GLOBAL-TECH APPLIANCES v. SEB

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash­
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SUPREME COURT OF THE UNITED STATES
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No. 10–6

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GLOBAL-TECH APPLIANCES, INC., ET AL.,

PETITIONERS v. SEB S. A.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE FEDERAL CIRCUIT

[May 31, 2011]

JUSTICE ALITO delivered the opinion of the Court.

We consider whether a party who “actively induces in ­ fringement of a patent” under 35 U. S. C. §271(b) must know that the induced acts constitute patent infringement.

I

This case concerns a patent for an innovative deep fryer designed by respondent SEB S. A., a French maker of home appliances. In the late 1980’s, SEB invented a “cool ­ touch” deep fryer, that is, a deep fryer for home use with external surfaces that remain cool during the frying proc ­ ess. The cool-touch deep fryer consisted of a metal frying pot surrounded by a plastic outer housing. Attached to the housing was a ring that suspended the metal pot and insulated the housing from heat by separating it from the pot, creating air space between the two components. SEB obtained a U. S. patent for its design in 1991, and some ­ time later, SEB started manufacturing the cool-touch fryer and selling it in this country under its well-known “T-Fal” brand. Superior to other products in the American market at the time, SEB’s fryer was a commercial success. In 1997, Sunbeam Products, Inc., a U. S. competitor of SEB, asked petitioner Pentalpha Enterprises, Ltd., to supply it with deep fryers meeting certain specifications. Pentalpha is a Hong Kong maker of home appliances and a wholly owned subsidiary of petitioner Global-Tech Ap ­ pliances, Inc.1

In order to develop a deep fryer for Sunbeam, Pentalpha purchased an SEB fryer in Hong Kong and copied all but its cosmetic features. Because the SEB fryer bought in Hong Kong was made for sale in a foreign market, it bore no U. S. patent markings. After copying SEB’s design, Pentalpha retained an attorney to conduct a right-to-use study, but Pentalpha refrained from telling the attorney that its design was copied directly from SEB’s.

The attorney failed to locate SEB’s patent, and in Au ­ gust 1997 he issued an opinion letter stating that Pental ­ pha’s deep fryer did not infringe any of the patents that he had found. That same month, Pentalpha started selling its deep fryers to Sunbeam, which resold them in the United States under its trademarks. By obtaining its product from a manufacturer with lower production costs, Sunbeam was able to undercut SEB in the U. S. market.

After SEB’s customers started defecting to Sunbeam, SEB sued Sunbeam in March 1998, alleging that Sun ­ beam’s sales infringed SEB’s patent. Sunbeam notified Pentalpha of the lawsuit the following month. Unde ­ terred, Pentalpha went on to sell deep fryers to Fingerhut Corp. and Montgomery Ward & Co., both of which resold them in the United States under their respective trade ­ marks.

SEB settled the lawsuit with Sunbeam, and then sued Pentalpha, asserting two theories of recovery: First, SEB claimed that Pentalpha had directly infringed SEB’s patent in violation of 35 U. S. C. §271(a), by selling or offering to sell its deep fryers; and second, SEB claimed that Pentalpha had contravened §271(b) by actively induc ­ ing Sunbeam, Fingerhut, and Montgomery Ward to sell or to offer to sell Pentalpha’s deep fryers in violation of SEB’s patent rights.

Following a 5-day trial, the jury found for SEB on both theories and also found that Pentalpha’s infringement had been willful. Pentalpha filed post-trial motions seeking a new trial or judgment as a matter of law on several grounds. As relevant here, Pentalpha argued that there was insufficient evidence to support the jury’s finding of induced infringement under §271(b) because Pentalpha did not actually know of SEB’s patent until it received the notice of the Sunbeam lawsuit in April 1998.

The District Court rejected Pentalpha’s argument, as did the Court of Appeals for the Federal Circuit, which affirmed the judgment, SEB S. A. v. Montgomery Ward & Co., 594 F. 3d 1360 (2010). Summarizing a recent en banc decision, the Federal Circuit stated that induced in ­ fringement under §271(b) requires a “plaintiff [to] show that the alleged infringer knew or should have known that his actions would induce actual infringements” and that this showing includes proof that the alleged infringer knew of the patent. Id., at 1376. Although the record contained no direct evidence that Pentalpha knew of SEB’s patent before April 1998, the court found adequate evidence to support a finding that “Pentalpha deliberately disregarded a known risk that SEB had a protective pat ­ ent.” Id., at 1377. Such disregard, the court said, “is not different from actual knowledge, but is a form of actual knowledge.” Ibid.

We granted certiorari. 562 U. S. ___ (2010).

II

Pentalpha argues that active inducement liability under §271(b) requires more than deliberate indifference to a known risk that the induced acts may violate an existing patent. Instead, Pentalpha maintains, actual knowledge of the patent is needed.

A

In assessing Pentalpha’s argument, we begin with the text of §271(b)—which is short, simple, and, with respect to the question presented in this case, inconclusive. Sec ­ tion 271(b) states: “Whoever actively induces infringement of a patent shall be liable as an infringer.”

Although the text of §271(b) makes no mention of intent, we infer that at least some intent is required. The term “induce” means “[t]o lead on; to influence; to prevail on; to move by persuasion or influence.” Webster’s New Interna ­ tional Dictionary 1269 (2d ed. 1945). The addition of the adverb “actively” suggests that the inducement must involve the taking of affirmative steps to bring about the desired result, see id., at 27.

When a person actively induces another to take some action, the inducer obviously knows the action that he or she wishes to bring about. If a used car salesman induces a customer to buy a car, the salesman knows that the desired result is the purchase of the car. But what if it is said that the salesman induced the customer to buy a damaged car? Does this mean merely that the salesman induced the customer to purchase a car that happened to be damaged, a fact of which the salesman may have been unaware? Or does this mean that the salesman knew that the car was damaged? The statement that the salesman induced the customer to buy a damaged car is ambiguous.

So is §271(b). In referring to a party that “induces infringement,” this provision may require merely that the inducer lead another to engage in conduct that happens to amount to infringement, i.e., the making, using, offering to sell, selling, or importing of a patented invention. See §271(a).2 On the other hand, the reference to a party that “induces infringement” may also be read to mean that the inducer must persuade another to engage in conduct that the inducer knows is infringement. Both readings are possible.

B

Finding no definitive answer in the statutory text, we turn to the case law that predates the enactment of §271 as part the Patent Act of 1952. As we recognized in Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U. S. 476 (1964) (Aro II), “[t]he section was designed to ‘codify in statutory form principles of contributory infringement’ which had been ‘part of our law for about 80 years.’ ” Id., at 485–486, n. 6 (quoting H. R. Rep. No. 1923, 82d Cong., 2d Sess., 9 (1952)).

Unfortunately, the relevant pre-1952 cases are less clear than one might hope with respect to the question pre ­ sented here. Before 1952, both the conduct now covered by §271(b) (induced infringement) and the conduct now addressed by §271(c) (sale of a component of a patented invention) were viewed as falling within the overarching concept of “contributory infringement.” Cases in the latter category—i.e., cases in which a party sold an item that was not itself covered by the claims of a patent but that enabled another party to make or use a patented machine, process, or combination—were more common.

The pre-1952 case law provides conflicting signals re ­ garding the intent needed in such cases. In an oft-cited decision, then-Judge Taft suggested that it was sufficient if the seller of the component part intended that the part be used in an invention that happened to infringe a pat ­ ent. He wrote that it was “well settled that where one makes and sells one element of a combination covered by a patent with the intention and for the purpose of bringing about its use in such a combination he is guilty of con­ tributory infringement.” Thomson-Houston Elec. Co. v. Ohio Brass Co., 80 F. 712, 721 (CA6 1897).3

On the other hand, this Court, in Henry v. A. B. Dick Co., 224 U. S. 1 (1912), overruled on other grounds, Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U. S. 502 (1917), stated that “if the defendants [who were ac ­ cused of contributory infringement] knew of the patent and that [the direct infringer] had unlawfully made the pat ­ ented article . . . with the intent and purpose that [the direct infringer] should use the infringing article . . . they would assist in her infringing use.” 224 U. S., at 33 (em­ phasis added and deleted).4

Our decision in MetroGoldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U. S. 913 (2005), which looked to the law of contributory patent infringement for guidance in determining the standard to be applied in a case claiming contributory copyright in ­ fringement, contains dicta that may be read as interpret ­ ing the pre-1952 cases this way. In Grokster, we said that “[t]he inducement rule . . . premises liability on purpose ­ ful, culpable expression and conduct.” Id., at 937.

While both the language of §271(b) and the pre-1952 case law that this provision was meant to codify are sus ­ ceptible to conflicting interpretations, our decision in Aro II resolves the question in this case. In Aro II, a majority held that a violator of §271(c) must know “that the combi ­ nation for which his component was especially designed was both patented and infringing,” 377 U. S., at 488, and as we explain below, that conclusion compels this same knowledge for liability under §271(b).

C

As noted above, induced infringement was not consid ­ ered a separate theory of indirect liability in the pre-1952 case law. Rather, it was treated as evidence of “contribu ­ tory infringement,” that is, the aiding and abetting of direct infringement by another party. See Lemley, In ­ ducing Patent Infringement, 39 U. C. D. L. Rev. 225, 227 (2005). When Congress enacted §271, it separated what had previously been regarded as contributory infringe ­ ment into two categories, one covered by §271(b) and the other covered by §271(c).

Aro II concerned §271(c), which states in relevant part:

“Whoever offers to sell or sells . . . a component of a patented [invention] . . . , constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.” (Em ­ phasis added.) This language contains exactly the same ambiguity as §271(b). The phrase “knowing [a component] to be espe ­ cially made or especially adapted for use in an infringe ­ ment” may be read to mean that a violator must know that the component is “especially adapted for use” in a product that happens to infringe a patent. Or the phrase may be read to require, in addition, knowledge of the patent’s existence.

This question closely divided the Aro II Court. In a badly fractured decision, a majority concluded that knowl ­ edge of the patent was needed. 377 U. S., at 488, and n. 8; id., at 514 (White, J., concurring); id., at 524–527 (Black, J., dissenting).5 Justice Black’s opinion, which explained the basis for the majority’s view, concluded that the lan ­ guage of §271(c) supported this interpretation. See id., at 525. His opinion also relied on an amendment to this language that was adopted when the bill was in commit ­ tee. Id., at 525–527.

Four Justices disagreed with this interpretation and would have held that a violator of §271(c) need know only that the component is specially adapted for use in a prod ­ uct that happens to infringe a patent. See id., at 488–490, n. 8. These Justices thought that this reading was sup ­ ported by the language of §271(c) and the pre-1952 case law, and they disagreed with the inference drawn by the majority from the amendment of §271(c)’s language. Ibid.

