Dear Supreme Court: Does Joint Enterprise Liability Theory Apply to Direct Patent Infringement

My starting point for thinking about patent infringement begins with the recognition that the corporate defendants held liable for patent infringement ordinarily do not themselves make or use the patented invention.  Rather, in most cases, it is employees, contractors, and employees of those contractors who take the actual infringing acts that are then attributed to the accused infringer.  This case looks to boundary conditions for finding, under the law, when third-party activities are so attributable.

The Limelight v. Akamai dispute involves a system of using a distributed set of servers for avoiding congestion while delivering internet content.  The approach is used by media giants such as Netflix and others.  The distributed nature of the technology creates a good likelihood that different business entities will control various aspects of the system.  A concern for a patentee in this situation is that, although the patented invention is being used, no single entity is liable for infringement (applying the all elements rule).

In its 2014 Limelight decision, the Supreme Court held that infringement-by-inducement requires evidence of underlying direct infringement.  After remand, the Federal Circuit then expanded the contours of direct infringement.  According to the court, direct infringement requires that all steps be “attributed” to a single entity and can be attributable “when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.” likewise “where two or more actors form a joint enterprise, all can be charged with the acts of the other.”

Now, Limelight has asked the Supreme Court to once again review the case. The question presented is:

Whether the Federal Circuit erred in holding that a defendant may be held liable for directly infringing a method patent based on the collective performance of method steps by multiple independent parties, even though the performance of all the steps of the method patent is “not attributable to any one person” under traditional vicarious-liability standards.

Limelight’s strongest argument is that the Federal Circuit’s decision represented an undue expansion of rights. Unfortunately, I don’t give the case much chance of success.  The brief primarily argues that – on the facts – no liability exists and that – before the most recent Federal Circuit decision – the courts had previously found no direct infringement.  The Supreme Court is unlikely to take-up a full review of factual proof in this 10-year-old complex patent case.  Likewise, none of the prior decisions focused on how those facts applied to the question of joint enterprise liability.

Read the petition here: Limelight petition

 

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

40 thoughts on “Dear Supreme Court: Does Joint Enterprise Liability Theory Apply to Direct Patent Infringement

  1. Prof. Crouch – serious question for you: what type of “ecosystem” do you think is achieved with Malcolm’s posts here?

    This type of C R P is nothing new.

    Even on your latest “ecosystem” thread, it was revealed that this is exactly the same C R P that Malcolm has been posting for a decade now.

    If you ask for a better system, then do nothing about a known blight, how the H do you expect to be taken seriously?

    1. how the H do you expect to be taken seriously?

      I know it may be really hard for you to believe, “anon, but “being taken seriously” by you is probably on the very bottom of Dennis’ list of priorities.

      And for good reasons.

        1. Dennis is taken seriously because he writes well and he isn’t a transparent shill for the More Patents, Easier to Enforce, All the Time crowd.

          That’s what sets him apart from your favorite blogs and as long as he and Jason don’t proudly wave the flag for you and your self-important cohorts, he’ll continue to be “taken seriously” … at least by reasonable people.

          This is all so obvious it’s painful to point it out to you, but apparently it’s necessary (again).

          [shrugs]

  2. And criminy Malcolm, the thread here is under twenty posts at this time – learn to post your replies in the “reply to” mode instead of the “look at me look at me” mode of posting on top.

    This tendency of yours says more about you than you might realize – like you being narcissistic and not really interested in an actual dialogue.

      1. LOL – says the biggest hypocrite around – replete with his number one rhetorical tactic of AccuseOthersOfThatWhichMalcolmDoes.

        What a chump.

  3. “anon” what is the logical reason to forestall other innovation protection that is not in the single actor mode?

    In this instance, the major policy reason is identical to the logical reason: “multiple actors using existing techn0l0gy” isn’t what the patent system is supposed to be promoting so why bother?

    If you can’t write a claim that’s infringed by a single entity, the odds are incredibly high that (1) you don’t understand the actual techn0l0gy that was developed (or you’d claim that); or (2) there is no techn0l0gical innovation and you are claiming something else, e.g., a relationship between the parties identified in the claim.

    The old techn0l0gy of “computer connectedness” is a classic example. Methods involving the use of that old techn0l0gy to, e.g., transmit some specific information (described in terms of its content or some other abstract descriptor) in response to, e.g., user pushing a button or entering a code, simply aren’t deemed worthy of patent protection. Try inventing some new techn0l0gy instead.

    That’s “the logic.”

    1. Move the goalposts back Malcolm.

      Your sleight of hand with “using existing technology” is NOT a material distinction for the point under discussion. Such a thing applies equally whether or not we are discussing the single actor or the multiple actor element.

      You also quite miss the point with your attempt at emphasizing the “can” of writing a single actor claim. The point you should address is that not all innovations are of such nature. Yes, Malcolm, it really does sometimes take a village to invent as well as to infringe.

      Your “logic” is a F A I L.

