In two unanimous decisions issued on Monday, the Supreme Court reversed the Federal Circuit’s prevailing tests for determining when a patent is invalid for indefiniteness, and when a defendant may be held liable for induced infringement. Nautilus, Inc.  v. Biosig Instruments, Inc., No. 13-369 (June 2, 2014); Limelight Networks, Inc. v. Akamai Technologies,  Inc., No. 12-786 (June 2, 2014). These cases mark the Court’s fourth and fifth patent cases of the Term, with another major case involving the patentability of computer-implemented inventions—Alice Corp. Pty. Ltd. v. CLS Bank Inat’l, No. 13-298—yet to come by the end of June.

Nautilus v. Biosig Instruments

In Nautilus v. Biosig Instruments, the Court overhauled the Federal Circuit’s test for patent definiteness to “[e] liminat[e] [the] temptation”—which the Court called “powerful”—“to inject ambiguity into … claims.” Under the old test, a claim need only have been “amenable to construction” and not “insolubly ambiguous.” Now, “a patent is invalid for indefiniteness if its claims … fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.” Although “absolute precision” is not required, the Court’s new standard will make it easier to raise, and win, indefiniteness  challenges.

At issue in Nautilus was a patent for a heart-rate monitor used on the handles of exercise machines. In particular, the invention called for using electrodes arranged “in a spaced relationship” to distinguish between “true” signals from the user’s heartbeat and “false” signals produced by body movements.

By thus “filtering out … interference,” the design improved on monitors that indiscriminately measured all electrical signals. The patent’s owner, Biosig, allegedly disclosed the patented technology to StairMaster, which used the technology in its machines without obtaining a license from Biosig. When Nautilus acquired StairMaster and continued to practice the patent, Biosig sued Nautilus for infringement.

In its defense, Nautilus contended the claim-term “spaced relationship” was indefinite, and the district court agreed. The Federal Circuit reversed, holding that “a claim is indefinite only when it is not amenable to construction or insolubly ambiguous.” According to the court, “spaced relationship” meant that the electrodes “cannot be greater than the width of a user’s hands,” because the electrodes had to independently detect electrical signals “at two distinct points of a hand.” A skilled artisan, the court added, could find the proper “spaced relationship” himself by “adjusting design variables, including spacing” to eliminate false signals.

In a decision authored by Justice Ginsburg, the Supreme Court vacated the Federal Circuit’s judgment, holding that a “patent must be precise enough to afford clear notice of what is claimed”; otherwise, the patent would radiate “[a] zone of uncertainty” that could be entered “only at the risk of infringement claims.” “[I]t cannot be sufficient that a court can ascribe some meaning to a patent’s claims,” the Court stated; and “[t]o tolerate imprecision just short of that rendering a claim ‘insolubly ambiguous’ would diminish the definiteness requirement’s public- notice function and foster the innovation-discouraging

‘zone of uncertainty.’” Phrases such as “insolubly ambiguous” and “amenable to construction,” “can leave courts and the patent bar at sea without a reliable compass.” Instead, claims must be “reasonably clear-cut,” meaning that, “viewed in light of the specification and prosecution history,” they must “inform those skilled in the art about the scope of the invention with reasonable certainty.”

Although the precise meaning of “reasonable certainty” awaits future cases, Nautilus creates a new playing field for litigation over indefiniteness. Whereas the “insolubly ambiguous” standard made showing indefiniteness difficult, that has now changed. In the coming days, we expect to see the indefiniteness defense raised more often—and with more success.

Limelight Networks v. Akamai Technologies

The Court’s other unanimous decision issued on Monday likewise reversed the Federal Circuit (sitting en banc), this time by holding that a defendant is not liable for inducing patent infringement under 35 U.S.C. § 271(b) if no one has infringed directly under § 271(a). Limelight Networks, Inc. v. Akamai Technologies, Inc., No. 12-786 (June 2, 2014).

The patent at issue, held by respondent Akamai Technologies, claimed a method of delivering electronic data using a “content delivery network,” or “CDN.” Among other steps, the claimed method required that electronic content be designated for delivery by a process called “tagging.” Petitioner Limelight operated a CDN and carried out several steps claimed in the patent, but Limelight did not “tag” any content within the meaning of the claims. Instead, the “tagging” was performed by Limelight’s customers.

Akamai sued Limelight for patent infringement, and a jury awarded Akamai $40 million in damages. Shortly after the verdict, the Federal Circuit decided Muniauction, Inc. v. Thomson Corp., which held that “direct infringement requires a single party” either “to perform every step of a claimed method” or “exercise[] ‘control or direction’ over the entire process such that every step is attributable” to it. 532 F.3d 1318, 1329-30 (Fed. Cir. 2008). Citing Muniauction, Limelight moved for judgment notwithstanding the verdict, arguing that it neither “tagged” any content nor controlled or directed its customers to do so. The district court agreed, and a panel of the Federal Circuit affirmed, but the en banc court reversed. Without overturning Muniauction, the court held that the evidence could support a judgment for Akamai on the theory that Limelight had induced infringement under § 271(b). According to the court’s reasoning, a defendant could induce infringement by carrying out only some steps of a method patent and encouraging others to carry out the rest—even if no one would be liable for direct infringement.

In a sharply worded opinion written by Justice Alito, the Supreme Court unanimously reversed. The Court began from the undisputed premise that “liability for inducement must be predicated on direct infringement.” “One might think,” the Court said, “that this simple truth is enough to dispose of this appeal.” The Court then rejected the Federal Circuit’s reasoning that “a defendant can be liable for inducing infringement under § 271(b) even if no one has committed direct infringement.” This, the Court said, “fundamentally misunderstands what it means  to infringe a method patent,” which “is not infringed unless all the [claimed] steps are carried out.” Relying on the Federal Circuit’s prior decision in Muniauction, the Court explained that “there has simply been no infringement of the method in which respondents have staked out an interest, because the performance of all the patent’s steps is not attributable to any one person.” As a result, Limelight could not “be liable for inducing infringement that never came to pass.”

The Federal Circuit’s contrary view, the Court explained, “would deprive § 271(b) of ascertainable standards” by permitting “inducement liability  when fewer than all of a method’s steps have been performed.” This, in turn, “would require the courts to develop two parallel bodies of infringement law: one for liability for direct infringement, and one for liability for inducement.”

The Court went on to reject Akamai’s analogies to tort law and to the federal aiding and abetting statute, which allow liability for acts that are divided between multiple actors. According to the Court, these analogies missed the point—which was “not that no third party is liable for direct infringement,” but “that no directed infringement was committed.” The Court further rejected the argument that its interpretation of § 271(b) would “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.” Although the Court “acknowledge[d] this concern,” it noted that “[a]ny such anomaly” results from Muniauction’s interpretation of § 271(a). And “[a] desire to avoid Muniauction’s natural consequences,” the Court said, “does not justify fundamentally altering the rules of inducement liability.”

Finally, the Court declined to review the merits of Muniauction itself as being outside the scope of the question presented. The Court noted that, “on remand, the Federal Circuit will have the opportunity to revisit” Muniauction “if it so chooses.”

Thus, while Limelight is significant in limiting induced infringement where the patented steps are divided among two or more parties, the Federal Circuit may have an opportunity on remand, or in future cases, to revive such claims by expanding the standard for direct  infringement.