While there is much to be said in favor of both views expressed in Aro II, the “holding in Aro II has become a fixture in the law of contributory infringement under [section] 271(c),” 5 R. Moy, Walker on Patents §15:20, p. 15–131 (4th ed. 2009)—so much so that SEB has not asked us to overrule it, see Brief for Respondent 19, n. 3. Nor has Congress seen fit to alter §271(c)’s intent re ­ quirement in the nearly half a century since Aro II was decided. In light of the “ ‘special force’ ” of the doctrine of stare decisis with regard to questions of statutory inter ­ pretation, see John R. Sand & Gravel Co. v. United States, 552 U. S. 130, 139 (2008), we proceed on the premise that §271(c) requires knowledge of the existence of the patent that is infringed. Based on this premise, it follows that the same knowl ­ edge is needed for induced infringement under §271(b). As noted, the two provisions have a common origin in the pre ­ 1952 understanding of contributory infringement, and the language of the two provisions creates the same difficult interpretive choice. It would thus be strange to hold that knowledge of the relevant patent is needed under §271(c) but not under §271(b).

Accordingly, we now hold that induced infringement under §271(b) requires knowledge that the induced acts constitute patent infringement.

III

Returning to Pentalpha’s principal challenge, we agree that deliberate indifference to a known risk that a patent exists is not the appropriate standard under §271(b). We nevertheless affirm the judgment of the Court of Appeals because the evidence in this case was plainly sufficient to support a finding of Pentalpha’s knowledge under the doctrine of willful blindness.

A

The doctrine of willful blindness is well established in criminal law. Many criminal statutes require proof that a defendant acted knowingly or willfully, and courts apply ­ ing the doctrine of willful blindness hold that defendants cannot escape the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances. The traditional rationale for this doctrine is that defendants who behave in this manner are just as culpable as those who have actual knowledge. Edwards, The Criminal Degrees of Knowledge, 17 Mod. L. Rev. 294, 302 (1954) (hereinafter Edwards) (observing on the basis of English authorities that “up to the present day, no real doubt has been cast on the proposition that [willful blindness] is as culpable as actual knowledge”). It is also said that per ­ sons who know enough to blind themselves to direct proof of critical facts in effect have actual knowledge of those facts. See United States v. Jewell, 532 F. 2d 697, 700 (CA9 1976) (en banc).

This Court’s opinion more than a century ago in Spurr v. United States, 174 U. S. 728 (1899),6 while not using the term “willful blindness,” endorsed a similar concept. The case involved a criminal statute that prohibited a bank officer from “willfully” certifying a check drawn against insufficient funds. We said that a willful violation would occur “if the [bank] officer purposely keeps himself in ignorance of whether the drawer has money in the bank.” Id., at 735. Following our decision in Spurr, several fed­ eral prosecutions in the first half of the 20th century invoked the doctrine of willful blindness.7 Later, a 1962 proposed draft of the Model Penal Code, which has since become official, attempted to incorporate the doctrine by defining “knowledge of the existence of a particular fact” to include a situation in which “a person is aware of a high probability of [the fact’s] existence, unless he actually believes that it does not exist.” ALI, Model Penal Code §2.02(7) (Proposed Official Draft 1962). Our Court has used the Code’s definition as a guide in analyzing whether certain statutory presumptions of knowledge comported with due process. See Turner v. United States, 396 U. S. 398, 416–417 (1970); Leary v. United States, 395 U. S. 6, 46–47, and n. 93 (1969). And every Court of Appeals— with the possible exception of the District of Columbia Circuit, see n. 9, infra—has fully embraced willful blind ­ ness, applying the doctrine to a wide range of criminal statutes.

Given the long history of willful blindness and its wide acceptance in the Federal Judiciary, we can see no reason why the doctrine should not apply in civil lawsuits for induced patent infringement under 35 U. S. C. §271(b).8

Pentalpha urges us not to take this step, arguing that §271(b) demands more than willful blindness with respect to the induced acts that constitute infringement. See Reply Brief for Petitioners 13–14. This question, however, is not at issue here. There is no need to invoke the doc ­ trine of willful blindness to establish that Pentalpha knew that the retailers who purchased its fryer were selling that product in the American market; Pentalpha was indis ­ putably aware that its customers were selling its product in this country. Pentalpha further contends that this Court in Grokster did not accept the Solicitor General’s suggestion that Grokster and StreamCast could be held liable for inducing the infringement of copyrights under a theory of willful blindness. Reply Brief for Petitioners 14 (citing Brief for United States, O. T. 2004, No. 04–480, pp. 29–30). But the Court had no need to consider the doctrine of willful blindness in that case because the Court found ample evidence that Grokster and StreamCast were fully aware—in the ordinary sense of the term—that their file ­ sharing software was routinely used in carrying out the acts that constituted infringement (the unauthorized sharing of copyrighted works) and that these acts violated the rights of copyright holders. See 545 U. S., at 922–927, 937–940.

B

While the Courts of Appeals articulate the doctrine of willful blindness in slightly different ways, all appear to agree on two basic requirements: (1) the defendant must subjectively believe that there is a high probability that a fact exists and (2) the defendant must take deliberate actions to avoid learning of that fact.9 We think these requirements give willful blindness an appropriately limited scope that surpasses recklessness and negligence. Under this formulation, a willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts. See G. Williams, Criminal Law §57, p. 159 (2d ed. 1961) (“A court can prop­ erly find wilful blindness only where it can almost be said that the defendant actually knew”). By contrast, a reck ­ less defendant is one who merely knows of a substantial and unjustified risk of such wrongdoing, see ALI, Model Penal Code §2.02(2)(c) (1985), and a negligent defendant is one who should have known of a similar risk but, in fact, did not, see §2.02(2)(d).

The test applied by the Federal Circuit in this case departs from the proper willful blindness standard in two important respects. First, it permits a finding of knowl ­ edge when there is merely a “known risk” that the induced acts are infringing. Second, in demanding only “deliberate indifference” to that risk, the Federal Circuit’s test does not require active efforts by an inducer to avoid knowing about the infringing nature of the activities.

In spite of these flaws, we believe that the evidence when viewed in the light most favorable to the verdict for SEB is sufficient under the correct standard. The jury could have easily found that before April 1998 Pentalpha willfully blinded itself to the infringing nature of the sales it encouraged Sunbeam to make.10 SEB’s cool-touch fryer was an innovation in the U. S. market when Pentalpha copied it. App. to Brief for Re ­ spondent 49. As one would expect with any superior product, sales of SEB’s fryer had been growing for some time. Ibid. Pentalpha knew all of this, for its CEO and president, John Sham, testified that, in developing a product for Sunbeam, Pentalpha performed “market re ­ search” and “gather[ed] information as much as possible.” App. 23a. Pentalpha’s belief that SEB’s fryer embodied advanced technology that would be valuable in the U. S. market is evidenced by its decision to copy all but the cosmetic features of SEB’s fryer.

Also revealing is Pentalpha’s decision to copy an over ­ seas model of SEB’s fryer. Pentalpha knew that the prod ­ uct it was designing was for the U. S. market, and Sham— himself a named inventor on numerous U. S. patents, see id., at 78a–86a—was well aware that products made for overseas markets usually do not bear U. S. patent mark ­ ings, App. in No. 2009–1099 etc. (CA Fed.), pp. A–1904 to A–1906. Even more telling is Sham’s decision not to in ­ form the attorney from whom Pentalpha sought a right-to ­ use opinion that the product to be evaluated was simply a knockoff of SEB’s deep fryer. On the facts of this case, we cannot fathom what motive Sham could have had for withholding this information other than to manufacture a claim of plausible deniability in the event that his com ­ pany was later accused of patent infringement. Nor does Sham’s testimony on this subject provide any reason to doubt that inference. Asked whether the attorney would have fared better had he known of SEB’s design, Sham was nonresponsive. All he could say was that a patent search is not an “easy job” and that is why he hired attor ­ neys to perform them. App. 112a.

Taken together, this evidence was more than sufficient for a jury to find that Pentalpha subjectively believed there was a high probability that SEB’s fryer was pat ­ ented, that Pentalpha took deliberate steps to avoid know ­ ing that fact, and that it therefore willfully blinded itself to the infringing nature of Sunbeam’s sales.

* * *

The judgment of the United States Court of Appeals for the Federal Circuit is Affirmed.

1 We refer to both petitioners as “Pentalpha.”

2 Direct infringement has long been understood to require no more than the unauthorized use of a patented invention. See Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U. S. 476, 484 (1964); 3 A. Deller, Walker on Patents §453, p. 1684 (1937) (hereinafter Deller). Thus, a direct infringer’s knowledge or intent is irrelevant.

3 For an article that is particularly clear on this point, see H. Howson, Paper before American Association of Inventors and Manufacturers, Washington, D. C., Contributory Infringement of Patents 9 (Jan. 1895) (reading late 19th-century case law to require only that a party “inten ­ tionally contribut[e] to the act, which the Court holds to be an in ­ fringement” (emphasis in original)). Other authorities from this era likewise suggest that it was sufficient if the seller intended a compo­ nent part to be used in a manner that happened to infringe a patent. See, e.g., Morgan Envelope Co. v. Albany Perforated Wrapping Paper Co., 152 U. S. 425, 433 (1894) (“There are doubtless many cases to the effect that the manufacture and sale of a single element of a combina­ tion, with intent that it shall be united to the other elements, and so complete the combination, is an infringement”); Individual Drinking Cup Co. v. Errett, 297 F. 733, 739–740 (CA2 1924) (“[B]efore one may be held for contributory infringement, it must be shown that he had knowingly done some act without which the infringement would not have occurred”); New York Scaffolding Co. v. Whitney, 224 F. 452, 459 (CA8 1915) (“Contributory infringement is the intentional aiding of one person by another in the unlawful making, or selling, or using of a third person’s patented invention”); 3 Deller §507, at 1764–1765 (“[W]here a person furnishes one part of a patented combination, intending that it shall be assembled with the other parts thereof, and that the complete combination shall be used or sold; that person is liable to an action, as infringer of the patent on the complete combination”); 3 W. Robinson, Patents §924, p. 101 (1890) (“To make or sell a single element with the intent that it shall be united to the other elements, and so complete the combination, is infringement”).

4 The earlier case of Cortelyou v. Charles Eneu Johnson & Co., 207 U. S. 196 (1907), contains language that may be read as adopting a similar position. In that case, the Neostyle Company had a patent for a “stencil duplicating machine” called the “rotary Neostyle,” and it licensed the use of its machine pursuant to a license requiring the licensee to use only Neostyle’s ink. Id., at 198. Another company, Charles Eneu Johnson & Co., sold its ink to a Neostyle licensee, and Neostyle sued the Johnson company, claiming that it was “inducing a breach of the license contracts” and was thus indirectly infringing Neostyle’s patent rights. Id., at 199. The Court held that the defen ­ dant did not have “sufficient evidence of notice” to support liability. The Court wrote: “True, the defendant filled a few orders for ink to be used on a rotary Neostyle, but it does not appear that it ever solicited an order for ink to be so used, that it was ever notified by the plaintiffs of the rights which they claimed, or that anything which it did was considered by them an infringement upon those rights.” Id., at 200 (emphasis added). The italicized language above may suggest that it was necessary to show that the defendants had notice of Neostyle’s patent rights. See also Tubular Rivet & Stud Co. v. O’Brien, 93 F. 200, 203 (CC Mass. 1898) (“a necessary condition of the defendant’s guilt is his knowledge of the complainant’s patent”).

