#16480 - Secondary Liability And Remedies - Intellectual Property (IP) Law

24. Secondary Liability and Remedies

Secondary Liability/ Indirect Infringement

MML 384-94, 723-48, 811-23, 1044-54; 35 U.S.C. § 271(b)-(c); 17 U.S.C. § 512,(c)

• Mostly would be better to sue the infringer, but direct liability may be difficult to monitor, expensive, may be suing customers, brings uncertainty

• For: can only fully protect creator if there is liability, incentive to create

• Against: Society benefits may exceed someone’s right to go after indirect liability

  • Unclear on when does it stop, what are the limits and boundaries of indirect liability

  • May deter good things, e.g. new technologies

Patent P.384-94

• Previously aiding and abetting 1952 Act splits into 2 types:

• (a) Contributory Infringement

  • 35 USC §271(c)

    • “Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.”

      • (1) component

      • (2) materiality

      • (3) knowledge requirement

      • (4) uses for component

  • C.R. Bard, Inc. v. Advanced Cardiovascular Systems, Inc. (Fed. Cir. 1900)

    • Facts: P argues that D’s medical system is adapted for use by a surgeon in a surgery in a manner that infringes its patented medical treatment therefore D is a contributory infringer + actively induces infringement of P’s patent

      • Patentee didn’t sue direct infringer are a group of doctors, but the manufacturing company, as it is easier and look better + statutory exemption that sergeants cannot be used for employing certain medical methods.

    • Rule: 35 USC s.271(c) liable as a contributory infringer if:

      1. sells a component of a patented machine,

      2. constituting a material part of the invention,

      3. knowing it would be adapted for use in an infringement, and

         • limit liability to prevent a lot of third party to be directly liable

         • some may not have constructive knowledge

      4. no substantial non-infringing use

         • also, if there are no other real use for it, infer intent

    • Issue: whether the ACS catheter has no use except through practice of the patented method

    • Held: multiple ways to use substantial non-infringing uses for the ACS catheter D not liable for contributory infringement reversed summary judgment finding ACS a contributory infringer under § 271

(b) (Active) Inducement

• 35 USC §271(b) “Whoever actively induces infringement of a patent shall be liable as an infringer.” S.271(b) Elements:

  1. Intent (can be circumstantial), and

  2. Providing instructions (or otherwise aiding)

• Global-Tech Appliances, Inc. v. SEB S.A (Supreme Court 2011)

  • Facts: SEP patented its deep fryer in the US Pentalpha developed for and sold to Sunbeam a deep fryer (by copying the SEB) in HK Sunbeam resold in the US SEB sued. Pentalpha argues it has no actual knowledge of infringement to “induce”

  • Held: Tightened intent requirement:

    • Willful blindness is sufficient

      1. D must subjectively believe that there is a high probability that a fact exists and

      2. D must take deliberate actions to avoid learning of that fact

    • S.271(b) requires knowledge that the induced acts constitute patent infringement

    • Deliberate indifference to a known risk that a patent exists is not appropriate standard under s.271(b)

    • Willful blindness is just as culpable as actual knowledge

  • S.271(b) Elements:

    1. Intent (can be circumstantial), and

       • Intent that there is a specific patent (not just specific intent to do the actions)

       • Willful blindness would suffice:

         • Sufficient evidence showing knowledge of patent itself + infringing it

         • D objective believe that there might be an infringement + deliberate action to avoid learning that fact

         • Knowing it exists + chance that there might be a patent

       • contributory infringer knew that he was causing another person to engage in something was both patented and infringing

       • "willful blindness: defendant

         • (1) "subjectively believe[s] that there is a high probability" that a patent exists and that the defendant's acts infringe that patent; and

         • (2) "take[s] deliberate actions to avoid learning" about those facts.

