June 1, 2011 - Regular readers of our Wealth of Ideas newsletter may recall that in our January 2011 feature article, we predicted that Global-Tech Appliances v. SEB would be one of the big cases to watch this year. On May 31, the U.S. Supreme Court delivered its verdict: 8-1 in favor of SEB, with Justice Kennedy dissenting because he disagreed with the application of willful blindness in this case.
French company SEB produced a cool-touch deep fryer, which it sold in the U.S. Sunbeam contracted with Global-Tech's subsidiary, Pentalpha, to produce a similar but less expensive deep fryer. In Hong Kong, Pentalpha bought an SEB deep fryer that wasn't marked with any U.S. patent numbers and reverse engineered it to produce an inexpensive cool-touch deep fryer.
Meanwhile, Pentalpha's CEO, John Sham, hired a patent attorney to conduct a patent search - but didn't tell the attorney that his company had bought and reverse-engineered SEB's product. The attorney found no applicable patents, so Pentalpha sold its deep fryers to Sunbeam, who in turn sold the fryers in the U.S.
Both a federal jury and the U.S. Court of Appeals for the Federal Circuit, which hears appeals in patent lawsuits, had already found for SEB on the grounds that Pentalpha "deliberately disregarded a known risk that SEB had a protected patent." This is known as "willful blindness" because even though Pentalpha was not aware of any specific patents held by SEB, it must have been aware that there was a possibility that SEB had patented its deep fryer. Pentalpha and Global-Tech appealed to the Supreme Court, arguing that they were unaware of SEB's patent until the 1998 lawsuit against Sunbeam.
Justice Kennedy disagreed with the use of the concept of "willful blindness" - adapted from criminal law - and wrote, "Willful blindness is not knowledge; and judges should not broaden a legislative proscription by analogy."
A PDF of the Supreme Court's ruling can be downloaded here: Global-Tech Appliances v. SEB.