A patent only protects an invention within the jurisdiction that issued it. So a US patent can only be enforced within the United States. This simple fact has led many companies to try to circumvent patent protection by designing and producing a product that would infringe on a US patent in another jurisdiction, and then using a third-party to distribute the product in the United States.
By designing and manufacturing offshore in a jurisdiction where the invention is not patented, a company is not directly infringing the US patent. Only the third-party distributing the product is liable for direct infringement. However, the third-party is often a shell with no assets, a relatively unsophisticated middleman, or an important customer that the holder of the infringed patent is unlikely to sue.
Inducement of infringement provides a way to hold a company accountable for activities that are calculated to infringe a valid patent. In simple terms, the patent holder charges the company with getting someone else to infringe. This is often critical in joining the real perpetrator of the infringement to a lawsuit. The theory provides a cause of action against a company that has not directly infringed a patent, but enabled the third-party to infringe.
However, the legal standard for inducement of infringement is that the perpetrator had knowledge of the infringement. Unfortunately, there is rarely a smoking gun showing knowledge of infringement. It is very difficult to prove that someone knew of a patent. And the most notorious manufacturers of knock-off products are very careful to make sure there is no record of knowledge of a patent, or at least no evidence that is discoverable by a US court.
As a result, the Supreme Court has established a "Willful Blindness" test to determine if an alleged inducer had knowledge of patent infringement. The test is based on a the willful blindness test that of criminal law and attempts to determine if the alleged inducer should have had knowledge of the infringed patent.
Under the Willful Blindness test, the alleged inducer is demonstrated to have had knowledge of the infringement if he believed that a fact exists, like the existence of a patent, and then takes deliberate actions to avoid learning that fact. So knowledge of the infringement, and inducement, can be shown by demonstrating that the inducer took steps to avoid learning of the existence of a patent.
In the case that led to the establishment of the willful blindness test, the alleged inducer copied a competitor's product, but did not tell an attorney performing a freedom of operation search that the product was copied. Freedom of operation searches are frequently performed to assure that a product is not infringing patents. The Court found that the failure to tell the attorney that the product was copied, along with other actions, were actions taken to avoid learning of the infringed patent and so found inducement.
Inducement is important cause of action for going after the principle perpetrators of infringing products, particularly blatant knockoffs. Companies wishing to avoid inducement actions should structure freedom of operation searches to show that likely infringement was considered.
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