February 13th, 2018
When patent infringement is determined, 35 U.S.C. § 284 permits courts to “increase the damages up to three times the amount found or assessed.” In Halo Electronics, Inc. v. Pulse Electronics, Inc., 136 S. Ct. 1923 (2016), the Supreme Court held that such enhanced damages are “designed as a ‘punitive’ or ‘vindictive’ sanction for egregious infringement behavior.” Id. at 1932. Examples of egregious behavior include behavior that is “willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate.” Id.
For a finding of willful infringement, the defendant’s knowledge of the patent is a prerequisite. WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1341 (Fed. Cir. 2016). But what about enhanced damages against a direct infringer who deliberately avoided having actual knowledge of the patent? More particularly, to paraphrase the Supreme Court, what about the so-called “willfully blind” defendant who takes deliberate actions to avoid knowing a high probability of direct infringement, and who can almost be said to have actually known the critical facts relating to such infringement? Does such “willful blindness” suffice for the finding of egregious behavior necessary for an award under 35 U.S.C. § 284?
The U.S. District Court for Delaware recently held that willful blindness alone is not sufficient for proving the egregious behavior required to support enhanced damages under 35 U.S.C. § 284. See Ansell Healthcare Prods. LLC v. Reckitt Benckiser LLC, No. 15-cv-915-RGA, 2018 U.S. Dist. LEXIS 14569 (D. Del. Jan. 30, 2018). However, the court held that willful blindness could be used to establish actual knowledge of the patent that is prerequisite to a finding of willfulness. Id. at *13.
The concept of “willful blindness” was previously considered by the Supreme Court in the context of indirect infringement of a patent. In Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 769 (2011), the Court found a defendant’s willful blindness adequately substituted for the knowledge requisite of inducement infringement under 35 U.S.C. § 271(b). Specifically, a defendant’s willful blindness to the consequences of its inducing acts can satisfy § 271(b)’s requirement that the defendant know that acts induced by the defendant constitute patent infringement. Id. The Supreme Court allowed this substitution for actual knowledge under the “rationale … that defendants who behave in this manner are just as culpable as those who have actual knowledge.” Id. at 766.
In Ansell, the plaintiff claimed that the defendant infringed four of the plaintiff’s patents by importing, selling, or offering for sale Durex RealFeel® condoms. Ansell, 2018 U.S. Dist. LEXIS 14569, at *2. Because the defendant’s affiliates had previously been sued for infringement in Australia on a counterpart to the U.S. patents, the plaintiff asserted that the defendant either had actual notice of the U.S. patents or had been “willfully blind” thereto. Id. at *14. The plaintiff also argued that the defendant’s willful blindness constituted egregious infringement behavior and entitled the plaintiff to enhanced damages. Id. at *19, 20. The defendant moved for summary judgement arguing that willful blindness alone does not constitute egregious infringement behavior. Id. at *1.
In considering the defendant’s motion for summary judgment, the court in Ansell determined that the doctrine of willful blindness articulated in Global-Tech was applicable to a willfulness determination in direct infringement cases. Id. at *16, 17. The court found that willful blindness can substitute for actual knowledge of the patent in determining whether a defendant’s direct infringement was willful. Id. at *17, 18. As an example, the court suggested that “a defendant’s willful blindness to a patent covering a product that it copies and then sells could satisfy the knowledge requirement for willful infringement, because the defendant’s willful blindness demonstrates the same level of culpability as if the defendant copied the product with actual knowledge of the patent covering that product.” Id. at *18.
However, the court determined that Halo requires the plaintiff to identify evidence beyond pre-suit knowledge of the patent to show egregious infringement behavior. Id. at *16 (citing Halo, 136 S. Ct. at 1936 (Breyer, J., concurring)). In view of Global-Tech and Halo, the court found that willful blindness can only substitute for actual knowledge and cannot substitute for the egregious infringement behavior necessary for enhanced damages. Id. at *17, 18.
At oral argument, the plaintiff in Ansell conceded that its evidence at most established defendant’s knowledge of the patent rather than egregious infringement behavior. Id. at *20. Therefore, the court granted the defendant’s motion for summary judgment on the issue of willful infringement. Id. at *22.
Takeaway: Litigation against a client’s affiliate on a foreign patent related to the U.S. patent may result in actual knowledge of the U.S. patent being imputed to the client under the doctrine of willful blindness. Such willful blindness can substitute for actual knowledge of a patent in direct infringement cases, but willful blindness alone does not constitute egregious infringement behavior sufficient to support an award of enhanced damages.