SCOTUS Seeks US Views on Joint Infringement of Process Claims

The Supreme Court on June 24, 2013, called for the views of the Solicitor General on petitions to review the Federal Circuit’s en banc decision on joint infringement of process patents.  That decision held that induced infringement of a process patent claim may be found even though no single entity performed all of the claimed steps as long as claim steps are performed collectively by multiple parties. In Akamai Technologies, Inc v. Limelight Networks, Inc., U.S., No. 12-960, 6/11/2013, the question presented is:

Whether a party may be liable for infringement under either 35 U.S.C. §271(a) or §271(b) where two or more entities join together to perform all of the steps of a process claim?

In Limelight Networks, Inc., v. Akamai Technologies, Inc., U.S., No. 12-786, 6/11/2013, the question presented is:

Whether the Federal Circuit erred in holding that a defendant may be held liable for inducing patent infringement under 35 U.S.C. § 271(b) even though no one has committed direct infringement under §271(a).

[AIPLA]

En Banc Federal Circuit

At approximately the same time, the Federal Circuit received appeals from two different district court decisions on process patent infringement where the claimed steps were separately performed by multiple actors. Under the law at the time, direct infringement of such patents required proof that a single entity performed or directed every step of the claimed method, and no claim for induced infringement could be maintained without evidence of direct infringement. The Federal Circuit decided both cases in a single per curiam opinion. Akamai Technologies, Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012); McKesson Technologies, Inc. v. Epic Systems Corp., 692 F.3d 1301 (Fed. Cir. 2012). The patent in Akamai is directed to an efficient method of delivering web site graphical content by delivering it to a wide network of servers. The patent required content providers to perform the tagging of certain graphical elements, but Limelight’s system instructs its customers to perform that tagging.  The patent in McKesson is directed to a method of creating patient-specific websites where the first step involves a user-initiated communication to the provider of a medical record. Epic offered software for healthcare providers to set up individual webpages for patients without depending on patient initiative. As to Akamai’s case, the appellate court rejected the single-entity requirement for proving induced infringement, ruling that inducement may be proved with evidence that the defendant performed some of the claim steps and induced other parties to perform the remaining steps. As to McKesson’s case, it held that a defendant may be liable for inducing infringement of a method claim if the defendant induced other parties to collectively perform all the claim steps, but no single party performed all of the steps itself. [While its petition to the Supreme Court was pending, McKesson  settled and its petition was dismissed.]

The Akamai-McKesson opinion noted that the briefing focused on the reconciling two requirements:

(1) that inducement can only be proved if there is evidence of direct infringement; and (2) that direct infringement can only be proved if all of the steps of the claimed process have been performed.

However, the decision focused solely on proof of inducement infringement under Section 271(b) of the Patent Act, emphasizing that it was not changing the liability principles of direct but divided infringement under Section 271(a). Thus, the ruling does not decide whether direct infringement can be found when no single entity performs all of the claimed steps of the patent. Instead, appellate court explained that Akamai and McKesson can be decided by reversing the rule of BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), that a single entity must be liable for direct infringement in order for a party to be liable for induced infringement. The Federal Circuit stressed the point: “To be clear, we hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity.” It explained further:

Requiring proof that there has been direct infringement as a predicate for induced infringement is not the same as requiring proof that a single party would be liable as a direct infringer. If a party has knowingly induced others to commit the acts necessary to infringe the plaintiff’s patent and those others commit those acts, there is no reason to immunize the inducer from liability for indirect infringement simply because the parties have structured their conduct so that no single defendant has committed all the acts necessary to give rise to liability for direct infringement. A party who knowingly induces others to engage in acts that collectively practice the steps of the patented method—and those others perform those acts—has had precisely the same impact on the patentee as a party who induces the same infringement by a single direct infringer; there is no reason, either in the text of the statute or in the policy underlying it, to treat the two inducers differently. In particular, there is no reason to hold that the second inducer is liable for infringement but the first is not. Likewise, a party who performs some of the steps itself and induces another to perform the remaining steps that constitute infringement has precisely the same impact on the patentee as a party who induces a single person to carry out all of the steps. It would be a bizarre result to hold someone liable for inducing another to perform all of the steps of a method claim but to hold harmless one who goes further by actually performing some of the steps himself. The party who actually participates in performing the infringing method is, if anything, more culpable than one who does not perform any steps.

As for the text of the statute, the Court found nothing there inconsistent with its analysis. Section 271(b) provides that whoever “actively induces infringement of a patent shall be liable as an infringer,” with nothing to indicate that “infringement” is means infringement” by a single entity. In this context, the term most naturally refers to “the acts necessary to infringe a patent,” not to the number of entities engaging in infringing actions. The Court also refers to the legislative history of the 1952 Patent Act for support of its conclusion that induced infringement does not require all of the acts constituting infringement to be performed by a single entity. It pointed to statements to Congress by the late Judge Giles Rich (before he came to the bench) that there is no anomaly in finding liability for indirect infringement when there was obvious infringement of the patent, even though there was “no direct infringer of the patent.” Judge Linn’s Dissenting Opinion Judge Linn’s dissenting opinion, joined by Judges Dyk, Prost and O’Malley, complained that the majority has written direct infringement out of the law of inducement. He called the per curiam ruling a policy-based decision that goes beyond what Congress enacted to find a rule that it thinks Congress should have enacted. The single-entity rule for inducing method claim infringement is compelled by both the text of the statute and the Supreme Court case law, he maintained. Judge Newman’s Dissenting Opinion In her dissenting opinion, Judge Newman also believes that the majority ignored the requirement of a direct infringement predicate. Although she believes that the single-entity rule is wrong and unnecessary, she argued that direct infringement can be found, independent of an inducement charge, where there is divided infringement by multiple actors. She said the majority should have consulted the Supreme Court’s Grokster opinion which states that “the lines between direct infringement, contributory infringement and vicarious liability are not clearly drawn.” To read the Court’s opinion and the dissenting opinions, click here.  To read the briefs before the Supreme Court, click here.

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