Inducement theory, Patent liability
Sturm College of Law
This article proceeds in four parts. In Part II, I describe the primary theories of infringement: direct infringement, inducement and contributory infringement. Part II highlights two important characteristics of each of these theories-the intent required to commit infringement and the presence or absence of express territorial limitations. In short, direct infringement is a strict liability offense that only applies to conduct in the United States. Inducement requires the intent to infringe and has no territorial limitation. And contributory infringement requires the intent to infringe, but only applies to acts committed in the United States.
In Part III, I explain how an expansive theory of inducement has emerged in the case law. Under this theory, inducement captures both overseas conduct and conduct that has been typically considered direct and contributory infringement. Thus, inducement has now been interpreted to cover making and selling infringing products or material components of infringing products overseas. Part III also provides a critical analysis of the case law and suggests that the district courts have prematurely adopted the expansive theory of inducement without considering important doctrinal issues.
In Part IV, I go on to discuss unconsidered policy issues associated with the expansive theory of inducement. In particular, Part IV explains how the theory leads to inequitable cross-border results. When a company makes or sells an accused product in the United States, the company is accused of direct infringement under § 271(a) and is judged by a strict liability standard. However, if that same company were to make or sell the same product abroad, the patent holder must pursue a charge of inducement because of the territorial limitations found in § 271(a). Since inducement requires intent, proving foreign infringement is far more difficult.
In Part V, I offer three alternate proposals that would each bring coherence to the law. To the extent that the United States wishes to impose liability on such foreign conduct, I suggest that Congress amend § 271(a) and (c) and broaden their territorial limitations to encompass this conduct. This proposal would level the playing field by making the scienter requirement the same regardless of where the infringing conduct takes place. However, if this country does not seek to enforce its patent laws on foreign conduct, I suggest that Congress amend § 271(b) to add a territorial limitation to the statute. This proposal would limit the reach of U.S. patent laws and eliminate the problem of discriminatory treatment. Finally, I offer a compromise approach. I suggest that inducement could be limited so that it does not encroach on the other two infringement theories. This proposal is not entirely satisfactory because the laws would reach abroad to capture some categories of infringing conduct and exclude others. However, the advantage of this approach is that U.S. patent law would no longer discriminate against domestic conduct. To the extent that the laws operated extraterritorially, they would treat foreign and domestic acts of infringement equally. Moreover, this solution does not depend on congressional action. Relying on the presumption against the extraterritorial application of U.S. patent law, courts could simply interpret §271(b) more narrowly.
Bernard Chao, Reconciling Foreign and Domestic Infringement, 80 UMKC L. REV. 607 (2012).
Originally published as Bernard Chao, Reconciling Foreign and Domestic Infringement, 80 UMKC L. REV. 607 (2012). Copyright is held by the author. User is responsible for all copyright compliance.