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What is the difference between contributory infringement and induced infringement?

While someone can directly infringe a patent by making, selling or using the protected invention, someone can also indirectly infringe a patent by being involved in conduct which eventually leads to direct infringement.  There are two types of such indirect infringement.

The first type of indirect infringement is contributory infringement. This occurs where something less than the whole patented invention is sold; in other words, where someone sells, offers to sell or imports some important part of a patented invention. However, the part sold must have no other substantial use except for being used in the patented invention - if it does have other substantial uses, there is no contributory infringement. For example, if you have a patent for a pencil with an eraser, and I start selling eraser nubs, if you can show that those eraser nubs serve no purpose except for being put on the top of a pencil, I am a contributory infringer.

The second type of indirect infringement is induced infringement. This is where someone does not make, use or sell anything, but is still involved in infringement (think of it as “aiding and abetting” infringement). For example, if I ask my brother to have his company make and sell Doohickeys you have a patent on, I may have induced infringement. However, an inducing infringer must take some initiating step of his own - so if my brother just orders some parts from me to use in his product which will end up infringing your Doohickey, I am not an inducing infringer because I did not take any active steps.