The U.S. Supreme Court reversed the U.S. Court of Appeal for the Federal Circuit holding that a defendant may not be liable for inducing infringement of a patent under 35 U.S.C. § 271(b) when no one has directly infringed the patent under 35 U.S.C. § 271(a) or any other statutory provision. Limelight Networks, Inc. v. Akamai Technologies, Inc., 572 U.S. __ (2014). The decision limits the ability of patent holders to protect technologies that are increasingly relevant in today’s economy. We are in an era of specialization and collaboration. Digital technology moves information among users. Patient samples may be taken in the home or in a physician’s office, analyzed and in a laboratory and transmitted to a treating physician who prescribes therapy. Thus, in many instances, more than one individual or entity can be involved in providing a digital service or medical method. Today’s decision dictates that these method patents are only enforceable if one party practices all steps of the method.
Patenting multi-party methods typically requires incorporating the steps performed by each actor in the method. For diagnostic and treatments methods in personalized medicine, a patent claim could recite the steps of: 1) obtaining the patient sample; 2) analyzing the sample for the presence of a genetic marker using one or more specific technologies; 3) treating the patient based on the information learned from the analysis of the patient sample.
Enforcement of multi-party patent claims is difficult because to prove direct infringement under 35 U.S.C. § 271(a), one party must perform all elements of the patent claim. Section 271(b) of the Patent Statute covers indirect infringement, which governs situations when a defendant participates in infringement but does not directly infringe the patent. To enforce a patent claim that requires more than one actor, plaintiffs allege infringement under a theory of induced infringement. In 2012, the Federal Circuit in Akamai Technologies, Inc. v. Limelight Networks, Inc. overruled its prior precedent to hold that if a party induced others to act with him or induced others to perform all elements of the claim, the party can be liable for induced infringement. The Federal Circuit reasoned that a party who knowingly induces others to engage in acts that jointly practice the steps of a patented method – and those who knowingly induces others to practice those steps – has had precisely the same impact on the patentee as the party who induces the same infringement by a single user.
The Patented Method
The Massachusetts Institute of Technology is the assignee of U.S. Patent No. 6,108,703 (the ‘703 Patent) which claims a method of delivering electronic data using a “content delivery network” or “CDN.” Akamai Technologies is the exclusive licensee of the ‘703 Patent. The ‘703 Patent claims technology that allows for the designation of certain components of a content provider’s Web site (such as video or music files) to be stored on Akamai’s servers and accessed from those servers by internet users. “Tagging” is the process of designating components to be stored on Akamai’s servers. Tagging increases the speed by which internet users can access content.
Limelight also operates a CDN and performs several of the steps claimed in the ‘703 Patent. But rather than tagging those components on its customer’s Web sites that it intends to store on it servers (a step in the ‘703 patented method), Limelight requires its customers to do their own tagging. Akamai alleged that Limelight provides instructions and offers technical assistance to its customers regarding how to tag/
One Party Must Perform All Claim Elements
In reversing the Federal Circuit, the Supreme Court cited its prior precedent, noting that “our case law leaves no doubt that inducement liability may arise ‘if, but only if, [there is]…direct infringement.” Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S 336, 341 (1961).” Slip Op. at 5. In a footnote, the Supreme Court acknowledged that Aro addressed the issue of contributory infringement under Section 271(c), but “we so no basis to distinguish for these purposes between the two, which after all spring from common stock.” Slip Op. at 5.
The Court stated that to apply the Federal Circuit’s standards would deprive §271(b) of “ascertainable standards” posing the question of how could a court determine if the patent holder’s rights have been invaded? Slip Op. at 6. The Court provides that example of a defendant paying another to perform just one step of a 12-step process but no other actor performs the remaining 11 steps. In that case, the Court reasoned,
“the defendant has encourage infringement, but no principled reason prevents him from being held liable for inducement under the Federal Circuit’s reasoning, which permits inducement liability when fewer than all of a method’s steps have been performed within the meaning of the patent. The decision below would require the courts to develop two parallel bodies of infringement law: one for liability for direct infringement, and one for liability for inducement.”
Slip Op. at 6.
Yesterday’s Law in Today’s Economy
The Supreme Court’s interpretation of induced infringement fails to acknowledge today’s global “wall-less” economy. Information, whether digital or physical, is easily passed among users. Innovation that harnesses the ability to seamlessly connect users of that information should be protectable and encouraged. The Court’s decision fails in both regards.