      1. “anon” it really does sometimes take a village to invent

        No, it doesn’t.

        And the rest of your comment is unintelligible, as usual.

          1. You don’t think it “takes a village” to invent? Talk to Lemley – that was his line.

            Show everyone the quote you’re referring to, “anon.”

            1. LOL – You are the one with the “notebook,” and you are the one that once claimed to have gone back and re-read everyone of my posts and a Supreme Court decision in the span of 4 hours (there’s that Malcolm time again).

              Since I know that I brought up during the AIA Big Corp can process in the name of the inventor discussions, and I know that I brought it up contrasting Lemley’s and Katznelson’s views on that AIA section, I am going to leave it to you and your “prowess” to do some of your own legwork here.

              Or is that “notebook” only for your cognitive dissonance problem?

        1. LOL — I misread what you wrote, “anon” … and I know exactly why. Too funny.

          it really does sometimes take a village to invent

          LOLOLOLOL

          “Sometimes”? Talk about moving the goalposts. Sure, “sometimes” it takes multiple people working together to arrive at the “fixed and permanent idea” that ends up being claimed. That’s nothing new, of course, and it’s not even particularly interesting. More importantly, that fact has absolutely nothing to do with the number of actors needed to infringe a particular claim.

          1. There is NO moving of goalposts on my end Malcolm.

            Accusation F A I L.

            Read again all of my posts here, from the beginning. I clearly note that innovation (and infringement) certainly happens at the individual level – but that such is just not the entire picture.

            You STILL fail to see the parallel, and that “you” problem only makes you look like a schmuck.

            Try to understand first, THEN comment.

            1. “anon” Read again all of my posts here

              Sure. I’ll get right on that.

              I clearly note that innovation …. certainly happens at the individual level

              In fact, your post at 4 is not clear about that which is why I pressed you to clarify. Instead you responded with insults.

              That sets aside the fact — noted again — that whether it takes a hundred people or one person to write a particular non-obvious patent claim has little or no relationship to the number of entities required to infringe that claim.

              1. You might want to “get right on it” especially since you seem so very eager to reply to my posts.

                Hint: replying with your ad hominem without reading and understanding what I am posting leads directly to this type of C R P from you.

                Happy Decade of Decadence.

                1. LOL – my response “with insults” is because your questions were nonsensical, having been answered in the very post that you were questioning.

                  Try better.

    2. “what is the logical reason to forestall other innovation protection that is not in the single actor mode? ”

      Because apportioning and proving scienter or contribution among multiple, non-legally related actors in economic relationships is practically impossible?

      Because patents have always been understood to be for inventions rather than behaviors and relationships?

      Because in real life, when everyone is responsible, no one is responsible?

      1. Nice attempts, Mr. Snyder,

        But each flawed in different aspects.

        First, direct infringement does not include scienter, and the “non-legally related” is the point at issue.

        Second part 1, “always understood” is nothing more than NOT questioning an assumption. I am directly asking TO question that assumption.

        Second part2, you are ASSuming that this is directed to “behaviors and relationships” outside of patent realm – and this is expressly a bad assumption.

        Third, this reply is s anon sequitur, as the point simply was not to “everyone,” but just to more than one.

        Try again.

          1. Sorry Malcolm, did you have a point…?

            At all….?

            Maybe (just maybe) if you do not like any of my responses, you might actually speak on target to them instead of playing your usual arse self.

  4. If we are to put our faith in Lemley and his views expressed for passage of certain elements of the AIA, should we not also disband with the notion of the “all elements” rule?

    If it “takes a village” to invent, why not have the reciprocal “it can take a village” to infringe?

    Sometimes, maybe, we should not be so intent on writing claims such that only one actor is involved.

    Just a thought….

    1. If it “takes a village” to invent,

      It doesn’t. And nobody ever asserted otherwise.

      Lemley and his views expressed for passage of certain elements of the AIA,

      Which “views” are you referring to exactly? Provide a specific cite so we don’t have to assume that you are working from another communication from your fillings.

      1. And nobody ever asserted otherwise.

        LOL – FA I L – I even gave you the name and you cut and pasted it.

        And then you have to ask about t?

        What a chump.

        1. I even gave you the name

          I’m asking for the quote you’re attributing to Lemley. I don’t recall Lemley ever saying that “it takes a village to invent”. Whatever he might have said, he didn’t say that.

          All this is setting aside the fact that whether a claimed “innovation” was conceived by one person or one hundred people collaboratively has little or nothing to do with joint infringement liability. Sitting here at my desk, I can innovate a couple hundred different methods today each of which requires a thousand distinct actors for infringement. So what?

          1. Your lack of recall is a “you” problem.

            Look up his inputs into the AIA (as I already mentioned).

            Your lack of ability to recognize the parallel of single and multi-actors is also a “you” problem. The “so what” is most definitely a “you” problem.

            1. Your lack of recall is a “you” problem.

              My failure to recall something that never happened is not a problem, “anon.”

