US Patent Law Reform Act is on its way to the White House for Approval

Competing patent reform bills were passed by the Senate and House of Representatives earlier this year. Yesterday, the Senate took the unusual step of bypassing reconciliation and instead adopted the House bill without changes, paving the way for President Obama’s anticipated signature on the “Leahy-Smith America Invents Act” (“AIA”). The Act provides the most comprehensive set of patent reforms since 1952. A number of the major provisions are summarized below:

Post Grant Review
Among the biggest changes is the new provision for an administrative process to challenge newly issued patents without having to resort to litigation in a federal district court. Moreover, unlike federal district court litigation (where the patent is “presumed” valid) and invalidity must be established by “clear and convincing” evidence, a challenger need only prove invalidity before the new Patent Trial and Appeal Board by a preponderance of the evidence.

Post grant review must be sought within nine months after the grant or re-issue of a patent. This provision of the act will take effect one year after enactment and apply to all patents issued before, on or after that date. Thus patents that issue before the one year anniversary may still be subject to post grant review provided that they have not been issued for more than nine months as of the effective date.

Unlike the current re-examination process, some discovery may also be permitted. Additionally, an oral hearing can be requested. The scope of discovery will be defined by rules yet to be promulgated by the USPTO. Nonetheless, the ability to conduct discovery and present oral arguments should go a long way towards leveling the playing field between the challenger and the patentee.

In addition to the new Post Grant Review, the traditional routes for reexamining patents will remain available to challengers. However, inter-partes re-examination will be renamed inter-partes review. The AIA also tweaks the standard for initiating review. The new threshold question will be: does the request show that there is a "reasonable likelihood that the requester would prevail" with respect to at least one claim. Inter-partes review will only be available after the nine month period for instituting post grant review proceedings expires. 

Forgiveness by Supplemental Examination
Patent owners will be able to request supplemental examination “to consider, reconsider, or correct information believed to be relevant to the patent.” One purpose of this provision appears to cleanse patents that might otherwise be unenforceable due to alleged “inequitable conduct” during prosecution. The bills provide that, subject to certain exceptions, “a patent shall not be held unenforceable under section 282 on the basis of conduct relating to information that had not been considered, was inadequately considered or was incorrect in a prior examination of the patent if the information was considered, reconsidered or corrected during a supplemental examination of the patent.”

First to File
In a roundabout way, the patent reform act provides that a patent will be issued to the first inventor to file a patent application. Both the House and Senate bills redefine prior art to include any earlier filed patent application by another, thereby ensuring that the second to file will be unable to get a patent. But both bills also provide for “derivation proceedings” before a Patent Trial and Appeal Board (which will replace current Interference proceedings) to determine whether a prior applicant had derived the subject matter in question from a later patent applicant. The effective date for the “first to file” provisions will be 18 months after enactment. 

The act also provides greater rights to prior users of an invention, who chose not to seek patent protection. Currently, US patent laws provide a “first inventor” defense to an action for infringement – but only for business method patents. The AIA appears to create a more general prior user right for those who used the “subject matter” on which they are being sued for infringement commercially more than one year prior to the effective filing date of the application giving rise to the patent.

Fee Setting Authority
Currently, the USPTO submits a budget each year to Congress and proposes fees that will cover the cost of running the patent and trademark operations. Congress routinely approves the fees but only gives the USPTO part of the revenue. The rest of the money gets spirited away and spent by Congress for sundry projects. The Senate bill would have allowed the USPTO to set fees and retain all of its fee revenue. However, the final resolution (based on the House bill approach) will allow fees to be set aside in a special fund that can be accessed by the USPTO based on congressional approval. 

Prior Art Citation
The AIA expands the rights of third parties to submit prior art. Such submissions have to be considered by the examiner so long as they are submitted before allowance and no more than six months after publication. 

After issuance, the Act also permits submissions of written statements made by the patent owner in federal court or USPTO proceedings as to the position taken by the patent owner as to the meaning of one or more claims. Such statements can be used for claim interpretation in re-examination, inter-partes review or post grant review proceedings. 

Best Mode Requirement
In a nod towards international harmonization, the AIA disables the unique requirement of the US patent laws that applicants must disclose the “best mode” of practicing their inventions. The Act removes failure to disclose the best mode from the list of invalidity defenses to an infringement action by providing that this is “not a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable.”

