On June 2 2014 a unanimous Supreme Court reversed an en banc Federal Circuit decision and held that a defendant cannot be liable for inducing infringement of a patent under 35 USC § 271(b) when no one has directly infringed the patent under Section 271(a) or any other statutory provision.(1)
Akamai Technologies, Inc owns a patent covering a method for delivering web content efficiently by placing some content on a set of replicated servers and modifying the provider's webpage to instruct web browsers to retrieve content from those servers. Limelight Networks, Inc maintains a network of servers and similarly allows for efficient content delivery by placing some content elements on its servers and instructing its customers on the steps to modify their webpages, rather than modify the content provider's webpages itself. Because neither Limelight nor its customers individually performed all of the steps of the patented method, there was a question as to whether there was direct infringement under 35 USC § 271(a).
Sitting en banc, on August 31 2012 a sharply divided Federal Circuit issued a per curiam opinion (Judges Rader, Lourie, Bryson, Moore, Reyna and Wallach) holding that Limelight could be liable for inducing infringement of the patented method under 35 USC § 271(b) if:
- it knew of Akamai's patent;
- it performed all but one of the steps of the claimed method;
- it induced its customers to perform the final step; and
- the customers performed the final step.(2)
Notably, it also held that to establish liability for inducing infringement of a method claim, "it is not necessary to prove that all the steps were committed by a single entity".
In dissent, Judge Newman criticised the court's finding of liability for indirect infringement of a method claim in the absence of any liability for direct infringement. She argued that this decision presented a dramatic change in the law of infringement. Judge Linn in dissent (joined by Judges Dyk, Prost and O'Malley) also criticised the ruling, stating that it was contrary to the Patent Act and Supreme Court precedent, and effectively rewrote 35 USC §§ 271(a) and (b).
On January 20 2014 the Supreme Court granted certiorari and on April 30 2014 it heard oral argument.
Writing for the court, Justice Alito noted that neither the Federal Circuit nor the respondents had disputed that liability for inducing infringement was predicated on there being direct infringement. But the Supreme Court indicated in no uncertain terms that the Federal Circuit had erred in concluding that direct infringement could exist independently of a violation of the statute governing direct infringement, 35 USC § 271(a); indeed, the Supreme Court stated that the Federal Circuit's en banc analysis "fundamentally misunder[stood] what it means to infringe a method patent".
In its own analysis, the Supreme Court assumed as correct the Federal Circuit's decision in Muniauction, Inc v Thomson Corp(3) – that there could be no direct infringement unless one defendant actually performed all the claimed method steps, or directed or controlled others who performed them. Given that in the instant case all steps were not attributable to any one person, and because there can be no inducement of infringement under Section 271(b) where there has been no direct infringement, the Supreme Court held that Limelight's conduct did not amount to inducing infringement.
The Supreme Court reasoned that the Federal Circuit's view would deprive the law governing inducement, 35 USC § 271(b), of ascertainable standards, and would require the development of two parallel bodies of infringement law: one dealing with direct infringement, and the other dealing with inducement. Additionally, echoing a policy point that it had made previously, the Supreme Court indicated that Congress knew how to impose liability for inducing activity, referring in this regard to 35 USC § 271(f)(1), and yet did not do so in this instance. Accordingly, the Supreme Court said: "The courts should not create liability for inducement of non-infringing conduct where Congress has elected not to extend that concept."
In closing, the Supreme Court declined an invitation by respondents to review the merits of the Federal Circuit's Muniauction decision regarding the rule for direct infringement under 35 USC § 271(a), saying that the question went beyond the scope of the grant of certiorari. Notably, however, the court said that on remand: "the Federal Circuit will have the opportunity to revisit the § 271(a) question if it so chooses." Given this, there still may be significant case law from the appellate courts in the future regarding the scope of liability in multi-party infringement situations.
For further information on this topic please contact Robert H Fischer or Anna E Dwyer at Fitzpatrick, Cella, Harper & Scinto'by telephone (+1 212 218 2100), fax (+1 212 218 2200) or email ([email protected] or [email protected]). The Fitzpatrick, Cella, Harper & Scinto website can be accessed atwww.fitzpatrickcella.com.
Endnotes
(1) Limelight Networks, Inc v Akamai Technologies, Inc.
(2) Akamai Technologies, Inc v Limelight Networks, Inc, 692 F 3d 1301 (Fed Cir 2012) (en banc).