    2. Providing instructions (or otherwise aiding)

  • S.271(c) explicitly tell knowledge requirement active inducement and

  • contributory infringement was together should read them the same

• Rubrics cube case: method and instructing people would count

• But must be active: not just to publish info about patent, or failure to prevent

Copyright P.723-48

Legislative history of indirect copyright liability

• Pre 1976 Act

  • May 31, 1790 Act §6 “Any person or persons who shall print or publish any manuscript, without the consent and approbation of the author or proprietor thereof . . . shall be liable to suffer and pay to the said author or proprietor all damages occasioned by such injury.”

    • 19^th century: Court introduced “tort” “joint tort feasors” “joint liabilities”

  • 1909 Act §1 “Any person entitled thereto… shall have exclusive right: (a) to print.. the copyright work”; §101 “If any person shall infringe the copyright in any work protected.. such person shall liable: (a) to an injunction”

• Early 20^th century: Copyright liability: copyright infringement is a tort court look to general principles of tort liability in determining the scope of indirect copyright liability

  1. Respondeat Superior: Employers liable for infringing acts of their employees (even without express authority or even against orders)

  2. Vicarious Liability: Liability extended to those who profit from infringing activity where an enterprise has the right and ability to prevent infringement. 2 elements: (1) third party right and ability to supervise; and (2) direct financial interest

  3. Contributory liability: one who, with knowledge of the infringing activity, induces, causes or materially contributes may be held liable as a contributory infringer

• 1976 Act:

  • § 106 “the owner of copyright… has exclusive right to do and to authorise any of the following: (1) to reproduce the work”

    • Use of the phrase “to authorise” is intended to avoid any questions as to the liability of contributory infringers

  • § 501 “anyone who violates any of the exclusive rights of the copyright owner… is an infringer of the copyright”

    • A well-established principle of copyright law is that a person who violates any of the exclusive rights… is an infringer, including persons who can be considered related or vicarious infringers

  • 1976 affirmed 2 types of liabilities:

  1. Vicarious liability

     1. Right and ability to supervise the infringing activity

     2. Holds a direct financial interest in infringement

     3. No need for actual knowledge

     4. Not just an employee/employer relationship

  2. Contributory Infringement

     1. Knowledge of infringing activity (knowledge of specific instances of infringement)

     2. Induces causes or materially contributes to direct infringing acts

Contributory Infringement: P.727

• Sony Coporation of America v Universal City Studio, Inc. (Supreme Court 1984)

  • Facts: a group of movie studios sued the maker of video cassette recorders (VCRs) for contributory copyright infringement because consumers bought VCRs and used them to tape movies and other programming broadcast by TV stations.

    • Prof: since end users of VCR are infringers, difficult to sue

  • Held: for D reversed CA’s judgement

    • One who supplies the way to accomplish an infringing activity and encourages that activity through advertisement is not liable for copyright infringement.

      • If product capable for non-infringing uses, not liable even if it is widely used for infringing uses

    • Court must balance the encouraging and rewarding of authors to create new works with the public good

    • The only contact is between D and VTR users, at the moment of sale

      • no precedent for imposing vicarious liability on the theory that D sold VTRs with constructive knowledge that its customers might use the equipment to make Unauthorised copies of copyrighted material

      • selling copying equipment doesn’t constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes, or actually, is merely capable of substantial non-infringing uses

      • A large portion of the public’s use of VTRs does not implicate copyright; and time-shifting (most common use) constitutes a fair use

    • Not court’s job to apply laws that have not yet been written

  • Dissent: majority is deferring to congressional action in face of major technological advancements court is evading hard issues when they arise in the area of copyright law

    • Test for indirect liability for copyright infringement: based on whether the primary use of technology is infringing.

    • Which D would have prevailed, given majority’s determination that the predominant use of VTRs (time-shifting) constituted fair use.

  • Prof: both patent law is designed to protect incentive of the owner, and to stop others from using the creation in another way (similar to Copyright law that doesn’t want to prevent dissemination of creative work)

• Napster’s Peer-to-peer network technology case [P.734]:

  • Facts: Napster centrally kept an index of users user send query to Napster Napster send location of the song request song from Peer to Peer requestor gets copy of song from its peer Records sued Napster for contributory infringement

  • Held for P: D’s direct knowledge of copyright infringement by users of its...