Direct Filing by an Assignee Rather Than the Inventor
The AIA provides for filing in the name of an assignee or one to whom the inventor is under an obligation to assign the invention. A person who otherwise shows “sufficient proprietary interest in the matter” may make an application “on behalf of and as agent for the inventor,” and the patent will issue to the real party in interest. The AIA thus paves the way for corporations to file directly and dispenses with the notion that patent applications must be filed by individuals – and only after filing can they be assigned to a corporate employer. 

Virtual Marking and an End to Marking Trolls
The AIA permits “constructive notice” (for seeking damages) to be met by notifying consumers that the product is patented and directing the public to an internet site that provides a current list of patents covering the product. The Act also puts an end to so-called “false marking” actions by enterprising plaintiffs (“marking trolls”) who have sought damages (as private attorneys general) for incorrect identification of patents covering products. Henceforth, only the US Government will be able to sue for false marking and collect statutory penalties. Entities that have suffered “competitive injury” will also be able to sue for actual economic damages but marking trolls will be out of luck.

Satellite Offices
“Subject to available resources” the USPTO is directed to open two more satellite offices (in addition to one in Detroit currently being planned) within three years of enactment. Several criteria for selecting the locations of these satellite offices are set out, including geographic diversity, origin of patent filers and the availability of technically trained personnel for hiring as examiners.

The Cutting Room Floor
A number of patent reforms that had been proposed in the prior unsuccessful House and/or Senate bills were scraped to make the package of patent reforms less controversial. These include prior attempts to legislate changes in the way damages are awarded in infringement action, e.g., calculation of compensatory damages, new definitions for willful infringement and calculation of enhanced damages upon a finding of willful infringement. Changes in the law on inequitable conduct were also abandoned (apart from new supplemental examination process discussed above). A requirement for 18 month publication of all applications was also nixed as were rules relating to venue and provisions for interlocutory appeals after a district court had completed claim construction but prior to final disposition of a case.

- Tom Engellenner

This blog posting is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.

Gene Patents Survive the 'Magic Microscope' Test

Late last month the federal appeals court responsible for patent matters reversed a lower court decision that had threaten to eliminate all “gene patents.”  In the case of Association for Molecular Pathology v. Myriad Genetics a three-judge panel of the Court of Appeals for the Federal Circuit (CAFC) overturned (in part) a New York federal district court decision from last April.  The district court suit had been brought by several medical societies, physicians and individual cancer patients, seeking to invalidate several so-called “gene patents” held by Myriad Genetics and the University of Utah.  

Two of three judges concluded that isolated DNA molecules were indeed patentable subject matter.  Judge Lourie, writing for the majority, found that isolated DNA was not merely a purified product of nature.  The majority rejected a “magic microscope” argument advanced by the plaintiffs, who basically argued if you could see DNA, then it is a product of nature and, hence, not appropriate subject matter for a patent.

 

Judge Lourie disagreed and concluded that the claimed DNA sequences had markedly different chemical structures compared to the DNA found in our bodies.  However, the panel did affirm the district court’s decision to revoke certain analytical method claims –on narrow grounds.  On the assay claims, the CAFC panel concluded that the claimed methods failed to recite any “transformative” steps and were so broad as to read on purely mental steps.

The patents at issue in the case were based on the discovery that certain mutations in two gene sequences, BRCA1 and BRCA2, in some individuals were correlated with a heightened susceptibility to breast cancer.  Once these sequences were identified, the inventors also realized the isolated DNA could be used to construct screening assays for the mutations and therapeutics.  The inventors filed for patents on these discoveries. 

The attorneys representing the plaintiffs, the ACLU Foundation and the Public Patent Foundation, challenged seven of the patents for claiming subject matter not eligible for patent protection.  The challenged patents cover both isolated DNA derived from the BRCA1 and BRCA2 gene sequences as well as diagnostic methods for determining a patient's predisposition to breast cancer based on identification of certain mutations in BRCA genes extracted from patients and screening tests for new therapeutics.

The federal district court decision by Judge Sweet of the southern district of New York to revoke all of the patent claims had surprised much of the patent community because it was contrary to the longstanding practice of the Patent and Trademark Office in issuing gene patents as well as to practice of other government agencies like the NIH in seeking and obtaining patents on DNA sequences.  Basically, Judge Sweet adopted the argument advanced by ACLU Attorney Hensen: “Genes isolated from the human body are no more patentable than gold extracted from a mountain.”  However, this legal reasoning ran contrary to a large body of case law that biological materials, such as proteins, hormones and even stem cells can be patented in their isolated form.