              Let’s just put it in straightforward terms: you’re a hack. And that’s definitely your problem.

              1. Ah, but it DID happen, and it has been discussed on this blog in the past.

                Wake up son.

                Your accusation of “hack” is baseless and meaningless ad hominem.

                Try better.

  5. Prior to ’52, patent infringement was considered to be a form of tort. In torts, all participants in causing harm may be jointly and severally liable, but they may have causes of action between them for comparative fault.

    To have direct infringement, all elements of the claim must be practiced to produce the patented product, machine, or the final result of a process. Everyone knowingly or negligently participating by performing a act could be held liable for all damages, but only to the extent they have actual knowledge that they are cooperating in an infringement. The person (company) who does all acts himself, or who is the architect, is liable regardless of knowledge of infringement.

    I am not sure the Supreme Court wants to give us a lecture again, but they just may want to remonstrate on the principle that infringement is a tort and the general rules of torts apply — with the exception that a contributory infringer is not liable, even though he participates in the direct infringement, unless he had knowledge of the infringement, or is only dealing in staples.

  6. Dennis, I am puzzled by this sentence:

    My starting point for thinking about patent infringement begins with the recognition that the corporate defendants held liable for patent infringement ordinarily do not themselves make or use the patented invention. Rather, in most cases, it is employees, contractors, and employees of those contractors who take the actual infringing acts that are then attributed to the accused infringer.

    Corporations are incorporeal. All actions of all corporations/LLCs/etc are performed by officers, “employees, contractors, and employees of those contractors.” Whether it’s Title IX discrimination, securities violations, Clean Air/Water Act, or antitrust, the actions that get a corporate defendant in trouble are actions of its agents. What is the point you want to make?

    1. Maybe it’s a starting point because its an area of law that already deals with attribution from one distinct entity (employee offier etc) to another (the corporation LLC etc).

      Applying that general agency principle to the idea of who is liable, if at all, based on a set of actors (each doing at least one action that is required by a patent claim’s limitations) may elucidate where the proper line of demarcation lies.

    2. Boundy: All actions of all corporations/LLCs/etc are performed by officers, “employees, contractors, and employees of those contractors.” Whether it’s Title IX discrimination, securities violations, Clean Air/Water Act, or antitrust

      Don’t forget “sincere religious beliefs”!

    3. He’s basically recognizing that employment is a kind of inducement. In a global marketplace where labor is often outsourced to contractors, it seems a relevant starting point to a discussion about where the line is to be drawn re: direct vs indirect infringement. I believe the question at the heart of this is who should be held responsible, the mechanic who assembles an infringing product for a pittance, or the suit who profits from it. And to what extent does it matter what corporate entities they cloak themselves with?

    4. David,

      Maybe Prof Crouch was driving at the “edge” of what it means to be under the control of a single actor?

      To find that edge, one may start with the known aspects of “not self but still under control” (all of the things that fall under agency legal theory). It seems like as good a place to start as any other.

      Once that known aspect is recognized, then the next step to explore the area covered by what other separate actors from those that fall under agency theory might still also be able to be captured under the “single actor” rule.

      My point though (badly bungled by Malcolm, gee go figure “folks”), is to ask why does that “single actor” rule have to apply in the first place?

      The presence of that rule seems to be an artificial constraint that really does not fit the nature of all innovations. Sure, a lot of innovation has both single inventors and single infringers, but what is the logical reason to forestall other innovation protection that is not in the single actor mode? Tort law is not so constrained. The effect of this rule is more of what the courts (and the Court specifically) seem to NOT want: “artful scrivining,” as claims to inventions that are more “group oriented” must be manipulated to cover but one side of an actor’s actions.

      Challenging the unstated assumption with the simple observation that innovation (both sides – creation AND infringement) is just not so constrained to single actors may better inform the topic here.

    5. David – Thanks for the comment. Many people think of direct patent infringement as usually involving the situation where the infringer is the entity that actually took the infringing steps. From that starting point, the notion of joint enterprise liability appears to be a major step. My starting point, however begins with a recognition that most direct infringement findings must rely upon the legal construct that the actions of some third party should be attributed to the accused.

      1. Dennis, [T]he actions of some third party should be attributed to the accused.

        Agree.

        And I would like to point once again to Univis Lens where the invention was embodied in the lens blanks and the Supreme Court held that liability (and therefor exhaustion happened) was complete when the infringer sold the lens blanks to a finisher who subsequently finished the lens blanks into bifocal lens using conventional steps. There was direct infringement even if the finishers were completely independent third parties.

        I think the Feds were and still are reluctant to say that the likes of the innocent finishers should be direct infringers subject to the full liability for the infringement that is caused by others. That is what led the down the path to error in BMC Resource ruling.

  7. As I recall, the Supreme Court specifically invited/encouraged the Federal Circuit to expand the contours of direct infringement as they did – precisely to address to gap that would otherwise be left with indirect infringement.

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