Tag: Due Diligence Related

In the September 14, 2015 decision, Suprema, Inc. v. International Trade Commission, Fed. Cir. No. 12-1170, 9/14/2015, the Federal Circuit affirmed the ITC’s findings of infringement and violations of 19 U.S.C. §1337. Section 337 of the Tariff Act of 1930. Among them is importing “articles that . . . infringe a valid and enforceable United States patent.” 19 U.S.C. § 1337(a)(1)(B)(i). The International Trade Commission (“Commission”) interpreted this provision to cover importation of goods that, after importation, are used by the importer to directly infringe at the inducement of the goods’ seller.

Suprema, Inc., is a Korean company that makes hardware for scanning fingerprints, including its RealScan line of fingerprint scanners. Suprema sells the scanners to Mentalix, Inc.  Suprema does not make or sell this software. Instead, it ships each scanner with a “software development kit” (“SDK”) that is used for developing custom programs that control the functions of its scanners. Mentalix, Inc., is an American company that purchases Suprema’s scanners and imports those scanners into the United States. It writes custom software, called FedSubmit, which uses Suprema’s SDK to control and operate the scanners. Mentalix then bundles its software with the scanners and resells the bundle within the United States.

Cross Match is the assignee of  U.S. Patent Nos. 7,203,344 (“the ’344 patent”). The claims of the ’344 patent are drawn to fingerprint scanning systems and methods that generate a fingerprint image, process that image to identify key regions, and determine image quality. An administrative law judge (“ALJ”) conducted a thorough infringement analysis, expressly finding that each of the limitations of claim 19 was practiced by Suprema’s scanner products.

In addition to considering the issue of direct infringement, the Commission also considered whether Suprema induced infringement of claim 19.  The Commission examined the elements required to support an inducement finding, and considered the inducer’s knowledge regarding patent infringement. The Commission explained that the knowledge prong is met by a showing of willful blindness, and laid out the requirements for willful blindness: (1) the defendant’s subjective belief in the high probability that a fact exists; and (2) the defendant’s taking of deliberate steps to avoid learning of that fact. 

The Commission found that Suprema “‘willfully blinded’ itself to the infringing nature of Mentalix’s activities,” which Suprema “had actively encouraged.”  The Commission found that Suprema was successful in its attempts to develop various functions covered by the ’344 patent into its products which supports the finding that Suprema subjectively believed in the high probability that Cross Match’s scanner technology was patented. 

The Commission also found that Suprema deliberately avoided acquiring knowledge of the ’344 patent. The fact that Suprema failed to obtain opinion of counsel, through which the ’344 patent would have been uncovered since it was owned by Cross Match, supports the finding. The Commission reasoned that the search would have included an analysis of whether Suprema infringed Cross Match patents.  Accordingly, the Commission found that Suprema had willfully blinded itself to the existence of the ’344 patent and “deliberately shielded itself from the nature of the infringing activities it actively encouraged and facilitated Mentalix to make.” 

The Court agreed and reasoned that with the help of counsel, Suprema would have discovered the patents infringed, therefore, it rejected the argument that requiring research into every reference in a competitor’s patent would place too high a burden on manufacturers. The failure to obtain an opinion of counsel may be considered in deciding willful blindness for active inducement of patent infringement.

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