Corporate-Participant Liability for Direct Patent Infringement: A Look to Copyright Law’s Vicarious Liability Analysis

Abstract

Under current Federal Circuit doctrine, district courts must “pierce the corporate veil” before holding corporate officers and shareholders personally liable for their corporations’ direct infringement under § 271(a) of the Patent Act.  This Note traces the statutory and jurisprudential development of direct and induced patent infringement leading up to the Federal Circuit’s most recent discussion of its veil-piercing standard in the Wordtech case.  It then examines the Federal Circuit’s veil-piercing doctrine, its criticisms, and the various proposals to remedy the current problems.  This Note responds to the proffered solutions, and argues that adopting the vicarious liability doctrine from copyright infringement law is a more appropriate approach than the veil-piercing analysis and other alternatives for deciding corporate-participant liability under § 271(a).  Accordingly, a court would impose liability where a corporate-participant has the right and ability to control the infringing activity and receives an obvious and direct financial benefit from the infringing activity.  Vicarious liability is preferable because it does not have a scienter requirement, is not jurisdiction specific but rather applies universally, and targets omissions in addition to affirmative acts.  In sum, the vicarious liability approach is consistent with the congressional intent behind the Patent Act and is a well-crafted tool to address the problems that frequently arise in patent infringement litigation.