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

PETITIONER: Global-Tech Appliances, Inc.
RESPONDENT: SEB S.A.
LOCATION: U.S. District Court for the Southern District of New York

DOCKET NO.: 10-6
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Federal Circuit

CITATION: 563 US (2011)
GRANTED: Oct 12, 2010
ARGUED: Feb 23, 2011
DECIDED: May 31, 2011

ADVOCATES:
R. Ted Cruz - for the respondent
William Dunnegan - for the petitioners

Facts of the case

French-based SEB S.A. sells home cooking products in the United States through an indirect subsidiary, T-Fal Corp. SEB owns a patent for a type of deep fryer with an inexpensive plastic outer shell. The improvement of the patent was to separate the shell from the fryer pan to allow for the less expensive material. Hong Kong-based Pentalpha Enterprises, a subsidiary of Global-Tech Appliances, a British Virgin Islands corporation, began selling its deep fryers to Sunbeam Products Inc. in 1997. The company developed the product after purchasing an SEB deep fryer and copying its features. Though Pentalpha solicited and received a "right-to-use study" from a U.S. attorney citing no infringement of any patent, the company had failed to notify the attorney of the copying. SEB filed a lawsuit against Sunbeam and the companies settled. Though Pentalpha was aware of that litigation, it subsequently sold the same deep fryers to Fingerhut Corp. and Montgomery Ward & Co. In 1999, SEB sued Montgomery Ward, Global-Tech, and Pentalpha for infringement in the U.S. District Court for the Southern District of New York, which ruled against Pentalpha. In February 2010, the U.S. Court of Appeals for the Federal Circuit affirmed the district court decision and further held that "deliberate indifference" to potential patent rights satisfies the knowledge requirement for induced infringement.

Question

Does induced infringement under the patent clause require knowledge that the induced acts constitute patent infringement?

Media for Global-Tech Appliances, Inc. v. SEB S.A.

Audio Transcription for Oral Argument - February 23, 2011 in Global-Tech Appliances, Inc. v. SEB S.A.

Audio Transcription for Opinion Announcement - May 31, 2011 in Global-Tech Appliances, Inc. v. SEB S.A.

Samuel A. Alito, Jr.:

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.

Sarah from Law Aspect

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