On August 31, 2012, a divided Court of Appeals for the Federal Circuit issued an en banc opinion in two related cases involving the issue of “divided infringement” of method claims—that is, infringement where no single entity performs all steps of a method claim, but rather multiple entities collectively perform these steps. In its much-anticipated decision in Akamai Techs., Inc. et al. v. Limelight Networks, Inc. and McKesson Techs., Inc. v. Epic Systems Corp., No. 2009-1372, 2012 WL 3764695 (Fed. Cir. Aug. 31, 2012) (en banc), a 6-5 majority held that proving infringement by inducement of a method claim no longer requires proof that a single entity directly infringed each step of that claim. The Court held that a defendant may be liable for inducing infringement if the defendant has induced one or more other parties to perform the steps of the claimed method, even if no single party has performed all of those steps. In so ruling, the Court overruled precedent to the contrary in BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007).
Previously, in BMC Resources, the Federal Circuit had held that induced infringement occurs only when a single actor is liable personally or vicariously for the underlying direct infringement. In overruling BMC Resources, the Akamai/McKesson decision has made it easier to prove induced infringement. Under the new standard, a party can be liable for inducing infringement if it can be shown that it knows of the patent and either: (1) induces several parties to carry out the steps of the claimed method jointly; or (2) performs some of the steps of the claimed method itself and induces a third party to perform the remaining claim steps. Notably, the Federal Circuit did not overturn the single-entity requirement for direct infringement under 35 U.S.C. 271(a), which still requires that a single entity (or its agents) perform all the steps of a claimed method.
The patent claims at issue in Akamai and McKesson were directed to methods of use. In Akamai, defendant Limelight was accused of performing all but one of the steps of Akamai’s claimed method of delivering web content. Limelight’s customers performed the last step, pursuant to Limelight’s instructions. The claimed method in McKesson related to electronic communication between healthcare providers and their patients. The defendant, Epic Systems, did not perform any of the steps of the claimed method itself. Rather, patients and healthcare providers performed the claimed steps via software provided by Epic Systems. A Federal Circuit panel affirmed each district court decision, both of which found the defendant did not infringe because no single actor performed all the steps of the claimed methods. See McKesson Techs., Inc. v. Epic Systems Corp., No. 2010-1291, 2011 WL 1365548 (Fed. Cir. Apr. 12, 2011); Akamai Techs. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010). The en banc Court reheard the Akamai and McKesson cases jointly. The Court reversed and remanded both cases for further proceedings at the district court level in light of its opinion.
The majority relied on a variety of sources in support of its opinion. In particular, the Court looked to the legislative history of Section 271 and concluded that Congress did not contemplate a “single-entity” requirement. Slip op. at 28, 35. The Court also found support for its interpretation in criminal and tort law, which allow for secondary liability even if the individual accused of the underlying crime or tort is not found liable. Slip op. at 21-26.
Judges Linn and Newman dissented separately. Judge Linn, joined by Judges Dyk, Prost, and O’Malley, argued that the single-entity rule should apply to Section 271(b) as well as 271(a), since the definition of “infringement” as defined under Section 271(a) applies to both direct infringement under 271(a) and induced infringement under 271(b). Dissent of J. Linn, slip op. at 7-8. He argued that by defining the term “infringement” differently under 271(a) and (b), the majority took a position unsupported by the statutory text and assumed a role reserved for Congress. Id. Judge Newman, on the other hand, would have eliminated the single entity requirement in all contexts. Dissent of J. Newman, slip op. at 16, 38.
The Federal Circuit’s decision in Akamai and McKesson strengthens the law of induced infringement for patentees. It gives added value—and potentially breadth, in terms of who can infringe—to patents with method claims, especially for methods in which different entities perform different claim steps. Before this decision, defendants often asserted divided infringement as a defense in cases in which they did not perform all steps of a method claim. Likewise, patent drafters were often careful to draft claims in a manner that ensured that a single entity would perform all the steps. The Akamai/McKesson decision reduces the need for this particular variety of claim-drafting creativity and raises the bar for defendants asserting a divided infringement defense. However, the Federal Circuit’s decision may not be the last word on this issue. Given the divided en banc decision and the attention these cases have garnered, it is likely the Supreme Court will hear these cases.