulating air space between the pan and the outer shell, is owned by SEB and is protected by U.S. patent No. 4,995,312.
William Dunnegan, arguing on behalf of the petitioners, advocated the "purposeful, culpable" test for determining state of mind, as set forth in MGM Studios Inc. v. Grokster Ltd. (545 U.S. 913, 937 ). According to Dunnegan, courts should ask whether an accused inducer had a "purpose to induce a third party to engage in acts" that the accused inducer knew to be infringement. Such a standard would not encompass "willful blindness," Dunnegan clarified, because willful blindness is not purposeful.
Cruz, by contrast, presented the high court with three possible standards - the "purposeful, culpable" standard, a middle-ground, willful blindness standard and a "most narrow" standard, whereby a defendant has an obligation to ascertain whether a product is federally protected intellectual property. Of the last standard, Cruz argued that "it is a very minor obligation that is triggered only when you take a commercial product . . . reverse-engineer it, and copy it, because it is a situation that is highly likely to be indicative of bad conduct."
The petitioners meet all three standards, Cruz asserted.
[Editor's Note: Full coverage will be in the March 7 issue of Mealey's Litigation Report: Intellectual Property. In the meantime, the transcript is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844. Document #16-110307-005T. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
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