By Jason Rantanen
Promega Corp. v. Life Tech. Corp. (Fed. Cir. 2014) Download Promega v. Life Tech
Panel: Prost (dissenting-in-part), Mayer, Chen (author)
Before the holidays, I wrote about the enablement issue in this case. Today I’ll talk about the inducement issue, which involves two significant—and probably erroneous—doctrinal developments. I say “probably erroneous” because in my view at least one, if not both, would likely be reversed by the Supreme Court were it to grant cert.
The short version is that the majority held that in 35 U.S.C. § 271(f)(1), “induce” means “specific intent to cause” and “a substantial portion of the components” includes “a single important or essential component.” The consequence of the former is that one can induce oneself; the consequence of the latter is that merely supplying a single “main” or “major” component of the claimed invention is sufficient for purposes to 271(f)(1). Judge Prost dissented as to “induce” and would not have reached the “substantial portion” issue.
The patent claim: The asserted claim, claim 42 of patent No. RE 37,984, is directed to “[a] kit for analyzing polymorphism in at least one locus in a DNA sample.” The claim limitations involve vessels containing a variety of materials: a mixture of primers, a “polymerizing enzyme suitable for performing a primer-directed polymerase chain reaction,” adenosine, guanine, cytosine and thymidine, a buffer solution, and template DNA.
LifeTech’s activities: LifeTech manufactured Taq polymerase in the United States and shipped it to its facility in the U.K. where it was combined with foreign-manufactured components to produce kits containing all the claimed elements. While some of the kits were sold in the United States, the main issue on appeal involved kits that never entered the United States. Taq is indisputably “a polymerizing enzyme suitable for performing a primer-directed polymerase chain reaction.”
Procedural History: At trial, the jury was instructed to consider liability for all “United States sales,” which included “all kits made, used, offered for sale, sold within the United States or imported in the United States as well as kits made outside the United States where a substantial portion of the components are supplied from the United States.” Id. at 11 (emphasis added). LifeTech preserved its challenge to the italicized language. The jury returned a verdict finding that “all of LifeTech’s worldwide sales were attributable to infringing acts in the United States.” Id. The district court subsequently granted JMOL in LifeTech’s favor.
On appeal, Promega challenged the court’s grant of JMOL as to both sales infringing under 271(a) and under 271(f)(1). The Federal Circuit focused primarily on the 271(f)(1) issue. 35 U.S.C. § 271(f)(1) states:
Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
(emphasis added). LifeTech raised two legal grounds for affirming the district court’s grant of JMOL. First, it argued that 271(f)(1) requires inducement of another; one cannot induce oneself. Thus, it could not be liable under 271(f)(1) for exporting the Taq polymerase to itself to combine with the other components. Second, it argued that 271(f)(1) requires that a “substantial portion” of the components be exported; “one” component is not a “substantial portion” of the components.
For 271(f)(1), one can induce oneself: The majority first rejected LifeTech’s argument that 271(f)(1) should be interpreted as requiring another person to be induced. Rather, it means “merely the specific intent to cause the combination of the components of a patented invention outside the United States.” Slip Op. at 23. In reaching this conclusion, it first looked to the dictionary definition of “induce,” observing that it means “to bring about, to cause.” Id. From this, it concluded that “[t]he object of the transitive verb ‘induce’ can either be a person or a thing, such as an activity or result.” Id. Here, it is the activity that is being “induce[d]”: “The statute is written such that an activity—”the combination”—is the object of “induce,” not a person.” Id. Thus, no third party is necessary. Furthermore, “[h]ad Congress wanted to limit “induce” to actions contemplated by two separate parties, it could easily have done so by assigning liability only where one party actively induced another “to combine the [p]atented components.” Id. To bolster its conclusion, the majority drew upon its reading of the legislative history and what it divined as Congress’s intent in passing the statute. The result is to effectively turn the word “induce” into word “cause.”