5 Although Justice Black disagreed with the judgment and was thus in dissent, he was in the majority with respect to the interpretation of §271(c), and his opinion sets out the reasoning of the majority on this point. Three other Justices joined his opinion, and a fourth, Justice White, endorsed his reasoning with respect to the interpretation of §271(c). See 377 U. S., at 514 (White, J., concurring).

6 The doctrine emerged in English law almost four decades earlier and became firmly established by the end of the 19th century. Edwards 298–301. In American law, one of the earliest references to the doctrine appears in an 1882 jury charge in a federal prosecution. In the charge, the trial judge rejected the “great misapprehension” that a person may “close his eyes, when he pleases, upon all sources of information, and then excuse his ignorance by saying that he does not see anything.” See United States v. Houghton, 14 F. 544, 547 (DC NJ).

7United States v. Yasser, 114 F. 2d 558, 560 (CA3 1940) (interpreting the crime of knowingly and fraudulently concealing property belonging to the estate of a bankrupt debtor to include someone who “closed his eyes to facts which made the existence of” the receiver or trustee “obvious”); Rachmil v. United States, 43 F. 2d 878, 881 (CA9 1930) (per curiam) (same); United States v. Erie R. Co., 222 F. 444, 448–451 (DC NJ 1915) (approving a “willful ignorance” jury instruction to a charge that a rail carrier knowingly granted a concession to a shipper); Grant Bros. Constr. Co. v. United States, 13 Ariz. 388, 400, 114 P. 955, 959 (1911) (interpreting the crime of knowingly encouraging the importa­ tion of contract laborers to include those who “willfully and intention­ ally ignored facts and circumstances known to them, which would have led to [actual] knowledge”).

8 Unlike the dissent, we do not think that utilitarian concerns de­ mand a stricter standard for knowledge under §271(b), see post, at 3 (opinion of KENNEDY, J.). The dissent does not explain—nor can we see—why promoting “ ‘the Progress of Science and useful Arts,’ ” ibid., requires protecting parties who actively encourage others to violate patent rights and who take deliberate steps to remain ignorant of those rights despite a high probability that the rights exist and are being infringed, see infra, at 13–14.

9United States v. Pérez-Meléndez, 599 F. 3d 31, 41 (CA1 2010); United States v. Svoboda, 347 F. 3d 471, 477–478 (CA2 2003); United States v. Stadtmauer, 620 F. 3d 238, 257 (CA3 2010); United States v. Schnabel¸ 939 F. 2d 197, 203 (CA4 1991) (“The willful blindness in­ struction allows the jury to impute the element of knowledge to the defendant if the evidence indicates that he purposely closed his eyes to avoid knowing what was taking place around him”); United States v. Freeman, 434 F. 3d 369, 378 (CA5 2005); United States v. Holloway, 731 F. 2d 378, 380–381 (CA6 1984) (per curiam) (upholding jury in­ struction on knowledge when “it prevent[ed] a criminal defendant from escaping conviction merely by deliberately closing his eyes to the obvious risk that he is engaging in unlawful conduct”); United States v. Draves, 103 F. 3d 1328, 1333 (CA7 1997) (“knowledge may in some circumstances be inferred from strong suspicion of wrongdoing coupled with active indifference to the truth”); United States v. Florez, 368 F. 3d 1042, 1044 (CA8 2004) (“Ignorance is deliberate if the defendant was presented with facts that put her on notice that criminal activity was particularly likely and yet she intentionally failed to investigate those facts”); United States v. Heredia, 483 F. 3d 913, 917, 920 (CA9 2007) (en banc); United States v. Glick, 710 F. 2d 639, 643 (CA10 1983); United States v. Perez-Tosta, 36 F. 3d 1552, 1564 (CA11 1994). But see United States v. Alston-Graves, 435 F. 3d 331, 339–341 (CADC 2006).

10 The District Court did not instruct the jury according to the stan ­ dard we set out today, see App. to Brief for Respondent 26–27, and Pentalpha asks us to remand the case so it can move for a new trial. We reject that request. Pentalpha did not challenge the jury instruc ­ tions in the Court of Appeals, see Brief for Appellants in No. 2009–1099 etc. (CA Fed.), pp. 21–22, and that court did not pass upon the issue. Finding no “exceptional” circumstances in this case, we follow our usual course and refuse to consider the issue. See Youakim v. Miller, 425 U. S. 231, 234 (1976) (per curiam).

KENNEDY, J., dissenting

SUPREME COURT OF THE UNITED STATES
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No. 10–6

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GLOBAL-TECH APPLIANCES, INC., ET AL.,

PETITIONERS v. SEB S. A.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE FEDERAL CIRCUIT

[May 31, 2011]

JUSTICE KENNEDY, dissenting.

The Court is correct, in my view, to conclude that 35 U. S. C. §271(b) must be read in tandem with §271(c), and therefore that to induce infringement a defendant must know “the induced acts constitute patent infringement.” Ante, at 10.

Yet the Court does more. Having interpreted the statute to require a showing of knowledge, the Court holds that willful blindness will suffice. This is a mistaken step. Willful blindness is not knowledge; and judges should not broaden a legislative proscription by analogy. See United States v. Jewell, 532 F. 2d 697, 706 (CA9 1976) (en banc) (Kennedy, J., dissenting) (“When a statute specifically requires knowledge as an element of a crime, however, the substitution of some other state of mind cannot be justified even if the court deems that both are equally blameworthy”) In my respectful submission, the Court is incorrect in the definition it now adopts; but even on its own terms the Court should remand to the Court of Appeals to consider in the first instance whether there is sufficient evidence of knowledge to support the jury’s finding of inducement.

The Court invokes willful blindness to bring those who lack knowledge within §271(b)’s prohibition. Husak & Callender, Wilful Ignorance, Knowledge, and the “Equal Culpability” Thesis: A Study of the Deeper Significance of the Principle of Legality, 1994 Wis. L. Rev. 29, 35; see also L. Alexander & K. Ferzan, Crime and Culpability: A Theory of Criminal Law 34–35 (2009) (cautioning against the temptation to “distort” cases of willful blindness “into cases of knowledge”); G. Williams, Criminal Law: The General Part §57, p. 157 (2d ed. 1961). The Court’s definition of willful blindness reveals this basic purpose. One can believe that there is a “high probability” that acts might infringe a patent but nonetheless conclude they do not infringe. Ante, at 14; see also ibid. (describing a willfully blind defendant as one “who can almost be said to have actually known the critical facts”). The alleged inducer who believes a device is noninfringing cannot be said to know otherwise.

The Court justifies its substitution of willful blindness for the statutory knowledge requirement in two ways, neither of which is convincing.

First, the Court appeals to moral theory by citing the “traditional rationale” that willfully blind defendants “are just as culpable as those who have actual knowledge.” Ante, at 10. But the moral question is a difficult one. Is it true that the lawyer who knowingly suborns perjury is no more culpable than the lawyer who avoids learning that his client, a criminal defendant, lies when he testifies that he was not the shooter? See Hellman, Willfully Blind for Good Reason, 3 Crim. L. & Philosophy 301, 305–308 (2009); Luban, Contrived Ignorance, 87 Geo. L. J. 957 (1999). The answer is not obvious. Perhaps the culpability of willful blindness depends on a person’s reasons for remaining blind. E.g., ibid. Or perhaps only the person’s justification for his conduct is relevant. E.g., Alexander & Ferzan, supra, at 23–68. This is a question of morality and of policy best left to the political branches. Even if one were to accept the substitution of equally blameworthy mental states in criminal cases in light of the retributive purposes of the criminal law, those purposes have no force in the domain of patent law that controls in this case. The Constitution confirms that the purpose of the patent law is a utilitarian one, to “promote the Progress of Science and useful Arts,” Art. I, §8, cl. 8.

Second, the Court appeals to precedent, noting that a “similar concept” to willful blindness appears in this Court’s cases as early as 1899. Ante, at 11. But this Court has never before held that willful blindness can substitute for a statutory requirement of knowledge. Spurr v. United States, 174 U. S. 728, 735 (1899), explained that “evil design may be presumed if the [bank] officer purposefully keeps himself in ignorance of whether the drawer has money in the bank or not, or is grossly indifferent to his duty in respect to the ascertainment of that fact.” The question in Spurr was whether the defendant’s admitted violation was willful, and with this sentence the Court simply explained that wrongful intent may be inferred from the circumstances. It did not suggest that blindness can substitute for knowledge. Neither did Turner v. United States, 396 U. S. 398 (1970), or Leary v. United States, 395 U. S. 6 (1969). As the Court here explains, both cases held only that certain statutory presumptions of knowledge were consistent with due process. Ante, at 12. And although most Courts of Appeals have embraced willful blindness, counting courts in a circuit split is not this Court’s usual method for deciding important questions of law.

The Court appears to endorse the willful blindness doctrine here for all federal criminal cases involving knowledge. It does so in a civil case where it has received no briefing or argument from the criminal defense bar, which might have provided important counsel on this difficult issue.

There is no need to invoke willful blindness for the first time in this case. Facts that support willful blindness are often probative of actual knowledge. Circumstantial facts like these tend to be the only available evidence in any event, for the jury lacks direct access to the defendant’s mind. The jury must often infer knowledge from conduct, and attempts to eliminate evidence of knowledge may justify such inference, as where an accused inducer avoids further confirming what he already believes with good reason to be true. The majority’s decision to expand the statute’s scope appears to depend on the unstated premise that knowledge requires certainty, but the law often permits probabilistic judgments to count as knowledge. Cf. Connecticut Mut. Life Ins. Co. v. Lathrop, 111 U. S. 612, 620 (1884) (Harlan, J.) (“[B]eing founded on actual observation, and being consistent with common experience and the ordinary manifestations of the condition of the mind, it is knowledge, so far as the human intellect can acquire knowledge, upon such subjects”).

The instant dispute provides a case in point. Pentalpha copied an innovative fryer. The model it copied bore no U. S. patent markings, but that could not have been a surprise, for Pentalpha knew that a fryer purchased in Hong Kong was unlikely to bear such markings. And Pentalpha failed to tell the lawyer who ran a patent search that it copied the SEB fryer. These facts may suggest knowledge that Pentalpha’s fryers were infringing, and perhaps a jury could so find.

But examining the sufficiency of the evidence presented in the 5-day trial requires careful review of an extensive record. The trial transcript alone spans over 1,000 pages. If willful blindness is as close to knowledge and as far from the “knew or should have known” jury instruction provided in this case as the Court suggests, then reviewing the record becomes all the more difficult. I would leave that task to the Court of Appeals in the first instance on remand.

For these reasons, and with respect, I dissent.

Print this transcript Transcript: 

ORAL ARGUMENT OF WILLIAM DUNNEGAN ON BEHALF OF PETITIONERS

Chief Justice John G. Roberts: We'll hear argument next this morning in Case 10-6, Global-Tech Appliances v. SEB S.A.--

Mr. Dunnegan.

