On June 2, 2014, the Supreme Court directly impacted U.S. patent law with its decisions
in Limelight Networks, Inc. v. Akamai Technologies, Inc.,
and Nautilus, Inc. v. Biosig
In Limelight, the Court held that Limelight was not liable for induced
infringement because there was no underlying direct infringement of Akamai’s claimed method.
The court concluded that where the performance of every step of a claimed method is not
“attributable to any one person,” direct infringement has not occurred.
Applying this standard,
the Court determined that since Limelight did not perform every step of Akamai’s claimed
method, and it did not control its customers in performing the tagging step, the performance of
the entire method was not attributable to a single entity.
In Nautilus, the Supreme Court held
that Nautilus’s patent was invalid for indefiniteness because the claims “fail to inform, with
reasonable certainty, those skilled in the art about the scope of the invention.”
memorandum sets forth the factual background and procedural history of each case, discusses the
two Supreme Court decisions, recommends the best practice methods in light of each decision,
and posits future considerations for patent practice in the wake of Akamai and Nautilus.
I. Limelight Networks, Inc. v. Akamai Technologies, Inc.
Inconsistent application of the doctrine of divided infringement has significantly
complicated the seemingly straightforward analysis for determining whether induced
infringement has occurred. Under traditional, non-divided circumstances, a party who induces
another to infringe a patent may be held liable for infringement.
Limelight Networks, Inc. v. Akamai Technologies, Inc., No. 12-786, slip op. at 1 (Fed. Cir.
June 2, 2014).
However, the analysis is more
complex when one entity performs only some of the steps of a claimed method, and induces
Nautilus, Inc. v. Biosig Instruments, Inc., No. 13-369, slip op. at 2 (Fed. Cir. June 2, 2014).
Limelight, slip op. at 1.
Id. at 6.
Nautilus, slip op. at 2.
35 U.S.C. § 271(b). someone else to complete the remaining steps. All of the steps of the claimed method are being
performed, but not by the same entity. While it is undisputed that inducement liability can only
occur where there has been direct infringement, it remains unclear when direct infringement
occurs under divided circumstances.
Akamai’s patent claims a method for delivering electronic data using a “content delivery
In Akamai, the Supreme Court attempted to provide
clarity on induced infringement in the context of divided infringement.
Web site owners contract with Akamai to deliver content to individuals on
The patent concerns a method whereby certain components on an owner’s web
site are designated and then stored on Akamai’s servers, where they can be accessed by internet
The process of determining which components will be stored to Akamai’s server is
Limelight operates a similar CDN by carrying out several of the claimed
steps of Akamai’s patent, but has its customers complete their own “tagging.”
asserts that Limelight helps its customers tag the components by “provide[ing] instructions and
offer[ing] technical assistance,” it is clear that Limelight does not tag the components itself.
Akamai sued Limelight for patent infringement, and a jury found Limelight liable.
After the jury verdict, the Federal Circuit decided the precedential case of Muniauction, Inc. v.
The patent-at-issue in Muniauction was directed to methods for “conducting
original issuer auctions of financial instruments.”
The patent provides for an “integrated
system on a single server that allows issuers to run the auction and bidders to prepare and submit
bids” on the internet.
Muniauction alleged that Thomson’s method, “involving bidding on
financial instruments using a computer,” infringed its patent.
Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 341 (1961) (stating that
induced infringement arises “if, but only if [there is] … direct infringement”).
Thomson performed some of the
Limelight, slip op. at 1.
Id. at 1-2.
Id. at 2.
Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008).
Id. at 1321.
Id at 1322.
Limelight, slip op. at 3. steps of the claimed method, while giving its customers access and instructions on how to use the
system in order to perform the remaining steps. The Federal Circuit concluded that “direct
infringement requires that a single party perform every step of the claimed method.”
further explained that if a single party “exercises ‘control or direction’ over the entire process,”
then the performance of every step of the method is attributable to that single party and the direct
infringement requirement is met.
In determining that Thomson did not exercise the required
control or direction over the performance of the remaining steps by its customers, the court held
that Thomson was not liable for direct infringement.
