June 3, 2014
On June 2, 2014, the Supreme Court of the United States held that induced infringement requires a direct infringer–i.e., a single entity who performs every step of a patented method– reversing an en banc decision of the Federal Circuit. Writing for a unanimous Court, Justice Alito explained that there can be no induced infringement under 35 U.S.C. § 271(b) unless there is an act of direct infringement under Title 35. Limelight Networks, Inc. v. Akamai Technologies, Inc., No. 12-786 ("Akamai").
Discussion
Is there infringement liability where multiple actors perform the steps of a patented method? That is the big question here, and the Court’s decision answers it in one specific situation: whether someone who "induces" multiple actors to perform the patented steps of a claim may be liable for infringement under 35 U.S.C. § 271(b) ("Whoever actively induces infringement of a patent shall be liable as an infringer.").
It had long been the law that "induced infringement" requires an act of direct infringement. Sitting en banc, the Federal Circuit appeared to change that rule in 2012, when it announced that inducement liability could be found even if no single entity performed all of the steps of the claimed method. Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012). Defendant Limelight performed most of the claimed steps, and allegedly induced its customers to carry out the remainder of the method. The en banc court held that even though the division of the steps between Limelight and its customers (or among other independent entities) meant that there was no direct infringer, Limelight could nevertheless be liable as an inducer.
Many in the bar saw this en banc decision on indirect infringement as foreshadowing liability for divided direct infringement. Direct infringement of a method claim requires that the performance of every claimed step be attributable to one person–i.e., a single entity must itself perform every step, or, through an agency relationship or contract, "direct[] or control[]" others who perform the steps. Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008). With "divided direct infringement," however, independent defendants who each perform a claim step could be liable for direct infringement even though no single defendant performed all of the steps.
Yesterday’s decision only concerns inducement liability, and holds that a defendant is not liable for inducing infringement under § 271(b) when no one has directly infringed under § 271(a) or any other statutory provision. See Slip Op. at 5. Thus, the rule that liability for indirect infringement requires a direct infringer remains the law. Justice Alito’s opinion also underscored that liability for divided direct infringement was not before the Court. Its ultimate fate–by the Court, or by Congress–remains to be seen.
Lessons
At least until the Supreme Court or the en banc Federal Circuit has an opportunity to consider the Muniauction rule and the absence of liability for divided direct infringement, the new decision teaches two lessons.
First, an entity that allocates steps of a method claim among different, independent actors will probably not be held liable for induced infringement–so long as those actors are neither agents, nor contractually bound.
Second, an entity who uses one agent to perform some claimed steps, and performs the remaining steps itself (or contracts with another entity to perform them) can still be subject to liability as a direct infringer.
Gibson Dunn filed an amicus brief in the Federal Circuit in 2012 in Akamai in support of Limelight Networks on behalf of Facebook, Inc. and LinkedIn.
Gibson Dunn’s lawyers are available to assist with any questions you may have regarding these issues. For further information, please contact the Gibson Dunn lawyer with whom you work, the authors, Joseph Evall or Jessica Greenbaum, or any of the following members of the firm’s Intellectual Property Practice Group:
Josh Krevitt – Co-Chair, New York (212-351-2490, [email protected])
Wayne Barsky – Co-Chair, Los Angeles (310-557-8183, [email protected])
Mark Reiter – Co-Chair, Dallas (214-698-3360, [email protected])
Joseph Evall – New York (212-351-3902, [email protected])
Thomas G. Hungar - Washington, D.C. (202-955-8500, [email protected])
Matthew D. McGill – Washington, D.C. (202-887-3680, [email protected])
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