The case took a surprising turn last October when the U.S. Department of Justice decided to throw the Patent Office under the bus (on the issue of isolated DNA) and weighed in on the side of those seeking to erase gene patents.  At the oral hearing in the appeal, the government made its argument by way of a “magic microscope” test.  According to the government’s test, if an imaginary microscope could focus in on the claimed DNA molecule as it exists in the human body, the claim covers unpatentable subject matter.

Judges Lourie and Moore of the CAFC panel ultimately rejected this reasoning as flawed.  “The ability to visualize a DNA molecule through a microscope, or by any other means, when it is bonded to other genetic material, is worlds apart from possessing an isolated DNA molecule that is in hand and usable. . . .  The government’s microscope could focus in on a claimed portion of any complex molecule, rendering that claimed portion patent ineligible, even though that portion never exists as a separate molecule in the body or anywhere else in nature, and may have an entirely different utility.”

With regard to the analytical method claims, the CAFC panel affirmed the district court’s decision that the method claims were invalid – but on somewhat different grounds.  The judges noted that the method claims were so broad as to merely recite steps of “comparing” or “analyzing” two gene sequences. For example, Judge Lourie pointed to one claim that recited a method for screening a tumor sample by “comparing a first BRCA1 sequence from a tumor sample and a second BRCA1 sequence from a non-tumor sample, wherein a difference in sequence indicates an alteration in the tumor sample.”  He rejected this claim as reciting “nothing more than the abstract mental steps” necessary to compare two different nucleotide sequences.

The CAFC panel’s treatment of the method claims was very much in line with the recent U.S. Supreme Court decision in Bilski v. Kappos, which invalidated certain “business method “ patent claims because they were simply “abstract ideas.”

Even though Myriad’s method claims were revoked, the CAFC decision distinguished similar method claims that were found to pass muster in Prometheus Labs., Inc. v. Mayo Collabarative Servs., where the CAFC recently did find transformations in assay steps.  Judge Lourie noted that Myriad’s claims did not include the step of “determining” the sequence of BRCA genes by, e.g., isolating the genes from a blood sample and sequencing them, or any other necessarily transformative step.

Thus, the Myriad opinion broadly hints that those claiming biotech analytical methods can avoid a similar fate by reciting more concrete transformative steps, such as biopsying blood or tissue, removal of DNA from biopsied cells, separating the particular sequences of interest and preparing the isolated sequences for analysis to detect mutations. 

Lurking between the lines of Myriad decision is the problem of the cost of genetic assays.  According to the plaintiffs, the $3,000 price tag charged by Myriad for the full assay, effectively puts the test out of the reach for most Americans whose health plans will not fully cover the test.  The Justice Department’s position to support the plaintiffs may have been driven by factors far removed from patent practice -- the looming costs of personalized medicine as universal health care goals clash with federal budget cuts.

However, the ability to charge monopoly prices is at the core of the patent system, which is designed to reward for a limited period of time those who add to mankind’s knowledge.  The monopoly price also provides an incentive for others to find alternatives to the patented invention.  In fact, Myriad’s revenues are a far cry from the billions of dollars that many drug patents reap annually for their owners in the pharmaceutical industry.  Judge Lourie’s decision in the Myriad case stays true to these principles: “Changing course years after the fact will only serve to punish those companies who made the reasonable decision to invest large amounts of time and money into the identification, isolation, and characterization of genes.”

Of course, the CAFC panel’s decision in the Myriad case may not be the last word on whether isolated DNA is patentable.  The parties will in all likelihood seek rehearing en banc before all twelve of the judges of the CAFC.  After that, the U.S. Supreme Court may very well have its own opinion on the government’s “magic microscope” argument.

- Tom Engellenner

This posting is an adaptation of my recent analysis in IPLaw 360.  This blog is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.

US Patent Law Reform Is Waiting In the Wings

With the clock ticking down on the possibility of financial meltdown in two weeks, one can only hope that Congress will come to its senses and address the debt limit.  Assuming sanity prevails, there is a high probability that Congress can get back to its business of making laws in August and the most comprehensive patent reforms since 1952 can become a reality by the end of this summer.

These days, every bill has to have a moniker.  So they coined the term the “America Invents Act” and attached it this year’s patent reform bill, which is largely a recapitulation of reform measures that have died previously in the last three sessions of Congress.  Maybe a catchy name does make a difference.  This year patent reform legislation sailed through both houses of Congress.  The Senate passed Bill S. 23 by a vote of 95-5 on March 8, 2011 and the House of Representatives passed Bill HR 1249 by a vote of 304 - 117 on June 23, 2011. 

