Commil USA is an Israeli patent-holding company, which says its patent number 6,430,395 solves the problem of "how to manage 'hand-offs' between different base stations that together provide wireless coverage over a large area." Rather than using old base stations, the invention "provides a novel architecture that includes a new hardware device called a switch,'" Commil lawyers explain in their brief.

In 2007, Commil sued Cisco in the Eastern District of Texas, saying that its "Split-MAC WLAN systems" infringe the patent. Technically, though, it's Cisco's customers who were said to infringe the patent, which describes the invention in a series of "method claims." Commil lawyers said that Cisco's customers violate those claims any time they use one of an array of "Split-MAC" products that Cisco acquired when it bought a company called Airespace. The company introduced its "Split-MAC" concept in 2002, more than a year after the priority date of Commil's patent, according to Commil.

The issue that has the high court's attention in Commil v. Cisco is how a defendant should be allowed to defend itself from accusations of infringement. Cisco says, essentially, that when it comes to proving secondhand infringement, intent matters. It should have been allowed to present evidence that showed it had a "good-faith belief of invalidity" to the jury, which the trial judge prevented it from doing.

Commil says that allowing alleged infringers to talk about their "good faith belief" lets them off the hook all too easily. The whole point of being able to win a patent case on "indirect infringement," Commil argues, is that Congress meant to "provide patent owners with a remedy for infringement" when they can't practically enforce against direct infringers—in this case, Cisco customers.

Two trials—and allegations of anti-Semitism

The case has an unusual history, including a retrial that took place after a judge found that a local lawyer hired by Cisco had made anti-Semitic remarks.

Commil is a "non-practicing entity," the kind of company sometimes derided as a "patent troll." The Israeli startup was founded in 2000, making a big bet on Bluetooth applications, but "reality wrecked the plan when it became clear in 2004 that the market preferred WiFi," according to Globes, an Israeli business newspaper. In 2005, Commil fired all its employees and sold off its patents for "a few hundred thousands dollars" to Jonathan David, an attorney who had previously specialized in prosecuting asbestos lawsuits.

The patent-holding company won its initial trial against Cisco in the patent hotspot of Marshall, Texas, but got only $3.7 million. That was far less than the $57 million it was seeking. After trial, Commil filed a motion arguing that it should get a new trial because of statements made by a Cisco lawyer that "used religious references and played on stereotypes about Commil's owner and inventors, who are Jewish and reside in Israel."

During cross-examination David testified about eating at a local barbecue restaurant with one of the inventors, Cisco's local counsel asked what he ordered, and then said: "I bet not pork." He also invoked the trial of Jesus Christ, asking jurors to "remember the most important trial in history, which we all read about as kids, in the Bible."

US Magistrate Judge Charles Everingham found (PDF) that the lawyer was trying to align "his religious preference with those of the jurors and employ an 'us v. them' mentality—i.e., 'we are Christian and they are Jewish.'" He ordered a new trial.

It was a devastating mistake for Cisco. A new jury found the company liable, again, but this time awarded Commil $63.8 million in damages.

However, that large damage award was thrown out by a divided three-judge panel at the US Court of Appeal for the Federal Circuit. The majority held that the jury instructions were wrong and that Cisco should have been allowed to plead its case that it had a "good faith belief" it didn't infringe.

Believing vs. knowing

The law states that anyone who "actively induces infringement" of a patent is liable for damages under the patent laws.

In its brief (PDF), Commil acknowledges that "some intent" must be found to shown inducement, but suggests that Cisco's defense, if allowed to flourish, "would permit inducers to entirely disregard" the presumption that patents are valid "and by doing so avoid all liability for their inducement."

The point of the "inducement" law, Commil argues, is to allow patent-holders remedies even when "direct infringers are too numerous and diffuse for practical litigation." In other words, Congress fully intended to let patent owners go after a "middleman" product creator. If Commil loses, it could actually encourage "inefficient and undesirable lawsuits" against customers, the company argues.

Finally, just allowing accused parties to say they "believed" they didn't do it is basically a get-out-of-jail-free card that will be pulled out in every jury trial.

"If the Federal Circuit opinion stands, every accused inducer will argue to the jury that even if that patent is valid, it cannot be found liable because it thought the patent was invalid," state Commil lawyers.

For its part, Cisco argues (PDF) that if the high court sides with Commil, it will be a field day for patent trolls. "Commil’s watered-down standard would needlessly exacerbate an already serious threat to American businesses: indiscriminate licensing demands made by patent assertion entities 'in the hope that some recipients will be misled or intimidated into paying for licenses,'" write Cisco lawyers, quoting the Patent Office's own "I Got a Letter" explainer page.

Cisco says its view is clearly supported by a 2011 case called Global-Tech, which held that someone "inducing" patent infringement must "know that the induced acts" are actually infringing.

In Commil's view, such knowledge can be established with a letter notifying an accused party about infringement. Charles Duan at Public Knowledge has suggested that if Commil's view carries the day, the precedent could seep into copyright law, where it could have a vast effect on technologies like DVD drives, file-sharing software, and video-sharing websites—technologies that could be used for piracy, but could also be used for legitimate reasons.

"Any time someone invents a new technology that might have the remotest use for copyright infringement, the MPAA sends the inventor a letter," posited Duan in a provocative blog post entitled "The Supreme Court Case That Could Shut Down All Your Technology." "Now the inventor is automatically inducing copyright infringement—that letter was enough for the intent requirement, remember?—and has to shut up or pay up."

Both Commil and Cisco have allies in this fight, and they line up along the predictable battle lines. On Commil's side are IP-friendly groups like the Intellectual Property Owners Association, as well as pharmaceutical and biotech companies. Meanwhile, the Computer and Communications Industry Association, a tech industry trade group, has filed a brief in support of Cisco. So has a consortium of tech companies including HP, Dell, Dropbox, Facebook, Google, Red Hat, Oracle, and Xilinx, along with generic pharmaceutical companies. Public Knowledge, joined by several library groups and the Electronic Frontier Foundation are also supporting Cisco.

Commil v. Cisco is one of two patent cases being argued today at the Supreme Court, along with Kimble v. Marvell.