DSU Medical Corporation et al. v. JMS Co., Ltd., ITL Corporation PTY, LTD. et al.

*  Inducement of infringement under 35 USC 271(b) requires proof that the accused “actively and knowingly aid[ed] and abet[ed] another’s  direct infringement.”

DSU sued JMS, a Japanese medical supply business and ITL, a maker of syringe needle guards for JMS, at the U.S. District Court for the Northern District of California for infringing DSU’s patent claims to a plastic needle guard.  A jury awarded over $5,000,000 damages for infringement against JMS and Judge Lowell Jensen found non-contributory infringement by ITL.  DSU, JMS and ITL appealed various holdings to the Federal Circuit.

A Federal Circuit panel affirmed.  The court en banc reviewed whether “specific intent and action to induce infringement” was proven by the plaintiff, after a concern was raised about conflicting precedent from earlier decisions.  The court explained that under the “inducement rule” a party is “liable for the resulting acts of infringement by third parties” if  the “entity offers a product with the object of promoting its use to infringe, as shown by clear expression or other affirmative steps taken to foster infringement” such “as advertising an infringing use or instructing how to engage in an infringing use…”  In this case, ITL escaped contributory infringement by producing evidence that ITL believed that its product did not infringe.

This case reaffirms that a plaintiff must prove direct infringement, no substantial non-infringing uses of the supplied product, knowledge of the asserted patent, and intent, in order to win an inducement of infringement case.

Microchip Technology Incorporated v. The Chamberlain Group, Inc.

Decided March 15, 2006
Judge Lourie with Judges Rader and Linn

*           A concern that customers may be sued for infringement does not satisfy the “reasonable apprehension” test to establish jurisdiction for a declaratory judgment action against a patentee.

Microchip sued Chamberlain at the U.S. District Court for the District of Arizona for declaratory judgment that Chamberlain’s patent claims to garage door openers with self-learning security code software are invalid and non-infringed by Microchip’s customers.  Judge Susan Bolton held the claims invalid and infringed.  Chamberlain appealed to the Federal Circuit.

The Federal Circuit vacated and instructed the district court to dismiss because Microchip had no “adverse legal interest” to support jurisdiction.   The Federal Circuit explained that Microchips “economic interest alone (in customers who purchased chips for door openers), … cannot form the basis of an ‘actual controversy’ under the Declaratory Judgment Act.” 

Initiating or avoiding legal confrontation over patent rights requires knowledge of what it takes to establish jurisdiction for declaratory judgment.  Having a customer sued over use of your product is not enough to establish jurisdiction.  The Federal Circuit pointed out that a seller can establish jurisdiction if the seller is “potentially an inducer of infringement and it indemnified its customer against liability as well.”