It is important to note that the Federal Circuit, in BMC Resources, Inc. v. Paymentech
L.P., expressly excluded “arms-length” transactions from the realm of indirect infringement, and
articulated that the controlling entity must have another party “perform the steps on its behalf.”
BMC’s patents “disclose a method for PIN-less debit bill payment (PDBP) featuring the
combined action of several participants, including the payee’s agent . . . a remote payment
network . . . and the card-issuing financial institutions.”
Paymentech also offered PIN-less
debit bill payment services, but denied infringement, “arguing that it did not perform all of the
steps of the patented method by itself or in coordination with its customers and financial
The court explained that a party cannot avoid infringement liability by
contracting another party to carry out some steps of the claimed method, stating that it would be
“unfair . . . for the mastermind in such situations to escape liability.”
Muniauction, 1318 F.3d at 1329.
However, the Federal
Circuit held that Paymentech was not liable because it did not exercise the requisite control over
Id. at 1330.
BMC Resources, Inc. v. Paymentech L.P., 498 F.3d 1373, 1380-1381 (Fed. Cir. 2007).
Id. at 1376 (Paymentech performs its PDBP transaction following these steps: (1) “the
customer calls the merchant to pay a bill using an [interactive voice response unit];” (2) “the
merchant collects payment information from the customer and sends it to Paymentech;” (3)
“Paymentech routes the information to a participating debit network;” (4) “the debit network
forwards the information to an affiliated financial institution;” (5) “the financial institution
authorizes or declines the transaction, and if authorized, charges the customer’s account
according to the payment information collected by the merchant;” and (6) “information
regarding the status of the transaction moves from the financial institution to the debit network
and then, through Paymentech, to the merchant who informs the customer of the status of the
Id. at 1381 (stating that “the party in control would be liable for direct infringement”).the debit networks and the financial institutions.
The Federal Circuit recognized that the
control or direction standard for divided infringement “may in some circumstances allow parties
to enter into arms-length agreements to avoid infringement,” but concluded that direct
infringement does not cover multiple parties who perform various steps of a claimed method.
Based on Muniauction, the Akamai trial court determined that since Limelight did not
“control or direct” its customers to perform the “tagging” step of the method, there was no direct
infringement, and therefore, no indirect infringement liability was warranted.
A panel of the
Federal Circuit affirmed, stating that a party that does not perform every one of a patent’s steps
cannot be liable for direct infringement unless “there is an agency relationship between the
parties who perform the method steps or when one party is contractually obligated to the other to
perform the steps.”
The panel held that Limelight was not liable for direct infringement.
However, after rehearing en banc, the Federal Circuit stated that the evidence could favor
Akamai on a theory of induced infringement.
The court explained that induced infringement
under § 271(b) occurs when one party performs some of the claimed steps, while encouraging
someone else to perform the rest, even though no “single entity” is liable for direct
Relying on its previous decisions, the Federal Circuit stated that it has
repeatedly “recited . . . that one of the elements of induced infringement is proof that there has
been direct infringement,” but further articulated that “in none of those cases did the court hold
that, as a predicate for a finding of induced infringement, all the steps of a method claim must be
performed by the same entity.”
Id. at 1381-82.
The court reversed the judgment of the district court,
Id. at 1381.
Limelight, slip op. at 3 (Limelight moved for reconsideration, in light of the Muniauction
Akamai Techs., Inc. v. Limelight Networks, Inc., 629 F.3d 1311, 1320 (Fed. Cir. 2010), rev’d
en banc, 692 F.3d 1301 (Fed. Cir. 2012).
Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301, 1319 (Fed. Cir. 2012) (per
Id. (stating that “requiring proof that there has been direct infringement … is not the same as
requiring proof that a single party would be liable as a direct infringer”).
Id. at 1316-17.concluding that “Akamai should be given the benefit of this court’s ruling disapproving the line
of divided infringement cases that the district court felt compelled follow.”
