DSU Medical Corp. v. JMS Company, Ltd.
471 F.3d 1293 (Fed. Cir. 2006)
DSU invented and got two
patents on a safety needle designed to stop nurses from accidentally
ITL (in Australia) started
making a similar needle guard in Malaysia, outside the reach of US patent
law. They sold them to JMS (in Japan), who imported them through a
subsidiary (JMS North America) into the US.
ITL's needle guards came
without needles. When JMS got their shipment from ITL, they assembled
the needle guards with needles and shipped them to the US.
DSU sued JMS, JMS North
America, and ITL for infringement.
DSU argued that JMS North
America was directly infringing on their patent by selling products in
the US. In addition, JMS and ITL was also guilty of infringement because
they were helping JMS North America infringe.
35 U.S.C. §271(c) sets forth the standard for contributory
ITL argued that DSU's patent
only covered needle guards that contained needles.
DSU argued that since a
needle guard that didn't have a needle in it was useless, ITL was still
infringing because there was no substantial noninfringing use for ITL's product.
The Trial Court came to a
split decision. JMS and DSU appealed.
The Trial Court found that
JMS North America had directly infringed by selling an infringing product in the US.
The Court found that JMS contributorily
infringed by inducing JMS North America to sell an infringing
product in the US.
The Court found that ITL did
not contributorily infringe or induce
The Appellate Court affirmed.
The Appellate Court found
that there were two elements to contributory infringement.
§271(c) requires that a defendant sells a
"component" of a patented machine. So even though ITL's
product didn't completely match DSU's patent, it could still be
infringing if there was evidence it was used to make infringing needles.
§271(c) also requires that the defendant knows that
the component will be used to make something that is infringing.
The Court found that there
must be a direct infringement
(under §271(a)) in order to find contributory
infringement under §271(c)).
Since there was no evidence ITL's products were used in the US, there
was no direct infringement.
This gets confusing because
JMS North America was found to have directly infringed. However, They were found liable at the
trial level and had already paid 100% of the damages for that
infringement. None of ITL's guards were ever sold by anyone but JMS
North America, so there was no contributory infringement.
The Court noted that there
was a split of authority over what would constitute inducement.
Manville Sales Corp. v.
Paramount Systems, Inc. (917 F.2d
544 (1990)) said that the defendant must have known that there was
patent you were infringing on, and sell the product anyway.
Hewlett-Packard Co. v.
Bausch & Lomb Inc. (909 F.2d
1464 (1990)) said that the defendant just has to intend to sell the
product, they don't have to know that there is a patent you are
The Court found that inducement requires that the alleged inducer:
knowingly caused the acts
that constituted direct infringement, and
possessed specific intent
to encourage those acts of direct infringement.
That's the Manville standard.
The Court found that ITL
knew about DSU's patent. However, they had legal advice saying that
their product wasn't infringing. Even though that advice was wrong, it
was still proof that ITL didn't intend to infringe.