Continuing its string of reversals of Federal Circuit patent decisions, the United States Supreme Court has done it again. In Limelight Technologies, Inc. v. Akamai Technologies, Inc., the Court ruled that a defendant can be liable for induced infringement of a patented method only if a single entity directly infringed the patent by performing all of the method's steps.
The Federal Circuit decision at issue made it easier for patent holders to sue in a situations where no single entity performed all of the steps of a patented method, but several parties collectively performed all of the steps. In that decision, the Federal Circuit held that a defendant who performed some steps of a method and encouraged others to perform the rest could be liable for inducement of infringement.
In the Limelight decision, the Supreme Court pulled no punches when explaining that the Federal Circuit got it wrong:
The Federal Circuit's analysis fundamentally misunderstands what it means to infringe a method patent. A method patent claims a number of steps . . . [and] the patent is not infringed unless all the steps are carried out.
The Court's decision left some avenues for bringing divided infringement claims intact by "assuming without deciding" that the Federal Circuit's decision in Muniauction Inc. v. Thomson Corp was correct. In Muniauction, which the Supreme Court previously declined to review on appeal, the Federal Circuit addressed direct infringement under 35 U.S.C. § 271(a) and stated:
where the actions of multiple parties combine to perform every step of a claimed method, the claim is directly infringed only if one party exercises "control or direction" over the entire process such that every step is attributable to the controlling party.
In contrast, when considering the issue of inducement of infringement under 35 U.S.C. § 271(b), the Court noted that "in this case, performance of all the claimed steps cannot be attributed to a single person, so direct infringement never occurred."
The Court noted that other sections of the Patent Act (such as § 271(f)(1)) impose liability on ones who supply a "substantial portion" of a claimed invention, while § 271(b) contained no such lesser standard. To the Court, this distinction made it clear that "when Congress wishes to impose liability for inducing activity that does not itself constitute infringement, it knows precisely how to do so," and it in fact did not do so when drafting the induced infringement clause.
The Court acknowledged that its decision could "permit[] a would-be infringer to evade liability by dividing performance of a method patent's steps with another whom the defendant neither directs nor controls." However, the Court blamed this result on the Federal Circuit's interpretation of § 271(a) in Muniauction rather than its own interpretation of § 271(b) in the case at hand.
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