Unwired Planet v. Apple: Fault and Patent Infringement

By Jason Rantanen

Unwired Planet, LLC v. Apple Inc. (Fed. Cir. July 22, 2016) Download Unwired Planet Panel: Moore (author), Bryson, Reyna

Last week, the Federal Circuit issued two opinions, both written by Judge Moore, dealing with what I refer to as “fault” in patent law: the degree of culpability the accused infringer possessed with respect to the issue of patent infringement.*  Although the cases involve different legal doctrines–WBIP v. Kohler involves willful infringement under § 284 and Unwired Planet involves inducement of infringement under § 271(b)–both present that core question of fault.  This post will focus on the issue of fault in the context of Unwired Planet, although its observations about fault are relevant to issues of culpability in the context of enhanced damages determinations.  I’ll focus on the specific issues raised by WBIP in a future post.

*While some folks prefer the terms “scienter,” “mens rea,” or “mental state,” I tend to use  “fault” because patent infringement primarily involves businesses not humans, and businesses don’t really have minds. In addition, the idea of “fault” captures standards (such as strict liability and negligence) that do not really have mental state components.  Terminology matters less than what’s actually going on in the analyses in these opinions, though, so substitute your preferred term as desired.

Unwired Planet v. Apple involved inducement of infringement under 35 U.S.C. § 271(b).  In Global-Tech v. SEB, and reaffirmed in Commil v. Cisco, the Supreme Court held that inducement requires knowledge or willful blindness to the fact that the relevant acts constitute infringement of a patent.  563 U.S. 754, 766 (2011); 135 S.Ct. 1920, 1926 (2015).

Among other subjects raised on appeal, Unwired challenged the district judge’s grant of summary judgment against its § 271(b) inducement of infringement claim.  The district court based its decision on the ground “that no reasonable juror could conclude that Apple was willfully blind because of ‘the strength of Apple’s noninfringement argument.'”  Slip Op. at 18.  On appeal, the Federal Circuit vacated the grant of summary judgment because the “objective strength” of Apple’s position was insufficient to avoid liability for inducement:

Because the district court’s grant of summary judgment was based exclusively on its view of the strength of Apple’s non-infringement argument, we vacate. The Supreme Court’s Global-Tech Appliances and Commil decisions require a showing of the accused infringer’s subjective knowledge as to the underlying direct infringement. The district court’s reliance on the objective strength of Apple’s non-infringement arguments as precluding a finding of induced or contributory infringement was erroneous.

On its face, this statement in Unwired Planet seems inconsistent with the court’s recent holding in Warsaw Orthopedic, an opinion that Dennis wrote about last month.  In Warsaw Orthopedic the Federal Circuit held that the objective unreasonableness of the accused infringer’s position, together with its knowledge of the patents, was a sufficient basis for a jury to conclude that the accused had knowledge of or was willfully blind to the fact that it infringed the patents-in-suit.  See 2016 WL 3124704, *3, *5 (“[H]ere we conclude that there was substantial evidence that MSD’s infringement position was objectively unreasonable and that the jury, based on this evidence, could reasonably have concluded that MSD had knowledge (or was willfully blind to the fact) that it was infringing”).  In other words, while the objective reasonableness of the accused infringer’s position is insufficient to avoid a finding of willful blindness, the objective unreasonableness of the accused infringer’s position is sufficient for a finding of knowledge or willful blindness.

Adding to the potential confusion is an observation that Judge Reyna made in his concurrence in Warsaw Orthopedic: that “the Supreme Court in Commil stated that a defendant lacks the intent for induced infringement where his reading of the claims is both different from the plaintiff’s and reasonable.”  2016 WL 3124704, *6 (the concurrence does not provide a pin cite for this statement, but he’s presumably referencing 135 S.Ct. 1920, 1928 (“In other words, even if the defendant reads the patent’s claims differently from the plaintiff, and that reading is reasonable, he would still be liable because he knew the acts might infringe. Global–Tech requires more.”)).  Although Judge Reyna was making the point that he would resolve the appeal on the ground that the accused infringer had not presented its claim construction to the court, his reading of Commil nevertheless reinforces the idea that a reasonable claim construction would be sufficient to avoid a finding of inducement liability–a conclusion at odds with the Federal Circuit’s statement in Unwired that “the objective strength of Apple’s non-infringement arguments” cannot preclude a finding of induced infringement.

Timing matters: These statements are not as irreconcilable as they seem, however. The critical missing aspect is that of timing.  As the Federal Circuit observed in WBIP, “timing does matter,” Slip Op. at 35 (emphasis in original), a point made in Halo v. Pulse, 136 S.Ct. 1923, 1933, and repeatedly emphasized by Timothy Holbrook in his scholarship and amicus briefing.   Patent infringement almost never consists of just a single act.  Instead, it typically consists of a multitude of acts performed over months or years: the individual acts of making, using, selling, and offering for sale of the patented invention.  Mental states can change and evolve over this time.  Perhaps during early periods, the accused infringer is entirely unaware of the patents-in-suit; later on, it becomes aware and begins to have thoughts about them; still later it is embroiled in litigation and develops sophisticated legal arguments.

Viewed in this light, the court’s holdings in Warsaw and Apple are easily reconciled.  In Warsaw, the court was simply saying that relying on an noninfringement position that is objectively unreasonable allows for a jury to find that the accused possessed the requisite fault.  This makes sense, as a noninfringement position that is objectively unreasonable cannot foreclose a finding of fault regardless of whether that unreasonable position was developed before infringement began or later on during litigation.

On the other hand, the flip is not necessarily true.  Just because an accused infringer develops a reasonable non-infringement position during litigation does not mean that it had a reasonable noninfringement position earlier on.  Logic would indicate, though, that if it had a reasonable noninfringement position earlier on, then it would not possess the requisite degree of fault at that time, given the passage in Commil v. Cisco referenced by Judge Reyna.

The Nature of the Determination of Fault: Wrapped up with the issue of timing is that of the actual determination of knowledge or willful blindness.  It is the patent owner’s burden to prove that the accused infringer possessed the necessary degree of fault, not the accused infringer’s burden to prove that it did not.  “The doctrine of willful blindness requires the patentee to show not only that the accused subjectively believed that there was a high risk of infringement, but also that the accused took deliberate actions to avoid confirming infringement.”  Unwired, Slip Op. at 19.  On this basis, the Federal Circuit observed, Apple might be able to prevail on summary judgment on remand.  When coupled with the reality of temporally evolving mental states, this requirement poses an interesting challenge: the patentee must make out a plausible case for fault at the relevant points in time.  The objective reasonableness of the infringer’s legal position would seem to be relevant to this determination, but the existence of an objectively reasonable legal position at one point in time does not necessarily mean that it applies to other periods of time.  Furthermore, as Prof. Holbrook has observed, the issue of reasonableness falls out once the court issues its ruling on the “correctness” of the position.  If the accused inducer loses on that issue, it can no longer argue that it’s position was “reasonable.”

Thanks to Dennis Crouch, Dmitry Karshtedt, Chris Seaman and Timothy Holbrook for helpful discussions relevant to this post.