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August 11, 2012

The Practical Difference Between Contributory Infringement and Inducing Infringement in Patent Cases

The Federal Circuit’s recent decision in Toshiba v. Imation highlights a key difference between the concept of contributory infringement and inducement of infringement in patent cases.  It is that an accused infringer may escape liability for contributory infringement if his product is capable of “substantial non-infringing use”, but if the accused infringer encourages infringing use, the fact that his product is capable of substantial non-infringing use will not save him from inducement liability.

Toshiba illustrates the point.  The Federal Circuit affirmed summary judgment for the defendant on contributory infringement, but reversed on inducement.  The case involved patents for DVD recorders. The court held: (1) Toshiba had not proven that an insubstantial number of Imation users did not take the last step claimed by the patent of “finalizing” their DVDs after recording them; (2) therefore (common sense notwithstanding) a not insubstantial number of Imation users could be skipping that step; and thus (3) Toshiba had not proven that the Imation recorders were not capable of substantial non-infringing use and its claim of contributory infringement therefore failed.

With respect to inducement, however, the Federal Circuit held that because Imation urged users of its product to finalize the DVDs, it was error to grant summary judgment for the defendant.  The Court explained that just because a product is capable of non-infringing use does not mean the defendant is not inducing its users to use it in an infringing manner.  Moreover, in this context, the court explained, where an alleged infringer designs a product for use in an infringing way and instructs users to use the product in an infringing way, there is sufficient evidence for a jury to find direct infringement.

In addition to highlighting the important distinction between contributory infringement and inducement, the case illustrates the potential significance of burdens of proof.  If Imation had been required to prove substantial non-infringing use, it does not seem certain it could have done so.  One might ask whether, as a matter of policy, it is best to place the burden on the plaintiff to prove that an accused product is not capable of substantial non-infringing use, but that is a topic for another day, or for comments to this post.