Reconciliation of the two bills seems to be a foregone conclusion because they are so similar and President Obama has indicated a willingness to sign the legislation.  Accordingly, this seems to be a good time to review what reforms have been agreed upon – and what has been left on the cutting room floor.

Post Grant Review

Finally, we appear poised to join the rest of the civilized world and have an administrative process to challenge newly issued patents without having to go to federal district court and spending three years and perhaps a million dollars to invalidate patents that have been issued by “mistake.”

Both the House and Senate bills provide for petitions to review newly issued patents.  Review must be sought within nine months after the grant or re-issue of a patent.   Unlike federal district court litigation (where the patent is “presumed” valid), a challenger need only prove invalidity by a preponderance of the evidence. 

Unlike the current re-examination process, some discovery will also be permitted.  Additional, an oral hearing can be requested.   The scope of discovery will be defined by rules yet to be promulgated by the USPTO.  Nonetheless, the ability to conduct discovery and present oral arguments should go a long way towards leveling the playing field between the challenger and the patentee.

In addition to the new Post Grant Review, the traditional routes for reexamining patents (with all their flaws) will remain available to challengers. However, inter-partes re-examination will be renamed inter-partes review.  The AIA also tweaks the standard for initiating review.  The new threshold question will be: “does the request show that there is a reasonable likelihood that the requester would prevail with respect to” at least one claim.  Inter-partes review will only be available after the period for instituting post grant review proceedings expires. 

Forgiveness of Sins by Supplemental Examination

Patent owners will be able to request supplemental examination “to consider, reconsider, or correct information believed to be relevant to the patent.”  One purpose of this provision appears to cleanse patents that might otherwise be unenforceable due to alleged “inequitable conduct” during prosecution.  The bills provide that, subject to certain exceptions, “a patent shall not be held unenforceable under section 282 on the basis of conduct relating to information that had not been considered, was inadequately considered or was incorrect in a prior examination of the patent if the information was considered, reconsidered or corrected during a supplemental examination of the patent.”

First to File

In a roundabout way, the America Invents Act (“AIA”) provides that a patent will be issued to the first inventor to file a patent application.  Both the House and Senate bills redefine prior art to include any earlier filed patent application by another, thereby ensuring that the second to file will be unable to get a patent.  But both bills also provide for “derivation proceedings” before a Patent Trial and Appeal Board (which will replace current Interference proceedings) to determine whether a prior applicant had derived the subject matter in question from a later patent applicant. 

One area where the House and Senate bills differ is in the rights afforded prior users of an invention, who chose not to seek patent protection.  Currently, US patent laws provide a “first inventor” defense to an action for infringement – but only for business method patents.  

The Senate bill retains the defense only for business method patents but would make a minor change to this to extend the protection to others who practiced the claimed subject matter at the direction of the first inventor but would not allow the transfer or license of the first inventor’s “prior use” rights. 

The House provision goes much further and would create a more general prior user right for those who used the “subject matter” on which they are being sued for infringement commercially more than one year prior to the earlier of the effective filing date of the application giving rise to the patent.

Fee Setting Authority (and an End of Fee Diversion?)

Currently, the USPTO submits a budget each year to Congress and proposes fees that will cover the cost of running the patent and trademark operations.  Congress routinely approves the fees but only gives the USPTO part of the revenue.  The rest of the money get spirited away and spend by Congress for sundry projects.  Any wonder why the USPTO has a huge backlog of unexamined patent applications?

The Senate bill would allow the USPTO to set fees and retain all of its fee revenue.  The House bill would allow fees to be set aside in a special fund that could be accessed by the USPTO based on congressional approval.  Given the financial turmoil over the federal debt, things seem to be tilting toward the House provision and less autonomy for the PTO.

Prior Art Citation

Both bills expand the rights of third parties to submit prior art.  Such submissions have to be considered by the examiner so long as they are submitted before allowance and no more than six months after publication. 

After issuance, both bills also permit submissions of written statements made by the patent owner in federal court or USPTO proceedings as to the position taken by the patent owner as to the meaning of one or more claims. Such statements can be used for claim interpretation in re-examination, inter-partes review or post grant review proceedings.

Best Mode Requirement

In a nod towards international harmonization, both bills disable the unique requirement of the US patent laws that applicants must disclose the “best mode” of practicing their inventions.  Both bills remove failure to disclose the best mode from the list of invalidity defenses to an infringement action by providing that this is “not a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable.”