Mr. Dunnegan: Mr. Chief Justice, and may it please the Court:

The standard for the state of mind element for a claim for inducing patent infringement should be: Did the accused inducer have a purpose to induce a third party to engage in acts that the accused inducer knew infringed the patent?

That's what I'll call the purposeful, culpable test.

The Federal Circuit applied a standard of whether Pentalpha was deliberately indifferent to a known risk that a patent may exist.

The Federal Circuit's deliberate indifference test was not a willful blindness test.

Willful blindness would have required both an awareness of a high probability that a patent would exist and a deliberate effort to avoid learning the truth.

Justice Antonin Scalia: And that's okay, as far as you're concerned?

You would consider that comes within your first test?

Mr. Dunnegan: Your Honor, deliberate indifference would not fall--

Justice Antonin Scalia: Would not, but willful blindness would?

Mr. Dunnegan: --No, Your Honor.

Willful blindness would not fall within our purposeful, culpable test.

Justice Antonin Scalia: So even willful blindness wouldn't be enough?

Mr. Dunnegan: Willful blindness in not a purpose, Your Honor.

Justice Ruth Bader Ginsburg: You said that the particular patent -- the defendant would have to know that the device infringed the particular patent.

I think that would be a standard that would be impossible to meet.

We have to know if it was patent number, whatever it was, '312.

Mr. Dunnegan: Well, you wouldn't have to know the patent number, Your Honor, but what you would have to know is that your -- the product which you are inducing a third party to make, use, or sell would be within the scope of a -- of the claims of a particular patent.

If you don't know that, then you're literally--

Justice Ruth Bader Ginsburg: But you can keep yourself ignorant of it.

I mean, for example, you pointed out that the -- that the device that was copied was purchased in Hong Kong, so it didn't have any marking, but the same Pentalpha could have bought the device in Montgomery Ward, looked to see if it had a patent marking; didn't do that.

Mr. Dunnegan: --It didn't do that, Your Honor.

What it did was better.

It hired a United States patent attorney to conduct a search to see if there was any patent which was infringed.

Justice Ruth Bader Ginsburg: But didn't tell that patent attorney that they had reverse-engineered a particular product.

If the attorney had been told this device copied the SEB fryer, isn't it 99 and 44/100ths percent sure that the attorney then would have found this patent?

Mr. Dunnegan: We don't know, Your Honor.

We don't know why the patent search failed.

It could have failed for a number of reasons.

Justice Ruth Bader Ginsburg: But I didn't ask you about this patent search.

I said if they had told the patent attorney we have copied a particular fryer, it's SEB's fryer, now find out if it infringed any patent -- do you think an attorney would not have found the SEB patent?

Mr. Dunnegan: It's possible that he wouldn't have.

Maybe it's more probable that he would have.

There's just no evidence on that in the record, Your Honor.

Justice Antonin Scalia: Well, why -- why wouldn't you tell him?

If you're -- if you're honestly interested in finding out whether there is a patent that you're infringing, why wouldn't you tell me the reason we're concerned is that we have reverse-engineered this from somebody else's product?

Just check to see if SEB has a patent on any of this stuff that we've reverse-engineered.

That's what I would have done.

Mr. Dunnegan: Your Honor, maybe that's what you would have done.

Maybe that's what I would have done, but there's no -- but the standard of that business -- what they had done in the past was to give their design drawings to the patent attorney and say objectively check these design drawings.

Their practice was not to notify the attorney.

Justice Antonin Scalia: Was their practice to reverse-engineer from other people's products?

Mr. Dunnegan: Yes--

Justice Antonin Scalia: I mean, I can understand when you have a new product of your own; of course, you just give it to an attorney.

But when you have reverse-engineered, not to tell them that it was reversed-engineered seems to me really trying to keep yourself in the dark.

What you want to get from the attorney is a piece of paper that he can show to Montgomery Ward that, yes, this product is not -- as it turns out, Montgomery Ward did accept it and got hit with liability for infringing a patent.

I -- I find that really incredible that, in an honest attempt to find whether there was any patent infringement going on, you wouldn't even tell the patent attorney that you've reverse-engineered somebody else's product.

Mr. Dunnegan: --Your Honor, looking back at this in hindsight, there's -- there's no question that if they had to do it again, they would have taken the additional step.

But--

Justice Antonin Scalia: No, they wouldn't.

Mr. Dunnegan: --No -- well, from an objective perspective, Your Honor, if you're giving the design to the -- to the attorney and you're saying do a complete search, it seems to me that that's the antithesis of being willful blind, because you're hiring a specialist to go out and look for the answer for you.

Now, the gold standard was not met, but the gold standard would rarely be met in any of these cases.

Justice Samuel Alito: But your position is that even willful blindness is not enough.

You have to have actual knowledge that -- that the item is patented, right?

Mr. Dunnegan: That is correct, Your Honor.

Justice Samuel Alito: So if the attorney had called up your client and said, I have an answer for you, and the client said, well, you know what, on second thought, I really don't want to know, because if I -- if I have actual knowledge, that may put me in a box; so forget about it.

Then there's no liability.

Mr. Dunnegan: Well, I would disagree in that situation, because most probably the knowledge of the attorney in that situation, because he has been hired by the client, would be imputed to the client.

So I could see a different result in the hypothetical that you posited.

Justice Sonia Sotomayor: Why would we -- wouldn't the rule that you're setting forth, willful blindness not being a part of it, mean that nobody would ever get a patent search, because what would be the inducement to do that?

Mr. Dunnegan: Well, Your Honor, right now, under -- under the Seagate case in the Federal Circuit, there is no inducement to go get a patent search.

Under the Seagate decision, if a party--

Justice Sonia Sotomayor: No, but you're not presumed to copy other people's items, which is the difference.

Is there -- let me just ask you something.

Assuming we were to find the willful blindness test to actual knowledge, the facts of your case, the fact that they did not give the name of the product that they copied to their patent attorney, is that just, as a matter of law, willful blindness?

Mr. Dunnegan: --No, Your Honor, I don't think that is willful blindness as a matter of law.

Willful blindness under the -- under the Santos standard has two distinct elements.

One would be that there's a high probability that there would have been a patent on that particular product.

Justice Sonia Sotomayor: Do patents -- are patents -- can you do a patent search on the basis of the name of the holder?

Mr. Dunnegan: Yes, you can, Your Honor.

Justice Sonia Sotomayor: And the product that they copied, did it have the name of the holder of the patent?

Mr. Dunnegan: Yes, it did, Your Honor.

Justice Sonia Sotomayor: So what is the likelihood that if they had actually given the attorney the name of the product, that he would not have found the patent?

Mr. Dunnegan: We don't know for sure, but the probability would be greater than 50 percent, Your Honor.

Justice Sonia Sotomayor: I think it would be probably 90 percent, assuming -- because there's always errors in searches.

So--

Justice Anthony Kennedy: But didn't we take this case to determine whether or not deliberate indifference is the standard?

I mean, willful blindness -- I don't think an opinion for this Court has ever sustained.

Santos was a judgment -- was not a majority opinion.

That's just a subset of knowledge.

If we leave that out from it, isn't the dichotomy that you present to us the difference between deliberate indifference and knowledge or--

Mr. Dunnegan: Purpose.

Justice Anthony Kennedy: --or purposeful, culpable expression, the -- the Grokster standard?

Mr. Dunnegan: Yes.

The -- well, I think to answer the question presented in a cert petition, you really need to determine what the standard is.

Now, I think we can also decide that it should not be -- or we can agree that it should not be a deliberate indifference to a known risk that a patent exists, because that would be met in virtually every situation where there was not actual knowledge of a patent.

Justice Samuel Alito: When I look at the language of the statute, I see no scienter requirement whatsoever.

Whoever actively induces infringement of the patent -- infringement is strict liability.

So if you actively induce somebody to engage in conduct constituting infringement, you're -- you're liable as an inducer.

Mr. Dunnegan: Let me explain to you why your -- why the language of the statute should not support the interpretation which Your Honor just gave.

Let's begin with the word "induces".

"Induces" connotes some degree of intent, arguably.

Mr. Cruz agrees with that at page 20 of his brief.

If you put the word "actively" in front of the word "induces", then you have a heightened intent standard--

Justice Samuel Alito: You have intent, but intent to do what?

Mr. Dunnegan: --Exactly, Your Honor.

That brings you to the word "infringement" in the statute.

Now, I think it's critical that (b) uses the word "infringement".

It does not go back to (a) and say anyone who actively induces the making, using, selling of a patent device is an infringer.

Justice Samuel Alito: What difference does that make?

Because making, using, and selling equals infringement.

Mr. Dunnegan: Because those are the acts, Your Honor.

If Congress's intent had been to say we only want to induce acts, it would seem to me the clearest way they could say that is to say

"making, using, or selling. "

If they wanted to create a standard which was inducing the actual infringement of a patent, as opposed to the acts which constitute the infringement, then they use the word "infringement".

Justice Samuel Alito: Well, I don't see that.

And not only that, I don't understand why the scienter requirement for inducing should be higher than the scienter requirement for a direct infringement.

Isn't the standard rule for aiding and abetting that the aider and abetter -- if (b) is an aiding and abetting provision, as one of the congressional reports said, the -- the scienter for aiding and abetting is the scienter of the underlying offense?

So if the underlying offense is a strict liability offense, then the inducement should be strict liability as well.

Mr. Dunnegan: That's not necessarily clear, Your Honor.

When you look at 18 U.S.C. section 2, there's very little case law dealing with strict liability offense and inducements of those.

We have been able to identify one Sixth Circuit case from 1989 which deals with the issue, and in that case, it holds that there's actually a purpose to -- a purpose to cause the underlying crime or violation, not necessarily strict liability, not strict liability.

Chief Justice John G. Roberts: Is your--

Mr. Dunnegan: I--

Chief Justice John G. Roberts: --I'm sorry.

Mr. Dunnegan: --No, please, Your Honor.

Chief Justice John G. Roberts: Is your position when you're -- when you're talking about willful blindness or purpose, whatever, is that with respect to a particular patent, or is it with respect to infringement of a patent?

I don't think it's true with deep fryers, but in some areas, you almost always know you're going to hit something, that given the nature of the industry, you're going to infringe something.

Is that enough?

Mr. Dunnegan: If there is an area -- for example, semiconductors, where some amici have stated that there's -- there's 420,000 patents dealing with semiconductors.

And you know that, and you know that if you do virtually anything, and especially if you copy, you're going to hit a semiconductor patent owned by somebody, I think that, in that rare situation, knowledge that you're infringing someone's intellectual property rights should probably be enough of a -- of a directed intent.

If you -- that would be the basis for inferring a purpose.

But here, we have to--

Chief Justice John G. Roberts: But that's -- I mean, I understand you're in the deep fryer industry, but that standard would bring the semiconductor industry to a halt.

Mr. Dunnegan: --No.

No, Your Honor.

