The Supreme Court on Tuesday ruled against Cisco in a multi-million dollar patent infringement case.
Cisco was accused of inducing others to infringe by selling wireless networking equipment with technology similar to that of another company, Commil. The court found that Cisco’s belief that Commil's patent for the technology was invalid was no defense.
“In the usual case, ‘I thought it was legal’ is no defense. That concept mirrors this Court’s holding [in this case],” Justice Anthony Kennedy wrote in the 6-2 opinion. Justice Stephen Breyer did not take part.
The majority said that ruling otherwise would allow companies accused of inducing patent infringement to claim they were merely acting in good faith, making litigation more burdensome and increasing discovery costs.
The court noted Tuesday’s case did not involve the type of frivolous litigation generally associated with "patent trolls" who “use patents as a sword to go after defendants for money.” But Kennedy did reaffirm the powers of district courts to sanction attorneys and force patent trolls to pay legal fees in some exceptional cases that involve frivolous litigation.
Justice Antonin Scalia dissented, and said the ruling could increase the “power of patent trolls” to bring demand letters. He said, however, that the Supreme Court is not the place to factor in those practical considerations.
Commil owns a patent for what is described as a method for using short-range wireless networks. It sued Cisco for infringement and for causing others to infringe by selling similar technology.
A jury previously ordered Cisco to pay $63.7 million in damages for inducing others to infringe.
Cisco appealed and argued it had acted under the belief that the Commil patent was invalid. The U.S. Patent and Trademark Office subsequently deemed the patent to be valid during a review.
The court on Tuesday argued that when “infringement is the issue, the validity of the patent is not the question to be confronted.”
“An accused infringer can, of course, attempt to prove that the patent in suit is invalid; if the patent is indeed invalid, and shown to be so under proper procedures, there is no liability. That is because invalidity is not a defense to infringement, it is a defense to liability,” according to the ruling.
Separately, the court clarified its previous position that one must prove two things when bringing accusations of induced infringement: “knowledge of the patent in suit and knowledge of patent infringement.”