Akamai Technologies, Inc. v. Limelight Networks, Inc.1:
Induced Infringement Does Not Require A Direct Infringer
In a per curiam opinion, a narrow majority of the Court of Appeals for the Federal Circuit, sitting en banc, revisited the Federal Circuit’s prior BMC Resources, Inc. v. Paymentech, L.P.2 and Muniauction, Inc. v. Thomson Corp.3 decisions. The BMC and Muniauction opinions addressed so-called “divided infringement” of method claims. In cases of divided infringement, no single entity performs every step of the claimed method, but multiple parties, perhaps working in concert, perform each required step of the asserted method.
Under BMC, a patentee had no remedy for infringement under 35 U.S.C. § 271(a) in divided infringement situations unless one party, acting as a “mastermind,” performed some required steps of a claimed method and exerted “direction or control” over another party that performed the remaining steps. In Muniauction, the court went even further, holding that the direction or control language of BMC required more than controlling access to an allegedly infringing system or the issuance of instructions for performing a claim step. Something more, such as a contractual obligation to follow instructions on performance of a claim step, was necessary.
Applying the Federal Circuit’s decisions in BMC and Muniauction, district courts in two cases, Akamai Technologies, Inc. v. Limelight Networks, Inc. and McKesson Technologies, Inc. v. Epic Systems Corp., determined, as a matter of law, that the defendants did not infringe the asserted method claims, because no single party either (1) performed all the required steps of the asserted claims; or (2) acted as a mastermind, performing some of the required claim steps on its own and directing another party to perform the remaining claim steps. In both cases, the named defendant designed—and, with respect to defendant Limelight, operated—computer systems that, when used as instructed, arguably enabled performance of all the steps of asserted patents. But no party directed or controlled the performance of all the claim steps as required by BMC and Muniauction. Because of this lack of direction or control, no single party directly infringed the asserted claims under 35 U.S.C. § 271(a). The lack of a single-party direct infringer also prevented the patentees from recovering for induced or contributory infringement under 35 U.S.C. §§ 271(b) and (c). The patentees in both cases thus had no infringement remedy available to them even though users of the accused systems, acting together but without direction or control, performed all the required steps of the claimed methods.
After three-judge panels of the Federal Circuit affirmed the non-infringement determinations of the district courts, the Federal Circuit took the two cases up en banc to address this divided infringement problem, where all of the steps required for infringement are performed by multiple parties but the patentee is left with no remedy.
Rather than change or uphold the Federal Circuit’s BMC and Muniauction decisions, the majority opinion, authored collectively by Judges Rader, Lourie, Bryson, Moore, Reyna, and Wallach, attempted to close this loophole by re-interpreting the direct infringement element required to find induced infringement under 35 U.S.C. § 271(b). Inducement requires that a party induce direct infringement of an asserted method. Historically, the Federal Circuit had adhered to the principle that the direct infringement element of induced infringement required a single direct infringer (i.e. the induced party performed all the required steps of an asserted method claim).
The majority in Akamai held that this interpretation was too narrow and that induced infringement did not require a single direct infringer; instead, it just required direct infringement. The majority thus held that a party that induces multiple third parties to perform, between them, all required steps of a claimed method may be liable for induced infringement even if none of the induced parties would be liable as a direct infringer. Thus, the majority concluded, inducement requires direct infringement—every required step of an asserted method claim must be performed—but not a single direct infringer. In essence, the majority held that the direct infringement element of induced infringement does not require a single liable direct infringer.
To support its new interpretation of the direct infringement element of induced infringement, the majority referenced testimony before Congress regarding the bill that became the 1952 Patent Act. That testimony, the majority suggested, demonstrated that the Patent Act was intended to provide patentees with a remedy for infringement in situations like those presented in the Akamai and McKesson cases.
After articulating the Federal Circuit’s new standard for induced infringement, the majority vacated the legal determinations of the district courts in the Akamai and McKesson cases for further consideration consistent with the majority’s decision.
Judge Linn wrote in dissent, joined by Judges Dyk, Prost, and O’Malley. The majority, Judge Linn argued, stepped into Congress’s domain by creating a remedy for patentees in a situation where Congress did not. This was particularly evident to Judge Linn based on the fact that Congress had recently overhauled the Patent Act. During the development of that overhaul, Congress was aware of the Federal Circuit’s precedent that (1) the direct infringement element of inducement required a single direct infringer, and (2) there was no single direct infringer where multiple parties performed all the steps of a method claim but not party exerted direction or control. Congress had previously added to the behavior that could constitute direct infringement to address special situations, such as the filing of an application to the FDA for approval of a generic drug. If Congress had intended to address the divided infringement problem, Judge Linn reasoned, it could have done so.
Judge Linn also criticized the majority for, in his opinion, punting on the question the court convened en banc to address—divided infringement—by undoing the court’s precedent on inducement. According to Judge Linn, none of the parties or amici address the issue of changing the law regarding inducement in their briefs, and the majority erred by using this avenue to close what it viewed as a loophole.
Judge Newman also wrote in dissent, asserting that the divided infringement problem could be adequately addressed using traditional joint-tort principles. By turning the clock back to before BMC and Muniauction, a court confronted with the issue of divided infringement absent direction or control could simply find any party involved in the infringement of a method claim liable for the infringement. Such a court could then apportion damages based the relative fault of any joint tortfeasors as it would in, for instance, a negligence case.
Authored by Eric Chad of Merchant & Gould, P.C.
1 Nos. 09-1372, -1380, -1416, -1417, 2010-1291 (Fed. Cir. Aug. 31, 2012).
2 498 F.3d 1373 (Fed. Cir. 2007).
3 532 F.3d 1318 (Fed. Cir. 2008).