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 pricking themselves.
  • 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 infringement.
    • 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 infringement.
  • 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 infringing on.
    • 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.