Commil v. Cisco ( 2013 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
COMMIL USA, LLC,
Plaintiff-Appellee,
v.
CISCO SYSTEMS, INC.,
Defendant-Appellant.
______________________
2012-1042
______________________
Appeal from the United States District Court for the
Eastern District of Texas in case no. 07-CV-0341,
Magistrate Judge Charles Everingham.
______________________
ON PETITION FOR PANEL REHEARING AND
REHEARING EN BANC
______________________
MARK S. WERBNER, Sayles Werbner, P.C., of Dallas,
Texas, filed a petition for rehearing en banc for plaintiff-
appellee. With him on the petition were RICHARD A.
SAYLES and MARK D. STRACHAN. Of counsel on the
petition were LESLIE V. PAYNE, NATHAN J. DAVIS and
MIRANDA Y. JONES, Heim, Payne & Chorush, of Houston,
Texas.
WILLIAM F. LEE, Wilmer Cutler Pickering Hale and
Dorr LLP, of Boston, Massachusetts, filed a response to
the petition for defendant-appellant. With him on the
response were MARK C. FLEMING, JONATHAN W. ANDRON,
and FELICIA H. ELLSWORTH; and WILLIAM G. MCELWAIN, of
Washington, DC. Of counsel on the response were HENRY
B. GUTMAN, Simpson Thacher & Bartlett LLP, of New
York, New York; and JEFFREY E. OSTROW, HARRISON J.
FRAHN, IV, PATRICK E. KING, and JONATHAN SANDERS, of
Palo Alto, California.
______________________
Before RADER, Chief Judge, NEWMAN, LOURIE, DYK,
PROST, MOORE, O’MALLEY, REYNA, WALLACH, TARANTO,
and CHEN, Circuit Judges.1
REYNA, Circuit Judge, with whom RADER, Chief Judge,
NEWMAN, LOURIE, and WALLACH Circuit Judges, join,
dissents from the denial of the petition for rehearing en
banc.
NEWMAN, Circuit Judge, with whom RADER, Chief Judge,
REYNA and WALLACH, Circuit Judges, join, dissenting
from the denial of the petition for rehearing en banc.
PER CURIAM.
______________________
ORDER
A petition for rehearing en banc was filed by plaintiff-
appellee, and a response thereto was invited by the court
and filed by defendant-appellant. The petition for
rehearing en banc was first referred as a petition for
rehearing to the panel that heard the appeal, and
thereafter the petition for rehearing en banc and response
were referred to the circuit judges who are authorized to
1 Circuit Judge Hughes did not participate.
request a poll of whether to rehear the appeal en banc. A
poll was requested, taken, and failed.
Upon consideration thereof,
IT IS ORDERED THAT:
(1) The petition of plaintiff-appellee for panel
rehearing is denied.
(2) The petition of plaintiff-appellee for rehearing en
banc is denied.
(3) The mandate of the court will issue on November
1, 2013.
FOR THE COURT
October 25, 2013 /s/ Daniel E. O’Toole
Date Daniel E. O’Toole
Clerk
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
COMMIL USA, LLC,
Plaintiff-Appellee,
v.
CISCO SYSTEMS, INC.,
Defendant-Appellant.
______________________
2012-1042
______________________
Appeal from the United States District Court for the
Eastern District of Texas in No. 07-CV-0341, Magistrate
Judge Charles Everingham.
______________________
REYNA, Circuit Judge, with whom RADER, Chief Judge,
and NEWMAN, LOURIE and WALLACH, Circuit Judges, join,
dissenting from the denial of the petition for rehearing en
banc.
