May 31 (Bloomberg) -- The U.S. Supreme Court, in a decision limiting the rights of some patent holders, upheld a $5 million award against a home appliance maker for persuading retailers to sell a copycat version of an SEB SA deep fryer.
The 8-1 ruling set a high bar for claims that one company induced another to infringe a patent, while saying SEB met that standard in its suit against Hong Kong-based Global-Tech Advanced Innovations Inc. The majority said the patentholder must prove the defendant knew about the infringement or at least was “willfully blind” to it.
The ruling will help companies that make mobile phones or design software, said Edward Reines, a patent lawyer with Weil Gotshal & Manges. Because those products can be used in a “gazillion ways,” including some that would infringe a patent, manufacturers were at risk of liability when they encouraged customers to use various features, Reines said.
“This is a big deal,” said Reines, who filed a brief on behalf of companies including Red Hat Inc., General Motors Co., Yahoo! Inc., EBay Inc. and Hewlett-Packard Co. “In a world with products that are so versatile and flexible, a higher standard to prove inducement of infringement makes sense.”
The case divided businesses along what have become familiar lines in patent cases -- with large technology companies including Google Inc. and Microsoft Corp. urging limits on infringement suits, and the drug industry arguing for robust patent protection.
Global-Tech’s Pentalpha unit sold deep fryers to compete with ones sold under the T-Fal name by SEB, a home appliance maker based in Aix-en-Provence, France. A jury found that Pentalpha directly infringed the patent and also caused infringement by customers Montgomery Ward and Fingerhut.
A U.S. appeals court upheld the jury finding last year, saying Pentalpha had a “deliberate indifference” as to whether its fryers would infringe the SEB patent.
Writing for the Supreme Court, Justice Samuel Alito said the lower court standard made it too easy for patentholders to win suits alleging inducement to infringe.
At the same time, Alito said SEB met the Supreme Court’s new standard. SEB proved to a jury that a Global-Tech unit “took deliberate steps to avoid knowing” that it was selling a knockoff version of a patented SEB fryer, Alito wrote.
In developing its fryer, Pentalpha bought an SEB fryer in Hong Kong and copied its “cool touch” features, Alito said. Pentalpha never told its lawyer that it had copied the design, and the lawyer later issued a written opinion that the fryer didn’t violate any of the patents he had uncovered, Alito said.
Justice Anthony Kennedy was the lone dissenter.
The case is Global-Tech Appliances v. SEB SA, 10-6.
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