Two Texas judges have come to different conclusions as to whether a refusal to read other parties’ patents can support a finding of willful infringement.
The ruling from U.S. District Judge Rodney Gilstrap in the Eastern District of Texas (read Order here) came in a lawsuit Motiva Patents brought against HTC and Sony accusing the electronics makers virtual reality system of infringing several patents covering technology for tracking a person’s movement.
While deciding a motion to dismiss, the judge found HTC’s alleged policy of prohibiting its employees from reading patents can support a claim for willful infringement. If proven, willful infringement can expose companies to enhanced damages. The ruling from Judge Gilstrap, who has many pending patent cases in the litigation-rich Eastern District of Texas, throws into question what has been described as the “head-in-sand” policies that can purportedly be found in Silicon Valley and among high-tech companies.
Citing the U.S. Supreme Court’s 2011 ruling in Global-Tech v. SEB (read case here), the judge said willful blindness can be a substitute for actual knowledge in the context of indirect patent infringement, which is when a company induces others to infringe a patent. He reasoned the same can be true with respect to willful infringement. “A contrary holding would produce inconsistent results such that the same infringing act performed by the same defendant could be both willful (sufficient to be willfully blind to infringement) and not-willful (insufficient to willfully infringe),” he wrote. “The court declines to create such an inconsistency.”
Nonetheless, just such a contrary holding can be found right next door in the Western District of Texas! There (read case here) VLSI alleged Intel has a “publicly-known corporate policy” of prohibiting engineers from reading non-Intel patents as a way to “avoid possible triple damages for ‘willful infringement.’” Judge Alan Albright in August dismissed VLSI’s claims for indirect and willful infringement. The judge said in a brief order that Intel’s alleged policy is “insufficient to meet the test of willful blindness.”
The Business Take-Away: Is ignorance bliss? A recent survey of scientific researchers from Stanford Law School professor Lisa Larrimore Ouellette reported that 37% of researchers in the electronics and software space reported having been instructed not to read patents. Overall, unless there are some very important qualifications and exceptions, I think the “head in the sand” is not, in the long run, going to turn out to be a viable means of avoiding infringement liability. There are just too many areas of the law that prevent “willful blindness” from acting as an excuse.