The Commil majority established a substantive,
precedential change in patent law by expressly “hold[ing]
that evidence of an accused inducer’s good-faith belief of
invalidity may negate the requisite intent for induced
infringement.” Commil USA, LLC v. Cisco Sys., Inc., 720
F.3d 1361, 1368 (Fed. Cir. 2013). Its analysis may be
summed by its expressed view that because “[i]t is
axiomatic that one cannot infringe an invalid patent”
there is “no principled distinction between a good-faith
belief of invalidity and a good-faith belief of non-
infringement for the purpose of whether a defendant
possessed the specific intent to induce infringement of a
patent.” Id.By holding that a good faith belief in the invalidity of
a patent may negate the requisite intent for induced
infringement, the two-judge Commil majority created a
new noninfringement defense to induced infringement
that is premised on the accused infringer’s belief of
invalidity. As Judge Newman aptly points out in her
dissent, “This absolution applies, according to the panel
majority, although the patent receives the presumption of
validity, and validity is sustained in litigations.”
(Newman, J., dissenting from the denial of the petition for
rehearing en banc, at 1.)
Because I believe the Commil majority opinion is
without foundation in law and precedent, and for the
reasons stated below, I respectfully dissent from the vote
taken of the court to not conduct an en banc review of the
majority opinion in Commil.
I.
My primary dispute with the majority holding is that
it wrongly rearranges the legal foundation that underpins
the enforceability of valid patents and the finding of
liability for infringement.
First, the induced infringement statute states simply
that “[w]hoever actively induces infringement of a patent
shall be liable as an infringer.” 35 U.S.C. § 271(b). The
law recognizes that the statute’s use of the words
“actively induces” imparts an intent requirement into the
statute. As stated by the Supreme Court, “[t]he addition
of the adverb ‘actively’ suggests that the inducement must
involve the taking of affirmative steps to bring about the
desired result.” Global-Tech. Appliances, Inc. v. SEB
S.A., 131 S. Ct. 2060, 2065 (2011). In § 271(b), the
“desired result” that a party accused of inducement must
be affirmatively seeking to bring about is defined in the
statute as simply “infringement.”
The term “infringement” is used consistently
throughout § 271 to mean that all of the limitations of a
patent claim are satisfied by an accused product or
accused conduct. See, e.g., TecSec, Inc. v. Int’l Bus. Mach.
Corp., --- F.3d ----, No. 2012-1415, 2013 WL 5452049, at
*13 (Fed. Cir. 2013) (citations omitted) (“An act of
infringement occurs when all the elements of a claimed
product or method are met by the accused device or
process.”). In Global-Tech, the Court concluded that in
order to satisfy the intent element of induced
infringement under § 271(b), an accused infringer must
possess “knowledge that the induced acts constitute
patent infringement,” Global-Tech., 131 S. Ct. at 2068,
but it did not alter the fundamental meaning of
“infringement.” Our recent en banc decision in Akamai
further confirms that “infringement” in the context of
“induced infringement” is resolved solely with reference to
the limitations of a patent claim. See Akamai Techs., Inc.
v. Limelight Networks, Inc., 692 F.3d 1301, 1306 (Fed.
Cir. 2012) (“we hold that all steps of a claimed method
must be performed in order to find induced
infringement”).
The legislative history explains that the language of
§ 271(b) “recites in broad terms that one who aids and
abets an infringement is likewise an infringer.” H.R. Rep.
No. 82–1923, at 9. Neither the statute nor its legislative
history provides that one who knowingly and successfully
induces another to engage in conduct that infringes a
valid patent can escape liability by showing it held a good
faith belief that the patent was invalid. Indeed, the
rationale for imposing liability on the party who is
inducing infringement is simple: one who causes, urges,
encourages, or aids in an infringement is just as, if not
more, culpable for the invasion of the patentee’s exclusive
rights than those who actually perform the acts of
infringement. See generally Akamai, 692 F.3d at 1309-13.
Yet, under the majority’s holding, an accused inducer that
is deriving a benefit by knowingly and intentionally
inducing an unsuspecting third party to directly infringe
patent rights can itself escape liability based on a belief
that the patent is invalid while the unsuspecting third
party cannot. This situation is directly contrary to the
plain language and purpose of the induced infringement
statute.
II.
