At Founders Workbench, we try to provide regular updates of court decisions and other legal developments that may impact start-up founders. Patents have been a particular area of focus in these updates because of their central importance to the business model of so many of our start-up clients. If your company operates in the technology of software industry, it’s likely that you will benefit from an understanding of what’s happening with regard to patent law, regulation, and litigation.
Recently the U.S. Supreme Court agreed to hear a case addressing an important patent question. Goodwin Procter litigation partners, and former Supreme Court clerks, Willy Jay and J. Anthony Downs have written an insightful Client Alert that we wanted to flag for FWB readers because it examines an important issue that start-ups and other companies may encounter in patent infringement cases.
Downs is former chair of the firm’s IP Litigation Practice, and Jay is current co-chair of the firm’s Appellate Litigation Practice (he’s also a former Assistant to the Solicitor General), so we greatly value their analysis of this important issue.
On December 5, the U.S. Supreme Court granted certiorari in Commil USA LLC v. Cisco Systems, Inc. (No. 13-896), a case involving “inducement liability” under the Patent Act. The Court’s ultimate decision will determine whether a defendant accused of inducing infringement may defend on the ground that it believed in good faith that the infringed patent was invalid.
Although direct infringement is a strict-liability cause of action, inducement defendants have historically been able to assert that they reasonably believed the action they were inducing would not infringe. The Federal Circuit held in 2013 that the same rule applies to belief that a patent is invalid.
This is an important issue for companies that regularly are accused of induced infringement – for instance, by allegedly inducing their customers to practice a patented method. Many legal observers expect the software and technology industries to weigh in heavily in support of the mental-state element of inducement liability.
The Court will likely hear arguments in March and decide the case by June.
Read the entire Client Alert here.