If you copied a semiconductor and you knew that there were 420,000 patents that were unexpired out there, that would make it -- if you didn't do your -- your diligence, perhaps--

Chief Justice John G. Roberts: I think the -- the problem is, even if you do do your diligence, given the way patents are these days, if there are 420,000, you're never going to know with any degree of comfort that you're not going to infringe something.

Mr. Dunnegan: --That is very, very true, Your Honor.

And even in the -- in the deep-fryer industry, it is going to be different, because there's very few -- I mean, compared to semiconductors--

Justice Antonin Scalia: Well, we're not going to adopt a special rule for the deep-fryer industry.

[Laughter]

Mr. Dunnegan: --Agreed.

Justice Antonin Scalia: Especially--

Mr. Dunnegan: Completely agreed.

Chief Justice John G. Roberts: But we might decide that it's more important to consider what's going to happen to the semiconductor industry in articulating our standard than what's going to happen to the deep-fryer industry.

Mr. Dunnegan: That's exactly correct, Your Honor.

[Laughter]

That's exactly correct.

And on balance -- I think there's one point that I should make sooner rather than later, and it's is the standard that I'm -- the standard that we are proposing is not unique to us.

It's the -- it's the standard that Grokster developed.

And with respect to willful blindness, we believe that the standard -- the balance was already struck, and it was struck in favor of eliminating a willful blindness standard.

I'd like to--

Justice Elena Kagan: Mr. Dunnegan, suppose I disagree with you on that, and suppose I think that actual knowledge of a patent or willful blindness as to whether a patent exists is the right standard.

Could a reasonable jury have found that in this case?

Mr. Dunnegan: --We don't think that a reasonable jury could have found willful blindness because, first of all, there wasn't a high probability that a patent would be found.

Second, we do not think that there was active--

Justice Elena Kagan: A reasonable jury couldn't have looked at the facts that Justice Ginsburg suggested -- you know, you do not tell the lawyer that you, in fact, have copied the product and say that's -- a reasonable jury -- that's willful blindness.

Mr. Dunnegan: --I don't think so, Your Honor, because what we have done in that situation was, first, we have done more than the law required.

We went out to get a patent.

We gave the lawyer our actual patent drawings and tell him to do his work.

Justice Ruth Bader Ginsburg: But if you really wanted to know, wouldn't you have gone into Montgomery Ward and bought one of the fryers and turned it around to see if it had a patent number on it?

Mr. Dunnegan: Your Honor, we have so many products that you couldn't practically expect the company to do that, I don't think.

Justice Antonin Scalia: --Listen, the -- the reason you got the opinion from the lawyer was -- was not to make sure that there were no patents.

It was to show that opinion to Montgomery Ward.

Mr. Dunnegan: But your -- your--

Justice Antonin Scalia: As a practical matter, you needed an opinion from a lawyer, because otherwise, Montgomery Ward was not going to sell this stuff.

Mr. Dunnegan: --Your Honor, I take issue with you for the following reason: I don't think there was any intention on the part of our client to -- to infringe a patent at all, because if it knew about the patent, it could have designed around it if it knew what it was doing.

There's no benefit to our client of getting Montgomery Ward or Sunbeam or Fingerhut in trouble for patenting infringement.

We really want to know what patents are out there.

Justice Ruth Bader Ginsburg: But isn't -- isn't it true that Sunbeam was the party that asked for the patent search?

Mr. Dunnegan: I don't believe that's in the record, Your Honor.

I believe the record shows that Sunbeam was given a copy of the patent search, but Mr. Sham testified -- and I believe this is about at page 50 of the joint appendix -- that the purpose of the search was to find out whether or not there was an infringement of any patent through this deep fryer.

Justice Ruth Bader Ginsburg: And there's nothing in the record that says who -- who asked Pentalpha--

Mr. Dunnegan: Not that I'm aware of, Your Honor.

Justice Ruth Bader Ginsburg: --to get -- to get a letter?

Justice Samuel Alito: If this is not willful blindness, I don't know what willful blindness is.

Now, maybe you can explain what more would have been required to permit a reasonable jury to find willful blindness.

Mr. Dunnegan: Okay.

I think you'd need two things, Your Honor.

The first that you would need is evidence that they were going to bump into a patent if they -- if they proceeded.

Is there the high probability of finding a patent?

Now, if you -- if you just consciously avoid knowledge in the absence of a high probability, that's not willful blindness.

That's not even culpable.

Justice Samuel Alito: But your client -- I don't know whether you're using your time most effectively by arguing this point, but your client thought that making a deep fryer that wouldn't burn people's hands if they touched it would be profitable, because there wasn't a lot of competition in that market.

This was a useful product and apparently one that was different from other deep fryers.

Isn't that in itself -- doesn't that in itself suggest, gee, there might be a patent on -- on this?

Mr. Dunnegan: No, I -- well, is there--

Justice Samuel Alito: One company is making this and it seems to be better than what the other companies are making; maybe it might be patented.

Mr. Dunnegan: --Your Honor, the record is that there were six or so deep fryers which were the cool-touch deep fryers which they -- which they used as references.

SEB was not the only cool-touch deep fryer that was available.

Now, to turn back to the issue of whether or not Grokster actually found that willful--

Justice Ruth Bader Ginsburg: Before -- before you pass that question, then why as in '607 did they pick the SEB fryer to reverse-engineer?

Mr. Dunnegan: --They reverse -- they looked at all of them, Your Honor.

They reverse-engineered all of them.

If you look at--

Justice Ruth Bader Ginsburg: And then they copied the design of the SEB.

Mr. Dunnegan: --Actually, Your Honor, they improved it.

There's functional features that went beyond and were better than what were in the SEB product.

For example, they used better metal to make the cast iron pan.

They put the--

Justice Ruth Bader Ginsburg: But there was a finding that it was an infringement, that the Pentalpha fryer infringed the SEB.

Mr. Dunnegan: --The jury did find that, Your Honor.

Justice Elena Kagan: Mr. Dunnegan, could I take you to the standard?

Because in Aro II we said that the appropriate standard in subsection (c) was actual knowledge.

Why shouldn't we just say it's the same?

Whether it is (b) or (c), these are just two means of -- of doing a contributory infringement, and the knowledge/willful blindness standard, once we've said it applies to (c), it applies to (b) as well?

Mr. Dunnegan: The reason that you shouldn't take the standard from (c) is because (c) deals with nonstaples and (b) deals with staples.

Someone can be liable under (b) if they -- if they sell a staple article of commerce, when they can't be libel under (c), even if they meet -- even if they meet the higher -- even they meet the state of mind element under (c), which is knowing the patent and knowing that the combination would be an infringement.

Therefore, to make sure that (b) does not swallow (c), it's very important that (b) have a higher state of mind.

Justice Elena Kagan: No, (b) and (c) have different standards as to -- not the knowledge of the patent but -- but what the person is -- the acts that constitute infringement.

But that's a different thing from whether they should have different standards as to the knowledge of the patent.

Mr. Dunnegan: Well, when you say there's different standards, the sale of an -- of a staple article under (b) in itself with a proper state of mind can be an inducement.

The sale of a nonstaple article with certain additional conditions can be a violation of (c).

The action element for (b) and (c) is -- is essentially the same for the sale of components, and it wouldn't make any sense to raise it for (b) because all you would be doing in that situation is -- is encompassing sellers that were helping their customers do business more effectively, and you wouldn't be getting any more bad guys.

The purpose of (b) is let's get the morally culpable actors.

Now--

Justice Anthony Kennedy: I had thought that you wanted us to take the knowing standard in (c) and apply it to (b).

Mr. Dunnegan: --No, Your Honor, I--

Justice Anthony Kennedy: Correct me if I'm wrong.

Justice Antonin Scalia: No, more than that.

Mr. Dunnegan: --I would think you have to go with the Grokster standard, Your Honor.

And the reason for that is, one, in Grokster you found what the state of mind standard was for inducing infringement under (b), and you moved that into the copyright law.

Then, under the--

Justice Elena Kagan: But, Mr. Dunnegan, in Grokster, there was no question as to whether they knew that the -- that the things were copyrighted.

Mr. Dunnegan: --That was conceded in that case, Your Honor.

Yes.

Justice Elena Kagan: So why is Grokster relevant here?

They conceded the very thing that we're arguing over.

Mr. Dunnegan: Well, it's -- it's -- it's relevant because it deals with the standard what is -- what is the state of mind element for inducing copyright infringement.

Justice Anthony Kennedy: And you say it's purposeful, culpable.

Mr. Dunnegan: Purposeful, culpable conduct -- yes.

Chief Justice John G. Roberts: And why is that -- how is that different from knowing?

I -- I -- my impression was the same as Justice Kennedy's.

I thought you wanted the knowing standard.

Mr. Dunnegan: Knowing, well -- the way I understand knowing, Your Honor, is that in Sony, for example, there was no liability even though Sony knew that some people were going to use the VCR to infringe copyrighted works.

That was collateral damage even though they knew it; it wasn't the basis for liability.

In Grokster, the basis for liability was even though the defendant knew that there were going to be some infringements, it couldn't be liable for contributory copyright infringement, the equivalent of 271(c), because there was substantial noninfringing uses for the Grokster software.

Grokster was -- was allowed to be found liable because the defendants had a -- a culpable objective -- they had a culpable purpose, or at least a jury could so find, that they wanted to encourage infringements.

Justice Sonia Sotomayor: --I'm -- I'm a little confused.

If you knew that there was a patent under (b), and you still gave the fryer -- patented the fryer that you know it is a patented fryer to Montgomery Ward or Sunbeam to sell, you're not liable under (b), because why?

What act of yours was not purposeful?

Mr. Dunnegan: Your Honor, I believe the first sentence of your question was if you knew that there was a patent.

Is that a hypothetical?

Justice Sonia Sotomayor: Yes.

Mr. Dunnegan: Okay.

If we knew that there was a patent and we knew the claims of the patent and we read them and we--

Justice Sonia Sotomayor: Well, we'll go as to -- let's -- let's just stop there.

Justice Kennedy and I believe the Chief have asked you, isn't your entire argument that we should move the knowing knowledge of (c) into (b)?

And you said no.

Mr. Dunnegan: --No.

Justice Sonia Sotomayor: Explain to me--

Mr. Dunnegan: Because it should be -- it should be higher.

It should be the Grokster standard of purposeful, culpable conduct.

And -- me the reason for that--

Justice Sonia Sotomayor: --Well, then explain to me--

Mr. Dunnegan: --Okay.

Justice Sonia Sotomayor: --what's not purposeful or knowing -- what's not purposeful, culpable conduct, if you know there's a patent or -- you can decide whether knowledge includes willful blindness or not, but it's not my issue.

If you know there's a patent and you give the product to someone else to sell, how can you not be culpable for it?

Mr. Dunnegan: Because, Your Honor, if -- you could or you could not be, depending on what your purpose is with respect to infringement.

If you had a legal opinion which told you that the sale of that product would not infringe the patent, then you wouldn't have a purposeful--

Justice Sonia Sotomayor: So you're introducing a mistake of law defense to knowledge.

You're saying, I really didn't know that it was unlawful.

