by Dennis Crouch
Akamai Tech. v. Limelight Networks (Fed. Cir. 2012) (En Banc)
Mckesson Tech. v. Epic Systems (Fed. Cir. 2012) (En Banc)
In a 6–5 en banc decision, the Federal Circuit has loosened the rules for proving liability under the doctrine of inducing infringement. In particular, the court here rejects the prior rule that inducement requires proof of a single actor directly infringing the patent. Rather, the court now holds that the underlying direct “infringement” of a process claim can still lead to inducement liability so long as all of the steps of the method were actually performed. “[I]t is no longer necessary to prove that all the steps were committed by a single entity.”
Inducement is defined by 35 U.S.C. 271(b). That one sentence provision states in its entirety that “whoever actively induces infringement of a patent shall be liable as an infringer.” Before this case, the Federal Circuit had repeatedly held that inducement requires both (1) the act of knowing inducement to infringe (with knowledge of the patent) and (2) actual direct infringement of the patent as defined by Section 271(a). The patentees in this case had a problem with this structure because the accused infringer had allegedly knowingly encouraged different parties to perform different steps of the patented method. Since direct infringement under 271(a) traditionally requires proof that a single-actor performed all of the claimed steps, the patentee was unable to satisfy the second prong of the inducement test. Now, under the new rule, inducement liability exists where the accused infringer (1) knew of the patent; (2) induced performance of the steps of the method; and (3) those steps were actually performed. It follows also that the accused infringer will also be liable if it performs some of the steps of the method and then actively induces performance of the other steps.
In my view, this decision is important because it closes a major loophole that has allowed some entities to knowingly and intentionally take advantage of a patented invention while avoiding the need to take a license.
The decision is important, but fairly narrow because inducement still requires that the accused infringer have knowingly induced the infringement — that is with knowledge that the steps it is encouraging are covered by the patent. The greatest fear of the case is that it might have created liability for parties who innocently performed one or more of the steps of the claimed invention. That fear has not been realized. Michael Barclay who assisted EFF with its brief noted as much in an e-mail this morning:
It’s not as bad as I thought when I saw that they overruled BMC v. Paymentech. The majority merely holds that an active inducer will be held liable so long as one or more parties are induced to practice all the steps of a claimed method. It appears that innocent actors who were “induced” by someone else will **not** be individually liable (unless, of course, they perform all the steps of the method claim themselves and thus are direct infringers). That was one point of EFF’s amicus brief, so from that standpoint, the decision was not all bad. Our brief urged that innocent third parties (those with no level of intent) not be held strictly liable for direct infringement. It appears that is the law.
Barclay has a good point here (in my view) and the decision does a fairly good job of balancing the competing themes of protecting patentees from intentional infringement and also protecting innocent parties who are only one cog in the machine. One issue going forward will be the scope of knowledge required for inducement and how the changes in willful infringement standards will impact inducement. Judge Newman’s dissent raises a host of additional complications. In her view, the decision opens a can of worms that will continue to squirm for years to come.
The majority opinion is limited to allegations of induced infringement under 35 U.S.C. 271(b) and the court expressly refuses in this case to decide the question joint direct infringement under 271(a). In my reading of the case, however, there are insufficient votes on the court to further expand the law of infringement to include joint direct infringement. The majority also limited its opinion to infringement of method claims.
The majority opinion (36 pages) was filed PER CURIAM and signed by Chief Judge Rader and Judges Lourie, Bryson, Moore, Reyna, and Wallach. Judge Linn’s dissent (29 pages) was joined by Judges Dyk, Prost, and O’Malley. Judge Newman separately dissented (38 pages).
Moving forward, this case obviously adds value to method claims. It also adds value to “bigger” methods that achieve value through the interaction of multiple individuals in perhaps asynchronous fashion.
Judge Linn writes a powerful dissent:
The majority opinion is rooted in its conception of what Congress ought to have done rather than what it did. It is also an abdication of this court’s obligation to interpret Congressional policy rather than alter it. When this court convenes en banc, it frees itself of the obligation to follow its own prior precedential decisions. But it is beyond our power to rewrite Congress’s laws. Similarly, we are obliged to follow the pronouncements of the Supreme Court concerning the proper interpretation of those acts.
The losing parties here will certainly take Judge Linn’s words to the Supreme Court in search of a new pronouncement.