Second, infringement and invalidity are separate
issues under the patent code and our precedent. This is
not controversial. We have “long recognized that patent
infringement and invalidity are separate and distinct
issues.” Pandrol USA, LP v. Airboss Ry. Prods., Inc., 320
F.3d 1354, 1365 (Fed. Cir. 2003). This distinction is
further reflected in the organization of the patent code,
which places the issues of infringement and invalidity in
separate “Parts.” Compare 35 U.S.C. §§ 251-329 (Part III:
“Patents and Protection of Patent Rights”), with 35 U.S.C.
§§ 100-212 (Part II: “Patentability of Inventions and
Grant of Patents”).
Given this, there is no reasonable basis to impute
questions of invalidity or liability into § 271(b) through
the term “infringement.” 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. 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. This too is not controversial under
our precedent because we have long recognized that
“[t]hough an invalid claim cannot give rise to liability for
infringement, whether it is infringed is an entirely
separate question capable of determination without
regard to its validity.” Medtronic, Inc. v. Cardiac
Pacemakers, Inc., 721 F.2d 1563, 1583 (Fed. Cir. 1983)
(emphasis added).
Despite that “Supreme Court precedent and our cases
make clear that patent infringement and patent validity
are treated as separate issues,” Pandrol, 320 F.3d at
1365, the Commil majority nevertheless imputes
questions of invalidity into induced infringement under
the guise of “intent.” It attempts to justify this departure
from controlling precedent on the premise that “[i]t is
axiomatic that one cannot infringe an invalid patent.”
Commil, 720 F.3d at 1368. But this “axiom” is materially
wrong in the present context and does not withstand
scrutiny in view of controlling precedent. See, e.g.,
Medtronic, 721 F.2d at 1583. A more accurate statement
of our precedent is that liability for patent infringement
depends on an infringed claim being valid and
enforceable; that is, one cannot be liable for infringement
of an invalid patent.
III.
Third, the Commil majority holding wrongly conflates
the defense of noninfringement with the defense of
invalidity. “An important limitation on the scope of
induced infringement is that inducement gives rise to
liability only if the inducement leads to actual
infringement.” Akamai, 692 F.3d at 1308. The Commil
majority expands the inquiry regarding noninfringement
to include invalidity on grounds that it “see[s] no
principled distinction between a good-faith belief of
invalidity and a good-faith belief of non-infringement for
the purpose of whether a defendant possessed the specific
intent to induce infringement of a patent.” Commil, 720
F.3d at 1368. This statement ignores the statutorily-
mandated presumption of validity, see § 282(a), in that it
sets up all patents as invalid, at least in the mind of the
inducer. In doing so, the majority strikes at the very
heart of the presumption of validity by eroding patent
rights that have been duly granted by the PTO based
solely on an erroneous—albeit good faith—belief that the
PTO erred in granting the patent. This has profound and
negative implications that are not contemplated by the
patent statute.
Conflating infringement and invalidity also
unnecessarily complicates the induced infringement
inquiry. In this regard, infringement and non-
infringement are opposite sides of the same coin whereas
infringement and invalidity are altogether entirely
different coins. The intent element of § 271(b) is met
when the accused infringer acts with actual knowledge of
the patent claim and was “actively inducing” conduct that
it knew to be within the scope of an asserted claim. See
Akamai, 692 F.3d at 1308. Whether the accused infringer
held a good faith belief that it was inducing conduct that
fell outside the scope of the claims is directly relevant to
this intent inquiry. But whether the accused infringer
held a good faith belief in invalidity—e.g., an erroneous
belief regarding obviousness—is wholly unrelated to the
accused infringer’s conduct vis-à-vis the limitations of a
presumptively valid patent claim. These fundamental
differences between the defenses provide a reasoned and
legally sound basis for differentiating between a good
faith belief of non-infringement and a good faith belief in
invalidity in the context of induced infringement.