Direct Filing by an Assignee Rather Than the Inventor

Both bills provide for filing in the name of an assignee or one to whom the inventor is under an obligation to assign the invention.  A person who otherwise shows “sufficient proprietary interest in the matter” may make an application “on behalf of and as agent for the inventor,” and the patent will issue to the real party in interest.  The AIA thus paves the way for corporations to file directly and dispenses with the quaint notion that patent applications must be file by individuals and only after filing can they be assigned to a corporate employer.  For a while it looked like a few strict constitutional constructionists in Congress would derail this provision but it’s still in both bills.  Even if this provision doesn’t get cut, look for someone to challenge “assignee filings” on constitutional grounds since Article 1, section 8 of the Constitution provides that Congress may grant patents to “inventors.”

Virtual Marking and an End to Marking Trolls

Both bills permit “constructive notice” (for seeking damages) to be met by notifying consumers that the product is patented and directing the public to an internet site that provides a current list of patents covering the product.  Both patent reform bills also put an end to so-called “false marking” actions whereby enterprising plaintiffs (“marking trolls”) have sought damages as private attorneys general for incorrect identification of patents covering products.  Henceforth, only the US Government will be able to sue for false marking and collect statutory penalties.  Entities that have suffered “competitive injury” will also be able to sue for actual economic damages but marking trolls will be out of luck.

Satellite Offices

“Subject to available resources” the USPTO is directed to open two more satellite offices (in addition to one in Detroit currently being planned) within three years of enactment.  Several criteria for selecting the locations of these satellite offices are set out, including geographic diversity, origin of patent filers and the availability of technically trained personnel for hiring as examiners.

The Cutting Room Floor

A number of patent reforms that had been proposed in the prior unsuccessful House or Senate bills have been scraped to make the package of patent reforms less controversial.  These include all of the prior attempts to legislate changes in the way damages are awarded in infringement action, e.g., calculation of compensatory damages as well as new definitions for willful infringement and calculation of enhanced damages upon a finding of willful infringement. Changes in the law on inequitable conduct were also abandoned (apart from new supplemental examination process discussed above).  A requirement for 18 month publication of all applications was also nixed as were rules relating to venue and provisions for interlocutory appeals after a district court had completed claim construction but prior to final disposition of a case.  
- Tom Engellenner  
 

This blog is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.

Global-Tech, Inc. v.SEB, S.A.

What is the Standard for Active Inducement of Patent Infringement?

The “state of mind” requirement for “actively inducing” patent infringement was debated in oral arguments before the U.S. Supreme Court last month.  The case of Global-Tech v. SEB SA raised the question of whether plain ignorance of a patent is enough to excuse an act that would otherwise be considered inducement of patent infringement if the defendant was aware of the patent.

U.S. patent laws distinguish between direct and indirect patent infringement.  Simply put, direct infringement is an action that literally follows each and every step or element of patent claim.  Indirect infringement, however, is harder to explain because it comes in two favors: contributory infringement and active inducement of infringement.

Contributory infringement is the sale of material components that have been especially made for use in a patented invention and have no substantial non-infringing use.  To prove contributory infringement one must show the defendant intended direct infringement to occur.  The contributory infringement section of the statute applies to those who sell components “knowing the same to be especially made or especially adapted for use in an infringement.”

Active inducement of infringement, on the other hand, applies to activities that cause someone else to infringe a patent.  For example, someone who sells a product necessary to perform a claimed process – even if the product has non-infringing uses – can be found to have actively induced infringement of the claimed process if the product was sold with express instructions for use in the manner that would constitute infringement. 

Asserting inducement has also become an effective weapon for U.S. patent holders to go after foreign manufacturers – as well as U.S. distributors – when the patent covers a product imported into the U.S.  Increasingly, federal courts have disregarded defenses raised by foreign manufacturers who assert they only sold a product outside of the U.S. and they were not responsible for the actions of the buyers.  In fact, this is precisely what happened in the Global-Tech case.  SEB S.A., the plaintiff sued Sunbeam for direct infringement and Global-Tech for indirect infringement.  After Sunbeam settled the charges against it, SEB S.A. continued to pursue the foreign manufacturer, Global-Tech.

Unlike contributory infringement, the section of the patent laws that defines inducement does not require a showing that the defendant intended that infringement occur. But it does require “active” inducement, which implies some knowledge requirement. Prior cases have held that it requires that the defendant knew or should have known that a U.S. patent existed that prohibited the method or product.