I knew that there was a patent, but I really thought that it wasn't a legal patent, so I was going to violate what I know wasn't legal.

Is that what you're saying?

Mr. Dunnegan: --Well, not exactly, Your Honor, because if you're reaching the conclusion that the product is not within the scope of the claims of the patent, I don't think that's law.

That's fact.

The reason it's not law is that -- it couldn't be repealed.

It's -- you can't pass a law abrogating a patent.

Chief Justice John G. Roberts: Well, you're talking--

Justice Sonia Sotomayor: Why do you get off the hook for making a mistake of law?

Mr. Dunnegan: A mistake of law -- generally you don't get off the hook.

What we have here is a mistake of fact concerning the scope of the claim of the patent.

Now, granted, under--

Justice Sonia Sotomayor: You would never have any patents enforced under your theory.

Mr. Dunnegan: --Yes, we would, Your Honor.

Let's take the situation that there was a prior adjudication that the direct infringer was directly infringing.

Let's take the situation where there's going to be advertising which references the patents, as there was in Grokster and says go infringe it.

Let's take the situation where there's internal documents at the company suggesting that there is a purpose to infringe, as there was in Grokster.

Chief Justice John G. Roberts: --But if you're -- I'm sorry.

I do not want to interfere with your time.

Mr. Dunnegan: No, Your Honor.

Please.

Chief Justice John G. Roberts: I'll wait.

Mr. Dunnegan: If the Court has no further questions, I would like to reserve my time.

Chief Justice John G. Roberts: Thank you, counsel.

Mr. Cruz.

ORAL ARGUMENT OF R. TED CRUZ ON BEHALF OF RESPONDENT

Mr. Cruz: Mr. Chief Justice, and may it please the Court:

Whatever test that this Court adopts for inducing infringement, the central objective of that test will be to separate culpable bad actors from innocent corporate behavior actors.

And by any measure, Pentalpha in this case was a culpable bad actor.

In fact, we've got really extraordinary testimony in this case--

Justice Elena Kagan: So would you have any objection to an actual knowledge willful blindness standard?

Would that be all right with you?

Mr. Cruz: --I think that is one of multiple standards this Court could adopt if this Court were to adopt actual knowledge.

I do not think actual knowledge is in the statute, but if this Court were to adopt actual knowledge and conclude also that willful blindness is a long-recognized means of demonstrating actual knowledge, that would support the judgment.

Justice Elena Kagan: I take it that we would do that on the basis of Aro II?

We would just say that's the standard for (c) and that should be the statement for (b)?

Mr. Cruz: Respectfully, Justice Kagan, I don't think that would be an interpretation that is faithful to the text of 271.

There is an enormous difference between 271(c) and 271(b).

271(c) includes the word knowing.

271(b) does not include the word knowing and your question assumes essentially--

Justice Elena Kagan: Well, 271(c) includes the word knowing, you have to know that an item has no noninfringing uses.

That is a different kind of knowledge than the knowledge that we are talking about here.

Mr. Cruz: --Respectfully, in Aro II what the Court did and it was, as you know, a splintered majority in Aro II where the dissenters flipped back and forth, but with the particular paragraph that addressed the holding on what had to be demonstrated, the Court concluded that that word knowing effectively modified both the knowledge that the nonstaple article had no noninfringing use and, and that it would cause the infringement.

That is how the Court read knowing, as modifying everything that follows it in 271(c).

Justice Elena Kagan: And because of the infringement, but not necessarily that there was a patent, not necessarily the legal effect as opposed to the act.

Mr. Cruz: Well, that is necessarily part of what the Court held in 271(c).

And I would agree, this would be a very, very different case if 271(b) had the word knowing.

I mean Aro in many ways was a much easier case, but the question is do you have to demonstrate that something is knowing and the statute says it must be knowing, then that is--

Justice Stephen G. Breyer: How do you say, I am not certain that willful blindness would support the conclusion below.

The standard, the district court or the trial court said really, negligence, as I read it.

The circuit said deliberate disregard of a known risk.

Well, how much of a risk?

I mean, the business world there is always a risk and we are talking about a complicated world, probably quite a lot of risk.

And so I think that standard would create a great deal of uncertainty.

Willful blindness has a tradition.

So are you okay with willful blindness and we say we are afraid they did not do it, i.e., we are afraid, we do not know what they really meant here and so send it back and do it again.

I am sure you wouldn't be overjoyed.

But do you think that would be a reasonable result?

Mr. Cruz: --I think if the conclusion were to send it back and do it again, I don't think that would be a reasonable result.

Justice Stephen G. Breyer: What are you supposed to say known risk, sure he says he looked at five.

And he says anybody can figure this thing out, all you do is put the little gizmos between the two sides, you know, and you have an inside and outside and you just suspend the inside with little bars of some kind.

I do not know what, chewing gum or something, and he says anybody could figure that out, it couldn't possibly be bad.

And so that is their view, but how much of a risk, they will say little risk, big risk.

So you see why I think we should send it back.

Now you tell me why that is not--

Mr. Cruz: That is what they argued to the jury and that's--

Justice Stephen G. Breyer: --I am not saying they are right in that, I bet they would lose.

But my problem is do I accept the words deliberate disregard of the known risk or do I say the more traditional accompaniment to knowledge is willful blindness, which for all its obscurity, at least has a history.

Mr. Cruz: --The jury heard those arguments, the jury rejected those arguments.

The argument that was presented to the jury, although the precise words willful blindness weren't used, the argument that was presented to the jury was willful blindness argument.

Chief Justice John G. Roberts: How was the jury instructed?

Mr. Cruz: What the jury was instructed was several things and the jury instructions are at RA 26 and 27.

The jury instruction that was used, by the way, was the model jury instruction that has been used since 1998, has been unchanged and has included largely this language since 1998 over and over again.

That is the jury instruction we are dealing with.

Chief Justice John G. Roberts: I am still waiting to hear what it was?

Mr. Cruz: It is a complicated instruction, so part of what--

Chief Justice John G. Roberts: Well, I thought there was some question about that it was so low that it in effect amounted to a negligence standard.

Mr. Cruz: --That is part of the argument Pentalpha presents.

I don't believe that is accurate.

Number one, the jury was instructed that plaintiff had to prove by preponderance of the evidence that defendant actively and knowingly aided and abetting the direct infringement.

That is part of the instruction.

That they actively and knowingly.

Justice Ruth Bader Ginsburg: Where are you reading from, Mr. Cruz?

Mr. Cruz: RA 26 and 27.

It is the end of the red brief.

Justice Stephen G. Breyer: I don't think that is the part they are complaining about.

Justice Anthony Kennedy: It is in the red brief, the Respondent's brief, page 26, toward the bottom it says if you find, I have a problem that I do not know that they preserved this objection, but let's talk about what the standard ought to be.

At the bottom it says, if you find that the someone has directly infringed a patent and that the defendants knew or should have known that its actions would induce direct infringement.

So this means to me that in order to be liable for an inducement you can be liable if you knew or should have known.

Now, if we can just discuss this for a moment.

It seems to me that this is the important point in the case because if you say should have known, then you have a standard that is less than intentional for inducers.

And that means that every supplier, every business person that takes a product from a manufacturer has the duty to inquire and to find out if there is a patent.

And it is a standard that is less than intentional and that is a very substantial change or a very substantial burden to impose on those who are selling and distributing products.

Mr. Cruz: Justice Kennedy, I don't believe that is correct.

Number one, we are certainly not advocating a general burden on all producers to do a patent search.

That is not remotely the position we are presenting.

Justice Anthony Kennedy: Well, if you say should have known, that is the necessary consequence of the holding.

Mr. Cruz: What I would suggest the import of that language is, is to allow constructive knowledge.

Is to allow essentially willful blindness, which was the entire way it was argued to the jury.

Justice Anthony Kennedy: Well, as you say, willful blindness was never used really until this Court and this Court has never in a full opinion for the Court adopted it even in the criminal context.

So can we talk about knowing as opposed to should have known.

Mr. Cruz: The argument that was presented to the jury, in closing what trial counsel said and this is the trial transcript, page 929 through 31, which is not in one of the appendixes in front of you.

I apologize for that.

But what the transcript says is that Mr. Sham, the CEO, never told his patent lawyer, look, what we are doing is copying this SEB product.

What he did, I suggest to you, is he set Mr. Levy up to fail.

He set him up to fail by not telling him he had copied the product.

That was the theory that was argued as to why they should have known, because this was in effect a sham, that not telling the lawyer about the product, it wasn't an accident.

Justice Anthony Kennedy: But you're presenting to us the proposition, I take it, correct me if I am wrong, that we should write an opinion that is saying that know or should have known is the standard for an inducer.

And I question whether that is a wise interpretation and a necessary interpretation of (b), especially as we are informed through (c) as to what (b) might mean.

Mr. Cruz: Justice Kennedy, we are not proposing that, and I would say two things.

Number one, there is an entire instruction on inducement and there is also the language I read before that is part of the jury charge on inducement.

And I don't think the jury can be presumed to have only listened to one snippet of the instruction without the entire instruction.

Justice Anthony Kennedy: If we are arguing about whether or not you can protect your judgement based upon all that's in the record, I think you may have a strong point.

But I am interested in what the standard ought to be.

I'd like you to know what a properly instructed jury should be told with reference to knowledge or something less than knowledge.

Mr. Cruz: I would suggest with respect to the language knew or should have known, that if there is not an actual knowledge requirement, which in my judgment is nowhere in the statute, then you have to have something like should have known because I do not know what you alternative instruct.

If it is not actual knowledge then there is a situation where someone is allowed to have constructive knowledge.

Justice Anthony Kennedy: So you're saying that (b) should have a lesser standard of culpability than (c)?

Mr. Cruz: Absolutely.

I don't think the statute makes any sense unless (b) is understood to have a lesser standard.

Otherwise, the inclusion of the word "knowing" is given no effect.

Justice Stephen G. Breyer: The difference, they say, between (b) and (c) is that (c) applies to a person who makes some really special thing that looks like a Japanese kabuki theater costume, and it's actually made out of metal and it's really -- has a very bizarre thing, and it is only used -- good use is to do this infringing thing.

But (b) could apply to somebody who makes plastic shields.

(B) can apply that -- (b) could apply to anybody who makes anything; is that right?

Mr. Cruz: Justice Breyer, under that argument, the statute would be interpreted identically if the word (b).

And given that they added it to (c) and not to (b)--

Justice Stephen G. Breyer: Well, the argument is that the words "actively induced" are meant to be something greater than knowing, not something less than knowing.

Because otherwise, you're going to hold Aluminum Company of America, if that still exists, liable when it makes these aluminum sheets, because somebody uses an aluminum sheet apparently, et cetera.

You see the problem.

It is quite different when you make this weird kabuki-looking thing that only has one use, and they -- and that's why it should be -- it should be harder to hold that person to contributory infringement, not easier.

Now, that's their argument.

What do you say.

Mr. Cruz: --Justice Breyer, that -- that may be a reasonable policy argument.

However, that is also a reasonable policy argument for modifying A, because right now, the aluminum company is liable under strict liability for direct infringement today.

