Federal Circuit Permits Multi-Party Infringement, But Only For Inducement

The Federal Circuit released its long-awaited en banc opinions regarding multi-party infringement, Akamai Techs., Inc. v. Limelight Networks, Inc. 

Per Curiam

In a 6-4-1 decision, the court held that infringement can be found in cases where (1) a party performs some of the steps of a patented method and induces another party to perform the remaining steps; and (2) where a party induces multiple third parties to collectively perform the steps of a patented method, but no single party has performed all of the steps itself. 

The court’s opinion was per curiam meaning that no particular authorship is attributed.  The judges consituting the majority included Chief Judge Rader and Judges Lourie, Bryson, Moore, Reyna, and Wallach.  The court declined to decide whether direct infringement can be found where the method steps are all performed, but are performed by different entities.

The court had previously held that for a party to be held liable for infringement, direct infringement of the method must be found.  This means that a single entity must have performed each of the method steps.  The court reasoned that because infringement is a strict liability tort (there is no mental requirement of intent or even knowledge), a party may be found liable for infringement by performing some of the method steps, even if it did not know that another party performed the remaining steps.

Inducement, however, requires knowledge that the induced acts constitute infringement.  It requires a specific intent to encourage another’s infringement.  Because there is no such thing as attempted patent infringement, actual direct infringement must occur for there to be liability for inducement.  Simply because the accused infringer has knowingly induced others to commit acts of infringement and the acts are committed by multiple parties is not a reason to immunize the inducing activity.

The court continues its opinion by noting that this result is consistent with the statutory language of § 271 of the Patent Act and with the legislative history of induced infringement.  The court also analogizes the relationship to other areas of the law, including criminal law.

Divided Infringement Dissent

Judge Newman filed a dissenting opinion where she took the court to task for not actually answering the question presented and briefed by the parties.  The court has announced a new rule for inducement, but did not answer the direct divided infringement question that was actually briefed and argued.

Judge Newman would answer the question that “direct infringement may be by more than one entity.”  She argues that until recently, this had been the law.  Nothing in the statute, legislative history, or precedent supports the single entity infringement position.  She argues that patent infringement is not trualy strict liability.  An infringer is not liable for damages until he has actual knowledge of the patent (unless the patented product is properly marked).

Single Entity Infringement Dissent

Finally, Judge Linn, joined by Judges Dyk, Prost, and O’Malley filed a dissent where he argued for the single entity infringement requirement.  Judge Linn argues that the language of the statute requires a single entity interpretation. 

He (similar to Judge Newman) also argues that the court cannot define direct infringement and indirect infringement differently.  There can be no indirect infringement without a finding of direct infringement.  Congress enacted sections on direct infringement (271(a)), inducement (271(b)), and contributory infringement (271(c)).  By the enactment of subsections (b) and (c) (and not other sections on joint liability or other theories of multi-party liability), Congress intended to limit direct infringement in subsection (a) to infringement by a single entity.

He takes issue with Judge Newman’s strict liability assertion.  Just because damages do not apply unless the infringer had knowledge of the patent (or marking), he is still liable for infringement in the absence of such knowledge.  Thus, patent infringement is a strict liability tort.

Finally, Judge Linn again provides instruction to patent applications and attorneys.  This problem can generally be avoided by proper claim drafting to cover the various infringing parties.

Analysis

The court obviously had a lot of trouble with this case.  It was initially argued in November, nearly 10 months ago.  Consensus was apparently elusive.  I assume that the per curiam opinion was all the court could reach a majority on.  Apparently the direct infringement single v. multi-party infringement question could not be resolved.

I don’t buy Judge Linn’s reading that the statute is clear that § 271(a) only applies to a single entity.  The court needs to figure this out, but appears to be stuck on whether patent infringement is a strict liability tort.  It appears worried about “accidental” joint infringement.

Judge Linn’s claim drafting admonition is another reminder that proper preparation of a patent application can have great consequences to the value of the resulting patent.

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7 Responses to “Federal Circuit Permits Multi-Party Infringement, But Only For Inducement”

  1. Inventive step | Platformblog Says:

    […] Federal Circuit Permits Multi-Party Infringement, But … – Inventive Step […]

  2. Global Week in Review 5 Sept 2012 from IP Think Tank Says:

    […] Akamai v Limelight and McKesson v Epic Systems (Patently-O) (PharmaPatents) (Beeser) (PatLit) (Inventive Step) (PatentMath) (Patent Docs) (IP […]

  3. gold price Says:

    The problem (according to the majority): “[r]ecent precedents of this court have interpreted section 271(b) to mean that unless the accused infringer directs or controls the actions of the party or parties that are performing the claimed steps, the patentee has no remedy, even though the patentee’s rights are plainly being violated by the actors’ joint conduct.” This is the wrong approach, according to the opinion, but only a bare majority of the Court decided not to decide the question of whether there can be direct infringement when no single actor performs all the method steps, stating that induced infringement can be used to decide the questions in both cases.

  4. Patent News Update | INVENTIVE STEP Says:

    […] Akamai v. Limelight.  The Court issued a CVSG order in this case in June where it asked for the views of the Solicitor General as to whether it should hear this case.  Akamai concerns multi-party infringement where more than one party completes all of the steps required in a patent claim.  The issues relate to both direct infringement and indirect infringement (inducement or contributory infringement). […]

  5. Supreme Court to Hear Several Patent Cases | INVENTIVE STEP Says:

    […] Limelight Networks, Inc. v. Akamai Techs., Inc. […]

  6. Federal Circuit is Reversed, Twice | INVENTIVE STEP Says:

    […] 2012, a fractured Federal Circuit permitted that multi-party infringement for induced infringement, even in the absence of a direct […]

  7. Global Week in Review 5 Sept 2012 from IP Think Tank | Duncan Bucknell Says:

    […] Akamai v Limelight and McKesson v Epic Systems (Patently-O) (PharmaPatents) (Beeser) (PatLit) (Inventive Step) (PatentMath) (Patent Docs) (IP […]

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