* * *
There exists another axiom of more universal
application that is appropriate here: “if it’s not broken,
don’t fix it.” The Commil majority has strained to fix
current law without ever showing exactly what is broken,
and its fix has been to create an entirely new
infringement defense, a new rule of law.
In addition, the majority does not instruct the lower
courts how they are to apply the fix. Is the new rule a
question of fact? Is it a question of law? Is it a question
of law with underlying factual basis? Should the question
of good faith belief of invalidity be tried along with the
invalidity issues, or perhaps before any other issues are
heard given its determinative effect on the outcome of the
case?
A grave concern that I have with the new rule is that
it fundamentally changes the operating landscape, much
like waking up and unexpectedly finding that the sky is
now green. The new rule is a powerful tool in patent
litigation in that it establishes an escape hatch from
liability of infringement that is not now in the statute.
This has a compromising effect on the only axiom that we
should all observe, and that is issued patents are
presumed valid.
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
COMMIL USA, LLC,
Plaintiff-Appellee,
v.
CISCO SYSTEMS, INC.,
Defendant-Appellant.
______________________
2012-1042
______________________
Appeal from the United States District Court for the
Eastern District of Texas in No. 07-CV-0341, Magistrate
Judge Charles Everingham.
______________________
NEWMAN, Circuit Judge, with whom RADER, Chief Judge,
REYNA and WALLACH, Circuit Judges, join, dissenting
from the denial of the petition for rehearing en banc.
By decision issued June 25, 2013, a split panel
announced a change in the law of induced infringement,
creating a new rule of law whereby an adjudged inducer
of infringement is absolved of liability for infringement if
the infringer had a “good faith belief” that the patent it
infringed was invalid. This absolution applies, according
to the panel majority, although the patent has a statutory
presumption of validity, and validity of the patent is
litigated and sustained. I explained, in my dissenting
opinion, why this position is contrary to law and
precedent. And I took some comfort from the protocol
that a panel cannot change the law established by
decisions of the court; only the en banc court can do so.
Indeed, it is not “axiomatic that one cannot infringe
an invalid patent” as the majority opinion states.
Precedent is contrary. See Medtronic, Inc. v. Cardiac
Pacemakers, Inc., 721 F.2d 1563, 1583 (Fed. Cir. 1983)
(“Though an invalid claim cannot give rise to liability for
infringement, whether it is infringed is an entirely
separate question capable of determination without
regard to its validity.”); Spectra-Physics, Inc. v. Coherent,
Inc., 827 F. 2d 1524, 1535 (Fed. Cir. 1987) (“The single
instruction to the jury that invalid claims cannot be
infringed (a nonsense statement), one of many on
supposed general principles of patent law, does not
operate to convert the interrogatories on infringement
into general verdicts which subsumed all of Spectra’s
invalidity defenses, including best mode.”). If the court
now wishes to change this law, it must be done en banc.
It disserves the public, and diminishes the court, to
continue to issue conflicting statements.
Now, however, the full court’s majority refusal of en
banc review of the panel’s ruling adds uncertainty to the
law and its application. Investors, competitors, and trial
courts cannot be confident as to the law that will be
applied by the Federal Circuit. Such destabilization is a
disservice not only to patentees but also to the public that
benefits from technological advance. A court’s creative
judicial rulings are readily clarified; our refusal to do so in
patent cases not only spawns avoidable litigation but also
is a disincentive to industrial innovation.
To compound the inequity, here the panel majority, on
remanding for retrial of infringement with the defense
that the infringer believed the patent to be invalid,
nonetheless does not permit retrial of validity. In the
posture of the remand, the prior jury verdict of validity is
the law-of-the-case. However, 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.” Anderson v. Siemens
Corp., 335 F.3d 466, 475–76 (5th Cir. 2003). It is only fair
that the new jury, at a new trial for determination of this
“belief”, receives full evidence of the premises. At a
minimum, the panel’s instructions for limited retrial
should receive en banc review.
Thus I must, respectfully, dissent from denial of the
request for rehearing en banc.