Justice Stephen G. Breyer: I'd like to get, really, an answer from you on Justice Kennedy's question, because at the moment I am not worried about your case.

You, of course, are.

I understand that.

But the -- I am worried about Alcoa or the little backyard maker of clay pots, or -- I mean, millions and millions of people make things that are used in millions and millions of ways.

And I am worried about what kind of burden we are supposed to impose on them.

I see three candidates.

One is, you're liable if you should have known.

Two is, you're liable if you consciously disregarded a -- a risk, a known risk; that is sort of like a -- you know, the Model Penal Code, sort of.

And third is willful blindness.

Is there a fourth?

And if there is not, what do you choose among those three?

No, not what you choose.

What should we choose?

Mr. Cruz: We have suggested three possible standards to be the rule in this case.

The first, the Court could choose to adopt the standard that was adopted in Grokster, and we have argued at considerable length that under the standard this Court adopted in Grokster, the plaintiffs -- the defendants, rather, would be liable and it would uphold the judgment below.

That is the broadest standard the Court could adopt.

A more narrow standard the Court could adopt is that at a minimum, willful blindness of the patented issue suffices to allow inducement liability.

That is a more narrow standard.

It would cover a much narrower universe of conduct.

It would exclude much of the conduct both Justice Breyer and Justice Kennedy are suggesting.

That is the second way this judgment could be affirmed and a more narrow rule.

The most narrow rule we have suggested this Court could adopt is in the limited circumstances when a defendant deliberately copies another commercial product, at a minimum, that defendant has an obligation to ascertain if that specific product has protected U.S. intellectual property, that it is a very minor obligation that is triggered only when you take a commercial product on the marketplace, reverse-engineer it, and copy it, because it is a situation that is highly likely to be indicative of bad conduct, to be risking a very substantial infringement of someone else's IP, and in terms of a low-cost avoider, one of the things at footnote 20 of our brief--

Justice Antonin Scalia: Wait.

Before you go -- before you go further, what if you do that, okay?

And you get an opinion from a lawyer, as they did here, saying you're not violating any copyright or any -- any patent?

Mr. Cruz: --If they had said three words differently, this would be a very, very different case.

If they had simply, in talking to their lawyer, said: We copied SEB.

Justice Antonin Scalia: Okay.

You have to tell the searcher that you copied.

Mr. Cruz: Yes.

Justice Antonin Scalia: That is part of your test, right?

Mr. Cruz: If you specifically copy a product, you have to look to see if that particular product is protected by IP.

Justice Stephen G. Breyer: So is that -- is that another standard?

Maybe that is an example of what it is to be willfully blind.

If, in fact, you go out and you copy something, it could well be patented, and you do not tell your lawyer, go look up this one, that is willfully blind.

Mr. Cruz: Well, and -- and that--

Justice Stephen G. Breyer: That is why you say they are the same.

I don't want to put words in your mouth.

Mr. Cruz: --Well, the Court could certainly craft the rule at least narrowly tailored to the facts here, which is copying.

And look, copying is not a unique problem.

It is a serious problem internationally, with U.S. intellectual property being stolen, copied, and marketed.

And if Pentalpha were to prevail, if this Court were to conclude unless you had actual knowledge, you know to a hundred percent certainty, this violates patent '312, you're immune from liability, that decision of this Court would serve as a roadmap.

Justice Anthony Kennedy: You're not immune from liability for direct infringement.

You're immune from liability, under the hypothetical, for actively inducing.

And that is where there is a very substantial policy difference.

Mr. Cruz: But, Justice Kennedy, the reason in this case why we brought a cause of action for both direct infringement and active inducing is because the argument of Pentalpha was their conduct was all overseas, and so they weren't covered by 271(a).

The entire reason for the inducing strategy is they may well prevail in another case on saying, we stole your property overseas so you can't get us for direct infringement.

And in that instance, inducing is the only way to get the actual mastermind.

I mean, that was one of the phrases Giles Rich used in defense of 271.

Justice Anthony Kennedy: So are you saying that the standard of knowledge would be the same for direct infringement as for active inducement?

Mr. Cruz: I think there is a reasonable statutory argument to be made that it is the same, namely, that it is strict liability.

We are not pressing that as the only way to prevail, but I think there is certainly a reasonable statutory argument.

Chief Justice John G. Roberts: I am a little confused about the relationship between knowledge and the Grokster standard.

You think knowledge is a more favorable standard for Petitioner than Grokster.

You're willing to accept Grokster, but not willing to accept actual knowledge.

Mr. Cruz: I do, and I will tell you why.

Because--

Chief Justice John G. Roberts: Well, before you tell me why, do you understand -- it's unfair to ask you, I guess, but I understood Petitioner to take the opposite position: That Grokster was a more favorable standard for him than actual knowledge.

Mr. Cruz: --I agree with you that is what Petitioner said here.

My understanding of Petitioner's position was the same as yours, Mr. Chief Justice and Justice Kennedy, that they are effectively requiring actual knowledge, that that's what their urging is.

Justice Elena Kagan: Why aren't you both wrong, that Grokster didn't deal with the question that we are dealing with, which was knowledge of a patent or knowledge of a copyright, that Grokster dealt with whether there was specific intent or whether there needed to be specific intent to encourage infringing acts.

That is what Grokster was about, an entirely separate question.

Mr. Cruz: Let me answer both your question, Justice Kagan, and the Chief Justice's question together.

Grokster used language about purposeful culpable conduct, but it went further.

It specified how you ascertain whether that standard is met, and it said as shown by other affirmative acts to encourage inducement.

Now, in Grokster, part of the argument Grokster made was, we do not know what copyrights are going to be violated.

We do not know what is going to be -- they made the same argument Pentalpha is making: We have no idea of any specific copyright that will ever be infringed.

They argued, we do not have actual knowledge of the specific copyrights.

And this Court said: That doesn't matter.

Justice Antonin Scalia: Well, one of the -- one of the briefs -- one of the amicus briefs in this case points out that that argument is a lot less plausible in copyright than it is in -- in patents.

It is very easy to find out whether you're infringing a copyright.

It is very difficult to find out whether you're infringing a patent, especially in the modern age of warehouse patents.

I am not sure that we -- that we want to use the same test for copyrights that we use for -- for patents.

Mr. Cruz: That policy differential -- there may well be differences between patent law and copyright law that are implicated in other cases.

Here, what occurred is an entire commercial product was copied.

It is much more akin to copyright infringement, where the entire product was copied and they just changed the cosmetic features.

Justice Antonin Scalia: Well, that's fine.

I am just -- I am just expressing reservations about your suggestion that we simply take Grokster wholesale and apply it to this situation.

Mr. Cruz: Let me be -- let me be clear, Justice Scalia.

I am not advocating this Court do so.

What I am saying is if this Court were to apply the Grokster test, we believe we prevail under it, and in fact any comparison of Grokster to Pentalpha, Pentalpha is clearly the more culpable actor.

In Grokster, the individuals violating the copyrights were the ones who made the choice to directly and deliberately violate the copyrights and Grokster simply provided the tool to do so.

Here the only bad actor was Pentalpha.

Sunbeam, Montgomery Ward, they had no idea of the infringement.

Pentalpha was the mastermind behind the entire patent violation, and in fact because of its actions procuring a right to use opinion, by keeping the relevant information from its patent lawyer, it lured, it induced Sunbeam and Montgomery Ward and Fingerhut into committing the bad act.

Justice Anthony Kennedy: Would you say, even though you -- I think you disagree with this in this case, would you say that there is a reasonable argument in our precedent for saying that the standard of knowledge under (b) should be greater than reckless disregard?

Mr. Cruz: I do not believe there is in the precedent.

For one thing, reckless disregard is the standard now.

Willfulness and recklessness are the standard right now for enhanced damages and attorney's fees; and if it were the case that every violation of 271(b) required willfulness or recklessness, it would also mean that every violation would qualify for enhanced damages or attorney's fees.

I don't think that's consistent with the statutory standard.

That's not the language Congress adopted.

Justice Anthony Kennedy: All right.

Would you say that there is substantial authority for the proposition that it should -- the state of mind should be greater than "should have known"?

Mr. Cruz: You know, I do not believe there is.

Particularly how "should have known" was used in this case, A, the jury was -- the way the jury was instructed, I would suggest it was effectively a constructive knowledge instruction.

Justice Ruth Bader Ginsburg: They're dealing--

Mr. Cruz: If you look at--

Justice Ruth Bader Ginsburg: --They're dealing with a Federal Circuit decision, they're reviewing that decision, the Federal Circuit had a formula.

It said standard is deliberate disregard of a known risk.

One thing you must surely do is to say whether that standard is right or wrong.

So the Federal Circuit, whatever the jury found, Federal Circuit said the law is that you are liable under 271(b) if you are deliberately -- if you deliberately disregard a known risk.

Is that standard the right one?

Mr. Cruz: --I agree the Federal Circuit had that language.

I would not suggest that standard was the wrong standard, but what I would say, what the Federal Circuit in fact did is it applied willful blindness.

If you look at the cases it cited, if you look at how it in fact interpreted it, although it used the deliberate indifference language, which I will concede was somewhat confusing in its reasoning.

If you look at it, it framed it as whether Pentalpha had constructive knowledge of the patent, and it then cited willful blindness cases from other circuits that focused it on actively disregarding a known risk and deliberate avoidance and consciously avoided knowledge.

All of that is willful blindness knowledge.

Justice Samuel Alito: Mr. Cruz, while we are certainly interested in what the standard should be.

But in terms of the deposition of this case, maybe you could help me with this.

The -- the instruction to which there was an objection on, 124A to -- well, wherever it is in the joint appendix -- was the newer should have known, right?

Mr. Cruz: Correct.

Justice Samuel Alito: And the objection that I see was that the words

"or should have known that their actions. "

--this is 135A of the joint appendix -- should have been stricken.

So am I right that the only issue that was preserved is the question whether actual knowledge was required?

Because that was the only -- that was what -- that was the error, the alleged error that was identified by Mr. Dunnegan.

Mr. Cruz: I agree with that entirely.

Justice Samuel Alito: So if he is wrong on that, then the judgment should be affirmed.

Mr. Cruz: I agree with that entirely, and indeed we have suggested the central issue, the question before this Court is, is there a requirement of actual knowledge of the specific patent?

And in my judgment there is no reasonable argument from the statutory language that in order to be liable under 271(b) you must specifically know to 100 percent certainty this is violating patent number 312.

That is the issue they objected.

That is the issue that has been brought before this Court.

Is--

Justice Sonia Sotomayor: --do so, because we still have to define knowledge.

If we accept that actual knowledge can have a different definition, just not the should have known definition--

Mr. Cruz: --Well--

Justice Sonia Sotomayor: --Do we have to define what knowledge -- what kind of knowledge we are talking about?

Mr. Cruz: --If it is a case that you must specifically know the specific patent, it will ensure that unscrupulous--

Justice Sonia Sotomayor: I agree.

We can say that.

