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"Patent Trolls" In The United States Supreme Court

On May 26, 2015, a United States Supreme Court Justice used the derogatory term “patent troll” for the first time in the United States Supreme Court’s recorded history.  In Commil USA, LLC v. Cisco Systems, Inc., 135 S. Ct. 1920, 1932 (May 26, 2015) the Court was asked to decide whether a company’s good faith belief that a patent was invalid could be a legitimate defense to patent infringement, specifically induced infringement.  The case involved a patent held by Commil USA, an accused patent troll, for improving the implementation of a wireless network over a large area.  A “patent troll” is a pejorative term for a non-practicing entity (“NPE”) that earns the majority of its revenue from the licensing or enforcement of its patents.  Commil USA sued Cisco Systems for patent infringement based on Cisco System’s use of similar technology, and inducing its customers to also infringe.  In defense, Cisco Systems admitted that it knew about Commil USA’s patent and that it’s use of Commil USA’s patented technology could constitute infringement.  Nevertheless, Cisco Systems argued that it shouldn’t be liable for patent infringement because it believed, in good faith, that Commil USA’s patent was invalid.  The Court was encouraged to allow a belief-of-invalidity defense in order to combat “abusive patent assertion” by the so-called patent troll Commil USA.

In a 6-2 decision, the Court ruled against Cisco System, holding accused patent infringers can’t evade claims of “induced infringement” by arguing they had a “good faith belief” the patent was invalid.  Notably, the Court recognized patents have a statutory presumption of validity.  Thus, Cisco System’s mere belief that it was acceptable to infringe Commil USA’s patent simply because the patent was no good, undermined the statutory presumption of validity.  The Court’s decision ultimately took away a powerful defense for accused patent infringers.

While the Court’s decision was significant in itself, Justice Antonin Scalia’s strongly worded dissent was further noteworthy.  Disagreeing with the majority, Justice Scalia argued it was “impossible” for anyone to induce infringement if they believed the patent was invalid in the first place.  Justice Scalia claimed the majority’s decision had ultimately “increase[d] the in terrorem power of patent trolls”—the first time the contentious term had ever been used in a United States Supreme Court opinion.  Thus, Justice Scalia’s reaction to the majority’s decision in Commil USA, LLC v. Cisco Systems, Inc. indicates the debate over how to combat abusive patent litigation is far from over.

  • Luke C. Holst is a registered patent attorney with experience in both patent prosecution and patent litigation. Holst is a former Patent Examiner at the U.S. Patent and Trademark Office; Law Clerk to the Honorable Mark W. Bennett at the U.S. District Court for the Northern District of Iowa; and Legislative Counsel at the U.S. Capitol to an Iowa Congressman on the U.S. House of Representatives Committee on the Judiciary. At McGrath North, Holst works on patent issues, other intellectual property matters, and litigation.