Inducement Requires Specific Intent to Cause Infringement

DSU Medical Corporation v. JMS CO., Ltd, [04-1620, 05-1048, -1052](December 13, 2006)[RADER, Schall, Linn] The Federal Circuit affirmed a finding of invalidity of one patent, but infringement of a second patent on a guarded, winged-needle assembly, and an award of $5 million damages.
BRIEF: One of the issues on appeal was whether the Court should have granted a new trial because the jury did not find ITL, who manufactured a component of the assembly that was found to infringe, liable for contributory infringement. The Federal Circuit started with the Supreme Court’s instruction that “One who makes and sells articles which are only adapted to be used in a patented combination will be presumed to intend the natural consequences of his acts; he will be presumed to intend that they shall be used in the combination of the patent. The Federal Circuit found that the record showed that ITL supplied the component, that the component had no substantial non-infringing usees, and that ITL intended to make the component. In fact, the Federal Circuit found, ITL acted with knowledge of the patent and knowledge that the component was specially adapted for use in an infringing manner. However, the district court found, and the Federal Circuit agreed, that there was no direct evidence that the components were actually assembled into an infringing structure. As a result the Federal Circuit found no abuse of discretion in denying the motion for a new trial.
The Federal Circuit considered the question of the required level of intent for inducement of infringement en banc, and held that the patentee has the burden of showing that the alleged infringer’s actions induced infringing acts and that he know or should have known his actions would induce actual infringement. The Federal Circuit explained that this required a knowledge of the patent. DSU challenged the jury instructions which required intent to cause direct infringement, and not merely intent to cause actions where constitute direct infringement. The Federal Circuit concluded that “inducement requires evidence of culpable conduct, directed to encouraging another’s infringement, not merely that the inducer had knowledge of the direct infringer's activities. While ITL had knowledge of the patent, it had opinions of counsel that it was not infringing, and thus there was support for the jury verdict that ITL did not intend to cause infringement. DSU complained that it wasn’t awarded damages on its price erosion theory, but the verdict contained a general category of lost profits damages, and without further detail the Federal Circuit said that there was no basis to speculate that price erosion damages were not included.