But how does it help--

Mr. Cruz: --Well--

Justice Sonia Sotomayor: --the development of law for us to simply say you -- it is not so much knowledge that you have to know the specific patent by number.

Mr. Cruz: --I am going to suggest it is a binary choice.

It is either actual specific knowledge of the patent, or it is some form of "should have known" that allows constructive knowledge.

Justice Stephen G. Breyer: That is where I am.

At the moment, the should have known or willful blindness, the disregard -- the problem, and it seems like a real problem, is know what, exactly?

Well, know there is a risk.

Well, at that point half the country in the business world is very upset because there is always a risk.

Mr. Cruz: But, Justice Breyer--

Justice Stephen G. Breyer: And the other problem is if you -- as you move away from that and say, no, no, I mean a real risk -- I mean a huge risk -- I mean a risk that in fact, you almost knew that this was it -- now I can do it with my tone of voice, but I need the words to put in there that are going to calm people's fears that they are not suddenly going to be held liable because there is some fairly small risk of this.

So what words would I use?

Mr. Cruz: --In this case, you had unusual--

Justice Stephen G. Breyer: I know this case; I am not worried about.

I am worried about what I said.

Mr. Cruz: --Well, let me suggest what words you could use to resolve this case.

Because--

Justice Stephen G. Breyer: I do not want to just resolve the case.

[Laughter]

The reason we took the case is because there seemed a bunch of standards floating around.

Now I know our interests differ in this matter, but I would appreciate any help you can give me about what I am thinking now is words that will quantify the risk that you had to have known about, a risk; so that it doesn't look like some small thing that is always there that looks like some giant thing that is pretty close to actually--

Mr. Cruz: --The language that -- that was used in Santos was that willful blindness is that when a party aware of a high probability of a fact deliberately avoids learning the truth.

Justice Stephen G. Breyer: --Well, I've heard about that.

Mr. Cruz: That language would encompass this case--

Justice Stephen G. Breyer: Yes, it would.

Mr. Cruz: --And it would not bring in innocent actors.

Justice Stephen G. Breyer: --my problem, is a high probability that.

You have to be -- you have to consciously, that is the model penal code, that is the -- you know, torts -- you have to consciously disregard a high probability that this item was patented and also meet the other requirements that are part of active inducement.

That is what your thought is?

Mr. Cruz: I think that would be an acceptable test this Court could--

Chief Justice John G. Roberts: A high probability of what?

A high probability that you will infringe this -- a patent or any patent?

Mr. Cruz: --A -- with respect to what was happening here, when you copy a commercial product, there is a high probability that product is protected by a patent, and when you engage in what the district court characterized--

Justice Antonin Scalia: He is not interested in what happened here.

I mean, we are still talking about a general test.

Mr. Cruz: --I -- what I would suggest and that is one of the reasons we proffered the narrow test that is keyed on copying, because copying of completed commercial products is the most egregious.

If the Court is concerned about unintended consequences, that narrow rule is the most narrow rule.

Let -- if I could briefly suggest--

Justice Sonia Sotomayor: Forget the narrow rule.

What do you think the rule should be to articulate what Justice Breyer would like?

Mr. Cruz: --With respect, my client doesn't care--

[Laughter]

--as long as the result is at the end, the opinion is affirmed.

Justice Stephen G. Breyer: I know your client doesn't care.

But still we have to write this.

So what about the answer?

To follow it up a little bit, it is knowledge -- you're familiar with these areas, so you're helpful, and -- and it is a knowledge or a known -- or consciously disregarding a known risk where the risk consists of a high probability that that item that you are inducing to be produced will infringe a patent.

Mr. Cruz: I agree that would suffice.

With respect to why this Court should not remand, if I may very briefly make three points.

Number one, this case has been going on for 12 years.

To remand for a new trial would drag it on to more endless litigation for no purpose.

The district court observed below this case was not a close case.

It took the jury 109 minutes to resolve against Pentalpha on every single ground that was presented to it.

Number two, the jury charge that was sent to the jury was more than sufficient under any of these standards.

But number three, the alternative argument we made, there was a finding of direct infringement.

That finding of direct infringement is also supported by the damage award and that is an alternative ground to remand it.

Now, in the reply brief Pentalpha says, focuses on the same differential that the Federal Circuit did between the language of the jury charge and the language of the verdict form, but the only evidence the jury had of the number of units sold by anybody was the stipulation.

In their reply brief they say, well, there could have been some sold in Canada.

That was lawyer argument.

The only evidence, which everyone agreed, was the stipulation and if that is true that supports the damage award.

Chief Justice John G. Roberts: Thank you, Mr. Cruz.

Mr. Dunnegan, you have four minutes remaining.

REBUTTAL ARGUMENT OF WILLIAM DUNNEGAN ON BEHALF OF PETITIONERS

Mr. Dunnegan: Five points in rebuttal, I believe, Your Honor.

The first is what should the standard be with respect to willful blindness.

And I do want to call the court's attention to one sentence in Grokster appearing at page 941 of the opinion.

And it provides, this is worth reading, I believe.

If liability for inducing infringement is ultimately found, it will not be on the basis of presuming or imputing liability, excuse me, fault, but from inferring a patently illegal objective from statements and actions showing what that objective was.

Now, in the context of an amicus brief from the solicitor general in that case suggesting a willful blindness standard, it seems to me that that language is a rejection of imputing a willful blindness standard.

Justice Samuel Alito: So you want actual knowledge of the patent?

That is your test?

Mr. Dunnegan: The test that we are looking for is the Grokster test.

Is there purposeful, culpable conduct.

Justice Samuel Alito: Do you want actual knowledge of the patent?

Mr. Dunnegan: Yes, Your Honor.

Justice Samuel Alito: And that is the issue you preserved with your objection?

Mr. Dunnegan: Not precisely.

We preserved other issues beyond that.

We preserved both the jury charge by objecting at 135A of the joint appendix and we objected to the judgment as a matter of law motion by making it and saying specifically there is no evidence here that there was actual knowledge of the patent before April 9th of 1998.

Now--

Justice Ruth Bader Ginsburg: And after that date you admit you -- because you continued to sell the product to the retailers?

Mr. Dunnegan: --Yes, Your Honor.

Justice Ruth Bader Ginsburg: So after Sunbeam sued, then you are actively inducing infringement?

Mr. Dunnegan: No, Your Honor.

At that point we have actual knowledge of the patent and the analysis has to go to what was our purpose.

For the bulk of that period of time, we had a legal opinion from a very competent New York City lawyer stating that we did not infringe.

And the jury, I guess the second point I was trying to make is the jury never evaluated any standard higher than new or--

Justice Ruth Bader Ginsburg: I thought that opinion was after the first finding of infringement, that you redesigned the product and that, the evidence you got dealt with the redesigned products.

Mr. Dunnegan: --I believe your timing is correct, Your Honor.

The--

Justice Ruth Bader Ginsburg: But after just originally, Sunbeam is suing for infringement.

Sunbeam notifies Pentalpha.

At that point, Pentalpha is continuing to make sales.

Is it infringing?

Is it actively inducing infringement.

Mr. Dunnegan: --That is a question of fact, Your Honor.

The jury resolved it against us, but the point I was trying to make is that for some period of time after that we had a legal opinion saying we did not infringe and we believe that legal opinion from the New York City attorney would prevent or should prevent, as a matter of fact, a finding of purposeful, culpable conduct.

Now, the second standard I wanted to address was--

Justice Ruth Bader Ginsburg: You admitted there was purposeful, culpable conduct when you did not, when you had the original design and that was, and you were sued for actively inducing infringement of that design, by that design.

Mr. Dunnegan: --No, Your Honor.

We would never concede that we were purposefully--

Justice Ruth Bader Ginsburg: But you think a jury could have found that from the facts?

Mr. Dunnegan: --Yes.

We are not seeking judgment as a matter of law for any claims that arose after April of 1998 when we had actual knowledge of the patent, only before we had actual knowledge of the patent are we seeking judgement as a matter of law.

Now, going to the issue of whether willful blindness could be found by the failure of someone to tell the patent attorney that there was a copying--

Justice Sonia Sotomayor: I am sorry.

Why are you doing that?

I thought that you came in arguing that you have to have actual knowledge of the patent.

Mr. Dunnegan: --Yes, Your Honor.

Justice Sonia Sotomayor: By number, and that was the conversation we had earlier, and that the patent covered the scope of your invention.

Mr. Dunnegan: Yes, Your Honor.

That's our primary argument, but if the court were to adopt willful blindness as being enough, then I would question whether or not simply not telling the patent attorney what references were used or even which ones were copied would be enough.

Because in that situation, the company has taken an effort to find out what the truth is and it simply failed to meet the gold standard in meeting that obligation.

Chief Justice John G. Roberts: Thank you, counsel.

The case is submitted.

Print this transcript Transcript: 

Justice Alito: This case involves a question of patent laws specifically the intent that is quite -- required for a violation of the provision of the Patent Act which prohibits a party from actively inducing another party to commit infringement.

The petitioners in this case whom we will call Pentalpha argue that a party cannot be held liable unless the party has actual knowledge that the induced acts will constitute infringement which requires knowledge of patenting question.

The Federal Circuit on the other hand, held that it is enough if a party should've known that the induced acts will constitute infringement.

Now, the facts of the case are relatively simple.

The respondent in this case, SEB, designed a cool-touch deep fryer and obtained a U.S. patent.

Now this product as the name suggests was a deep fryer manufactured for home use with an exterior that would remain cool when it was touched during operation even though the oil inside was boiling.

This was a successful product and Pentalpha decided to copy it and produce it for sale in the United States.

It could've sent somebody to any store in the United States where this was sold to look at the SEB fryer and see that whether there was a U.S. patent label on the back but it didn't do that.

It purchased one of the SEB fryers in Hong Kong knowing that a product manufactured for sale outside the United States would be unlikely to have a U.S. patent label and sure enough, this product did not have a U.S. patent label.

It then copied the SEB fryer in all respects other than some cosmetic respects and prepared to market it in the United States.

But before it did that, it hired a lawyer in the United States to do a patent search.

It failed to tell the lawyer one very important fact, namely that it had copied the SEB fryer.

Now, had it done that, presumably, the lawyer would've found the SEB patent.

But without that information, the lawyer did not find the patent and sent a letter to Pentalpha saying that its product would not infringe a U.S. patent.

Now, turning back to the legal issue in the case, the -- the Federal Circuit, we hold, went too far in concluding that it is enough if a party should've known that the acts induced would constitute infringement.

Based largely on this Court's decision in the 1964 case called Aro II, we hold that the statutory provision in question here requires knowledge that the induced acts constitute infringement but we also hold that an old and sensible doctrine called the doctrine of willful blindness applies.

This doctrine means that a party who may be liable if it knows a fact, cannot escape liability by deliberately taking acts to shield itself from direct actual knowledge of facts that it knows are very likely to be true, and that is exactly what happened here.

This case really provides a textbook example of willful blindness.

And we therefore hold that Pentalpha was properly held libel for inducing infringement.

The judgment of the Federal Circuit is therefore affirmed.

Justice Kennedy has filed a dissenting opinion.