In the late 1980s, SEB S.A., a French firm, invented a “cool-touch” deep fryer a home-use appliance with external surfaces that remain cool during the frying process. SEB obtained a U.S. patent for its design in 1991. SEB later began manufacturing the cool-touch fryer and selling it in the United States. Presumably because it was superior to other products in the American market at the time, SEB’s fryer was a commercial success. 

In 1997, Sunbeam Products Inc., a competitor of SEB, asked Pentalpha Enterprises Ltd. to supply it with deep fryers meeting certain specifications. Pentalpha, a Hong Kong maker of home appliances, is a wholly owned subsidiary of Global-Tech Appliances Inc. In order to develop a deep fryer for Sunbeam, Pentalpha purchased an SEB fryer in Hong Kong and copied all but its cosmetic features. Because the SEB fryer bought in Hong Kong was made for sale in a foreign market, it bore no U.S. patent markings. After copying SEB’s design, Pentalpha retained an attorney to conduct a right-to-use study. However, Pentalpha did not tell the attorney that its design was copied directly from SEB’s. 

The attorney failed to locate SEB’s patent. In August 1997, he issued an opinion letter stating that Pentalpha’s deep fryer did not infringe any of the patents he had found. Pentalpha then started selling its deep fryers to Sunbeam, which resold them in the United States under its trademarks. By obtaining its product from a manufacturer with lower production costs, Sunbeam was able to undercut SEB in the U.S. market. After SEB’s customers started defecting to Sunbeam, SEB sued Sunbeam for patent infringement in March 1998. Sunbeam notified Pentalpha of the lawsuit the following month. Nevertheless, Pentalpha went on to sell deep fryers to Fingerhut Corp. and Montgomery Ward & Co., both of which resold them in the United States under their respective trademarks.

SEB settled the lawsuit with Sunbeam and then sued Pentalpha and Global-Tech on the theory that they had violated the Patent Act by actively inducing Sunbeam, Fingerhut, and Montgomery Ward to sell or to offer to sell the defendants’ deep fryers in violation of SEB’s patent rights. Are the defendants liable for inducing patent infringement? For purposes of that possible basis of liability, does it matter whether the defendants knew of SEB’s patent?