TECSEC, INC., v. ADOBE INC.

Before Prost, Reyna, and Taranto. Appeal from the U.S. District Court for the Eastern District of Virginia.

Summary: Even if it would be objectively reasonable to view a defendant’s conduct as noninfringing, the intent element of induced infringement may still be established through the defendant’s subjective belief.

TecSec alleged that Adobe directly infringed and induced third parties to infringe TecSec’s patents. Under an initial claim construction order by the district court, TecSec and Adobe stipulated that Adobe did not infringe. The Federal Circuit reversed that initial claim construction, but did so just two weeks before TecSec’s patents expired. Adobe argued that the parties’ stipulation of noninfringement prevented it from possessing the requisite intent to induce infringement, and Adobe moved in limine to exclude from trial all evidence of induced infringement after the date of that stipulation. The district court granted that motion in limine. At trial, the jury found direct infringement but no induced infringement, and awarded TecSec $1.75 million in damages. The district court vacated the jury’s damage award, reasoning that TecSec’s only relevant damages evidence related to sales, which the court had previously determined did not alone constitute direct infringement. TecSec appealed.

On appeal, TecSec challenged the district court’s order excluding all evidence of induced infringement after the date the parties had stipulated to noninfringement. Adobe argued that the district court’s initial claim construction order was reasonable, and thus, as a matter of law, Adobe could not have had the specific intent required to establish induced infringement. The Federal Circuit disagreed, reasoning that the requisite intent could still be based on subjective bad faith of the infringer, even if it would be objectively reasonable to view the conduct as noninfringing. Adobe could still have had the required intent, for example, if it subjectively believed that the district court’s initial claim construction was incorrect. The Federal Circuit further held that excluding the entire issue of induced infringement from trial was not properly decided on Adobe’s motion in limine, which did not call or provide for consideration of all relevant evidence, as on a motion for summary judgment. The Federal Circuit therefore reversed in relevant part and remanded for further proceedings on TecSec’s claim of inducement of infringement.

Editor: Paul Stewart