The majority’s pseudo-textualist analysis: I’m thoroughly unconvinced by the majority’s analysis. Setting aside the majority’s reading of the legislative history, which Judge Prost criticizes in her dissent, its textual analysis is deeply flawed. Proper textualism involves the consideration of the ordinary meaning of words, evaluated in context, and an application of the canons of statutory construction. But just as in patent law, “ordinary meaning” doesn’t just mean “ordinary meaning.” Rather, terms with a legal meaning (such as “person”) are given their ordinary legal meaning. The problem with the majority’s analysis begins with its reliance on a general-purpose dictionary for a term that has a well-established legal meaning and goes downhill from there.
While “induce” might mean “to bring about, to cause” in the general-usage context, in the legal context—and particularly the patent law context—its meaning invariably involves a relationship between two separate persons. I am not aware of any instances (but would be interested to learn of them) where courts have interpreted “induce” as encompassing one’s own performance of the proscribed acts. This is especially true with respect to 271(b), where both the Federal Circuit and the Supreme Court have written extensively about the requirements for the relationship to rise to the level of inducement. One would not “induce” infringement of a patent by using a machine to carry out a claimed process; one would be liable for direct infringement. To treat the word as if it were necessary to start from first principles, looking it up in a general purpose dictionary, is to ignore all of this well-established legal meaning.
As part of my background reading for this post, I took a look at Bryan Garner’s Black’s Law Dictionary. Here’s his entry for “inducement” (there is no separate entry for “induce”), defining it as “The act or process of enticing or persuading another person to take a certain course of action”:
Congress did not have the benefit of Professor Garner’s text in 1984, when it passed 274(f); this definition comes from the 1999 version of Black’s.* But my sense is that Garner’s definition is a lot closer to the legal meaning of “actively inducement” than “http://www.merriam-webster.com/dictionary/induce.” Slip Op. at 23. And to the extent it is descriptive of the legal meaning, it unquestionably supports the interpretation as involving another person.
Edit to add a legal citation: “It is, however, well established that “[w]here Congress uses terms that have accumulated settled meaning under… the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms.” CCNV v. Reid, 490 U.S. 730 (1989) (quoting NLRB v. Amax Coal Co., 453 U.S. 322, 329 (1981)).
“Congress knows how to say…”: In addition to its dictionary definition, the majority also observed that Congress could easily have included the word “another” in the statute. The main problem with this interpretative principle is that it only applies when it’s clear that Congress actually does know how to say something. Typically, the principle is invoked in the context of a parallel statute in which Congress actually said it. See, e.g., Limelight Networks, Inc. v. Akamai Technologies, Inc., 134 S. Ct. 2111, 2118 (2014) (“As this provision illustrates, when Congress wishes to impose liability for inducing activity that does not itself constitute direct infringement, it knows precisely how to do so.”) (emphasis added). Here, however, there is no such contrasting statute that contains that “something;” worse, the closest parallel—Section 271(b)—does not contain the word “another.” Rather, it says simply “Whoever actively induces infringement of a patent shall be liable as an infringer.”
Edit to add a citation: “Ordinarily, ‘Congress’ silence is just that—silence.” CCNV v. Reid (quoting Alaska Airlines, Inc. v. Brock, 480 U.C. 678, 686 (1987)).
Judge Prost’s Dissent: Judge Prost’s dissent identifies another problem with the majority’s interpretation: that interpretation is foreclosed by precedent. “[W]e have never before held—in the context of either § 271(f) or § 271(b)—that a party can induce itself to infringe. And for good reason: this conclusion runs counter to unambiguous Supreme Court precedent.” Dissent at 2.
Twice the Supreme Court has held that inducement liability requires a third party. In interpreting the phrase “induces infringement” in § 271(b), the Supreme Court wrote that it requires “that the inducer lead another” or “persuade another.” Global-Tech Appliances, Inc. v. SEB SA, 131 S. Ct. 2060, 2065 (2011) (emphases added). Additionally, in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., a case in the analogous copyright context, the Supreme Court stated that inducement is defined as “entic[ing] or persuad[ing] another” to infringe. 545 U.S. 913, 935 (2005) (emphasis added). The majority cannot point to a single case—from the Supreme Court or otherwise—that supports its contrary interpretation of inducement.
Id. at 2-3.
