On August 31, 2012, the Federal Circuit sitting en banc held that a defendant may be held liable for induced infringement even if there is no single entity liable for direct infringement. "[A]ll the steps of a claimed method must be performed ... but ... it is not necessary to prove that all the steps were committed by a single entity." Akamai Tech. v. Limelight Networks, Inc., No. 2009-1372 and McKesson Tech., Inc. v. Epic Systems Corp., No. 2010-1291 (Fed. Cir. Aug. 31, 2012).
The Federal Circuit addressed two related cases, both of which were appeals of lower court findings of non-infringement under 35 U.S.C. § 271(b) because no single actor was liable for direct infringement. In the Akamai case, the defendant performed all steps of the claimed invention except for one step that was performed by its customers. In the McKesson case, the defendant's customers and other parties collectively performed all of the steps of the claimed method. Summary judgment had been granted in both cases because, under prior precedent, vicarious liability for induced patent infringement required a predicate act of direct infringement, which required that one party either perform, or "control or direct" the performance of every step of the claim. See BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007).
In a majority opinion joined by six members of the 11-member panel, the Federal Circuit overruled BMC and held that although inducement requires there to be a predicate infringement, it is not necessary that a single party committed that direct infringement. Akamai at 16. "Requiring proof that there has been direct infringement as a predicate for induced infringement is not the same as requiring proof that a single party would be liable as a direct infringer." Id. (emphasis in original). Thus, while the text of 35 U.S.C. § 271(a) requires a single infringer, inducement, which is governed by § 271(b), has no such requirement. There is now no requirement to prove that either agency, or that one party "control or direct" the performance of the other to prove induced infringement based on actions of multiple actors. Both cases were reversed and remanded for reconsideration.
In what may frame the decision for U.S. Supreme Court review, Judge Linn wrote a dissent, joined by three other judges, in which he argued that the majority was disregarding the plain language of the statutory text by holding that "infringement" could have different meanings in § 271(a) and § 271(b). He further argued that the majority was inserting its own policy preference into a statute that was clear in requiring direct infringement by a single entity in cases of induced infringement. "Divorcing liability under § 271(a) from liability under § 271(b) is unsupported by the statue, subverts the statutory scheme, and ignores binding Supreme Court precedent." Akamai at 4 (Linn, R., dissenting). In his view, the majority decision stands at odds with the Supreme Court's earlier decision in Aro Mfg. Co. v. Convertible Top Replacement, which held that there can be no indirect infringement without "infringement under § 271(a)." Id. at 9 (citing 365 U.S. 336, 341 (1961)).
Judge Newman wrote a separate dissent in which she argued a single actor should not be required for indirect infringement under § 271(b) or direct infringement under § 271(a).
What This Means for You
This decision greatly expands the application of induced infringement under § 271(b) and negates the defense of divided infringement. Plaintiffs asserting method patents in cases where no single entity practices all the steps of the claimed method will have a greater ability to pursue claims against indirect infringers. It remains to be seen how broadly courts will now interpret § 271(b) or whether the Supreme Court will grant certiorari in this case.
Originally published in V&E IP Insights E-communication, September 4, 2012
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