Patent Infringement Liability for Component Manufacturers

A component supplier may manufacture a particular component to be used as part of a customer’s larger system or device and expect that any potential infringement liability would reside with the customer. However, patent holders frequently pursue not only direct infringers but also the infringer’s suppliers in patent infringement lawsuits, seeking to recover damages from all parties involved. These threats of patent infringement catch many component suppliers by surprise because suppliers may not expect that they could be liable for uses of its components by its customers downstream in commerce.

The Patent Act provides a cause of action for “contributory” infringement, under which a supplier of a component that constitutes a material part of a patented invention may be liable for contributory infringement. Finding contributory infringement requires showing that the supplier knew that the supplier’s component was being used in a product that infringed the patented invention. Plaintiffs will often attempt to establish the knowledge requirement through a cease and desist letter to suppliers.

What does this mean for suppliers? It means that suppliers and manufacturers should not simply rely on their customers to do due diligence with respect to any potential infringement issues. Suppliers should consider performing at least a cursory review of potential infringement issues before supplying its components to customers. If a supplier learns of a patent that may be asserted against them, an opinion regarding non-infringement and invalidity should be obtained from competent counsel.