The U.S. Supreme Court recently issued a unanimous opinion making it easier for parties to circumvent method patents. Limelight Networks, Inc. v. Akamai Technologies, Inc., 2014 U.S. LEXIS 3817 (June 2, 2014).
Method patents claim a process that is made up of one or more steps. Direct infringement requires a single party to perform every step of a claimed method. A single defendant who does not itself perform each and every step may nevertheless be guilty of direct infringement if the defendant exercises control or direction over each and every step.
Limelight carried out several steps claimed in Akamai's patent, but its customers, rather than Limelight, performed a step known as "tagging." Limelight did not exercise control or direction over its customers' performance of "tagging." Akamai sued Limelight for infringement. A jury awarded Akamai more than $40 million in damages.
Limelight moved for judgment notwithstanding the verdict because it did not perform all the steps of the method itself and did not exercise control or direction over its customers. The district court granted the motion.
The en banc Federal Circuit reversed, holding that when a defendant carries out some steps constituting a method patent and encourages others (who are not its agents or under its control) to carry out the remaining steps––even if no one would be liable as a direct infringer––nevertheless, the defendant is guilty of induced infringement.
Justice Alito, writing for a unanimous Supreme Court, reversed, holding that where there is no direct infringement, there can be no inducement of infringement. When performance of all claimed steps could not be attributed to Limelight because Limelight's customers' tagging was not under Limelight's control or direction, direct infringement never occurred. Because liability for inducement must be predicated on direct infringement, Limelight could not be liable for inducing infringement that never came to pass.
The Court acknowledged that its ruling allows a potential infringer to evade liability by dividing method steps with another party outside its direction and control, but concluded that to rule otherwise would fundamentally alter the text and structure of the Patent Act, giving rise to a concept of infringement untethered to the statutory text and difficult for lower courts to apply consistently.
So, avoiding pitfalls of divisible methods will depend on practitioners' skills in drafting and prosecuting method claims while anticipating attempts to divide said method claims between parties.
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