Judge Prost might go too far in arguing that the majority’s interpretation is foreclosed by precedent (As the majority points out, none of these cases directly confronted the question of whether one can “induce” oneself), but her underlying point is sound: these cases demonstrated that the meaning of “induce” is already well-established as requiring another person.
Multinational companies must be careful: As long as the accused party meets the “supplies…a substantial portion of the components” requirement, it will be liable for its own foreign combination of those elements.** This has particular importance for multinational companies that engage in distributed manufacturing. As a policy matter, the court’s decision pushes those companies towards one of two alternatives: purchasing their components from another (possibly US) supplier or simply making the components abroad. Perhaps the lack of liability in this situation was an oversight in the statute, a statutory loophole. But if so, the appropriate response would be—as was the case following Deepsouth—legislative action. (I’m not convinced that it’s necessarily a loophole, but need to think further on that point.)
Every “essential” component is a “substantial portion of the components.” The majority also interpreted the requirement that “all or a substantial portion of the components of a patented invention” be supplied, concluding that “substantial portion of the components” includes “a single important or essential component.” Slip Op. at 27. Here, that component was the Taq polymerase, a widely-used enzyme for polymerase chain reaction. The court concluded that supplying Taq was enough based on the following evidence: “Without Taq polymerase, the genetic testing kit recited in the Tautz patent would be inoperable because no PCR could occur. LifeTech’s own witness admitted that the Taq polymerase is one of the “main” and “major components of the accused kits.” Id. at 32. As the Taq example demonstrates, under the court’s interpretation any component of a patented invention is an essential component. If one removes Taq, the kit won’t work; if one removes the primers, the kit won’t work; if one removes the nucelotide bases, the kit won’t work. This has the potential to greatly expand liability under 271(f)(1).
Rendering 271(f)(2) superfluous: In my view, the majority’s textual analysis of “substantial portion” suffers from similar flaws as its analysis of “induce.” The deepest, however, is that by reading “substantial portion” as it does, the majority renders 271(f)(2) superfluous. That section states:
(2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
Under the majority’s interpretation of “substantial portion,” 271(f)(1) reads:
“Whoever without authority supplies or causes to be supplied in or from the United States an important or essential component of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.”
The only differences between the two are that (f)(2) is limited to components that are “especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use;” a knowledge of infringement requirement in (f)(2); and the “intending that such component will be combined” language of (f)(2) versus the “in such manner as to actively induce the combination” language of (f)(1). The first two differences make (f)(2)’s scope narrower than that of (f)(1), and the third does not constitute a meaningful difference under the majority’s interpretation of “actively induces.”*** The result is that, under the majority’s interpretation, I can’t envision any conduct that would fall within (f)(2) that would not also fall within (f)(1).
*The older definition of “induce” from Black’s doesn’t provide much interpretative help in my view. See Black’s Law Dictionary, Fourth Edition (West 1951) (defining “induce” as “to bring on or about, to affect, cause, to influence to an act or course of conduct, lead by persuasion or reasoning, incite by motives, prevail on”) (this definition was carried forward through at least the 1990 version). Part of my ambivalence is that without looking at the source of the definition, it’s not clear that another party isn’t required. And once you look at the source of the definition, it’s apparent that the case wasn’t talking about the legal meaning of “induce” but it’s general purpose meaning. See State v. Stratford, 55 Idaho 65 (Idaho 1934).
**Nor does the argument that the majority’s interpretation still imposes an “intent” requirement change the analysis. The majority concludes that “actively induce the combination” means “merely the specific intent to cause the combination of the components of a patented invention outside the United States.” Slip Op. at 23. This is nothing more than a volitional conduct requirement: a person that combines the elements will necessarily have the “specific intent to cause the combination” except in very rare, very unusual circumstances. And the jury instruction discussed above did not mention any requirement of intent.
***If “actively induce” were interpreted as requiring the participation of a third party, then there might be a difference between the two in that a reasonable reading of 271(f)(2) is that it covers one’s own combination of the components.
Side note: This appeal is one of the two that were at the heart of In re Reines; Ed Reines represents LifeTech. In the other appeal, the district court’s judgment in favor of Promega was summarily affirmed in March.
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