Justices Revive Massive Verdict Against Cisco

WASHINGTON (CN) - Reinstating a $63 million verdict, the Supreme Court held Tuesday that Cisco Systems cannot use its belief that certain patents were invalid to resist claims of having induced their infringement.

Commil USA brought the federal complaint at hand in August 2007, accusing Cisco of infringing on its patent for Wireless Private Branch Exchange (WPBX) and Communicating Between Mobile Units and Base Stations.

Though a jury in Marshall, Texas, awarded Commil $3 million for direct infringement in May 2010, Commil failed to convince the same jury that Cisco induced infringement.

Commil fared better with its inducement claims in an April 2011 retrial, obtaining a $63 million verdict, but the Federal Circuit upended that verdict based on its finding of an erroneous instruction given to the jury regarding indirect infringement.

Two members of that three-judge panel dissented in part, and several judges dissented last year as well when the court refused to consider the case en banc.

The Supreme Court agreed in December to consider "whether a good-faith belief that a patent is invalid is a defense to inducement liability under Section 271(b)" of Title 35.

It held Tuesday that the defense is not available.

"Because infringement and validity are separate issues under the [Patent] Act, belief regarding validity cannot negate the scienter required under §271(b)," Justice Anthony Kennedy wrote for the court.

While Justices Ruth Bader Ginsburg, Samuel Alito, Sonia Sotomayor and Elena Kagan joined the ruling in full, Justice Clarence Thomas joined only as to the opinion's last five pages.

Kennedy emphasized that the Patent Act and case law before its passage holds that a patent is "presumed valid."

"Allowing this new defense would also undermine a presumption that is a 'common core of thought and truth' reflected in this court's precedents for a century," Kennedy wrote.

The majority also enumerated the "negative consequences" that could develop from creating a defense of belief in invalidity.

In addition to rendering "litigation more burdensome for everyone involved," Kennedy predicted an increase in discovery costs and issues for the jury to resolve.

Though frivolous suits from patent trolls are on the rise, Kennedy said the courts already have means to curb that behavior.

Chief Justice John Roberts joined a dissent by Justice Antonin Scalia that emphasizes that valid patents alone confer the exclusive right to practice a claimed invention."

"It follows, as night the day, that only valid patents can be infringed," Scalia wrote. "To talk of infringing an invalid patent is to talk nonsense."

"Because only valid patents can be infringed, anyone with a good-faith belief in a patent's invalidity necessarily believes the patent cannot be infringed," he added (emphases in original). "And it is impossible for anyone who believes that a patent cannot be infringed to induce actions that he knows will infringe it. A good-faith belief that a patent is invalid is therefore a defense to induced infringement of that patent."

Justice Stephen Breyer took no part in the court's consideration or decision of the case.

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