In the Global Tech case, the defendant (Global Tech’s Hong Kong subsidiary) entered into an agreement with a U.S. company (Sunbeam) to make deep-fryers to be sold in the U.S.by Sunbeam.

Global-Tech’s Hong Kong engineers went out and bought several deep-fryers including SEB’s “cool touch” fryer.  The model they bought contained no patent number to alert the public that its design was covered by a U.S. Patent.

After a jury trial, Global-Tech’s subsidiary was found to have induced infringement under the U.S. patent laws by selling Sunbeam products which the subsidiary knew would be resold in the U.S.  The trial judge did not instruct the jury that they had to find that the defendant also knew of the patent-in-suit when they sold the infringing goods.

On Appeal, the Court of Appeals for the Federal Circuit (CAFC) affirmed the decision.  In doing so, the CAFC distinguished its own prior holdings that had suggested that active inducement necessarily includes a requirement that the inducer knew or should have known of the patent.  Essentially, the appeals court relaxed this knowledge requirement by holding that “deliberate indifference” of a patent was enough to actively induce infringement.

The CAFC pointed to the finding that Global-Tech copied the SEB design by reverse engineering and didn’t check to see if the product was covered by patents.  More damning was testimony that Global-Tech had asked a U.S. attorney to render a clearance opinion but failed to tell him that they copied the SEB product.

Global-Tech’s brief to the Supreme Court relies heavily on the Supreme Court’s 2005 decision in MGM Studios v. Grokster. Although Grokster was a copyright case, the Court relied on Section 271 (b) of the patent law as a guide for interpreting the meaning of “inducing copyright infringement.”

Global-Tech’s position was that the Grokster ruling requires that actively inducing infringement means “purposeful, culpable expression and conduct” to encourage an infringement.

Global-Tech also made a public policy argument that a “deliberate indifference” standard would stifle competition because companies that sell products or components they know will be resold in the U.S. will have to decide whether or not to commission a full and complete patent search before they bring products to market.  Global-Tech argued that this heightened burden would discourage many companies from marketing competing products even when no patent protection exists

A number of influential companies with overseas operations, such as General Motors, Microsoft, Cisco, Intel and Hewlett Packard have lined-up with Global-Tech and filed “friend of the court briefs” opposing the “deliberate indifference” standard.  Internet service providers, such as Google, Yahoo, Comcast and Facebook, were also supporters of Global-Tech – perhaps because they that have been hit with numerous patent infringement suits recently.

On the other hand, SEB’s brief to the Supreme Court argued that nothing in the statute or case law requires that an inducer of infringement have knowledge of the specific patent at issue.  SEB further argues that if Congress had meant to include a knowledge requirement, it would have put one in just like it did in § 271(c) – the section that defines contributory infringement.

The oral arguments at the Supreme Court on February 23, 2011 suggest that the members of the Court were not comfortable with the “deliberate indifference” standard but they were also skeptical of Global-Tech’s innocence.  Several of the justices appeared to regard the patent clearance that Global-Tech sought as a sham.  Justice Ginsburg asked “if the attorney [who rendered Global-Tech’s clearance opinion] had been told this device copied the SEB fryer, isn’t it 99 and 44/100ths percent sure that the attorney would have found the patent?”

Predicting Supreme Court outcomes based on questions raised during oral arguments is often a dubious endeavor.  The overall tenor of the justices’ questions and comments suggests that the Court is likely to affirm the decision holding Global-Tech liable for inducing infringement.  But the Supreme Court’s reasoning is also likely to be different.

The “deliberate indifference” standard did not sit well with the Court because it seemed to be too low a threshold for liability.  Chief Justice Roberts expressed concern that such a low standard on intent “would bring the semiconductor industry to halt.”  He noted that there were 420,000 patents dealing with semiconductors and if you do virtually anything in that field, “you’re going to hit a semiconductor patent owned by somebody.”  Justice Breyer also express concern that a low standard, such as indifference, would put at risk millions of people who make products that are used in millions of ways.

The Justices seemed to struggle to come up with an alternative standard for intent that was not too hot – but also not too cold.  Justice Breyer posed several alternative standards for intent: “should have known,” “conscious disregard” and “willful blindness.”

“Willful blindness” may indeed be where the Supreme Court ends up.  In an unrelated, but recent, case of United States v. Santos, 553 U.S. 507 (2008), which also turned on the issue of “intend,” the Court applied this standard and held that “willful blindness arises when a party, aware of a high probability of a fact, deliberately avoids learning the truth.”