B. Supreme Court Holding
The Supreme Court reversed the Federal Circuit, harshly stating that the Circuit’s
analysis “fundamentally misunderstands what it means to infringe a patent.”
on the precedent established by the Federal Circuit in Muniauction, the Court stated that the steps
of a claimed method have not all been performed unless they are “all attributable to the same
The Court concluded that no direct infringement had occurred because Limelight
did not perform every step of the method itself, nor did it direct or control its customers to carry
out the tagging step. The Court held that because there can be no induced infringement without
direct infringement, Limelight was not liable under § 271(b). In reaching its conclusion, the
Court reasoned that the Federal Circuit’s decision would require “two parallel bodies of
infringement law” by creating separate standards for direct infringement under § 271(a), and
induced infringement under § 271(b).
Throughout its decision, the Supreme Court repeatedly questions whether the direct
infringement rule presented in Muniauction is the correct one.
However, despite Akamai’s
recommendation that the Court consider whether the Muniauction rule is consistent with pre-
1952 patent law principles, the Supreme Court declined to address the merits of Muniauction.
Instead, the Supreme Court focused only on the limited question of whether “a defendant may be
held liable for inducing patent infringement under … § 271(b) even though no one has
committed direct infringement under § 271(a).”
Id. at 1319.
The Court reasoned that “the possibility that
the Federal Circuit erred by too narrowly circumscribing the scope of § 271(a) is no reason … to
Limelight, slip op. at 5.
Id. at 6 (further stating that the “Federal Circuit seems to have adopted the view that Limelight
induced infringement on the theory that the steps that Limelight and its customers perform
would infringe the [patent] if all the steps were performed by the same person).
Id. (stating that the Court is making its decision by “assuming without deciding that the
Federal Circuit’s holding in Muniauction is correct…”).
Id. at 9 (respondents contend that “patent law principles established before the enactment of
the Patent Act demonstrate that a defendant that performs some steps of a patent with the
purpose of having its customers perform the remaining steps is liable for inducing
Id. at 10.err a second time” by imposing inducement liability where no direct infringement had
The Federal Circuit criticized the Supreme Court’s interpretation as “permitting a
would-be infringer to evade liability,” simply by dividing the performance of a patent’s steps
with another party. But the Supreme Court responded by stating that any such “anomaly” only
results from the Federal Circuit’s construction of direct infringement in Muniauction, and invited
the Federal Circuit to “revisit the § 271(a) question” on remand if it is so inclined.
C. Best Practices
The Supreme Court’s decision limits the reach of induced infringement claims under §
271(b). Under the Akamai standard, the only time a divided infringement scenario will warrant
inducement liability is when the steps of a claimed method are all attributable to a “single
entity.” This standard requires patent holders alleging induced infringement to prove that a
single entity “directed or controlled” the multiple parties performing the steps of the claimed
method, essentially making the controlling party the infringing “mastermind.” In light of
Akamai, the BMC rule would preclude inducement liability between contracting parties, where
the agreements do not illustrate that the “mastermind” party can exercise a high degree of control
or direction over the other parties involved.
Following Akamai, it will be more difficult to enforce method patents containing claims
that make it possible for various steps to be performed by multiple parties. As demonstrated in
Akamai, patent holders of method claims dealing with computer software and servers, and other
similar technologies, are most likely to be affected by this decision. Similarly, the
pharmaceutical and medical diagnostic industries will likely be constrained in their ability to
enforce method of treatment and diagnostic patents that require more than one entity to perform
all of the claimed steps. For example, a method of treatment patent may entail having one doctor
diagnose, a pharmacist prescribe a particular dose of medication, and then another doctor
administer the medication to the patient. In this scenario, induced infringement will only be
found if a single entity performs all of the claimed steps, or exercises the high amount of control
required by the Supreme Court’s standard. One potential solution is thoughtful drafting.
Patent draftspersons should consider Akamai. Many methods require the contribution of
multiple parties, however, when possible, patent drafters should direct their claims to a single
Id. at 9.
Id. at 10.actor who may perform a few of the many steps of the claimed method. Drafters should consider
claim sets directed to the potential “actors” of the covered methods. For example, one set of
claims may cover steps performed by one entity, and another set of claims may seek to cover
steps performed by others. Also, in addition to method claims, patent drafters should always
consider system and apparatus claims in their respective sets.
D. Future Considerations
The Supreme Court expressly stated that the Federal Circuit erred by “too narrowly
circumscribing the scope of § 271(a).” In the final words of its decision, the Court invites the
Federal Circuit to “revisit the § 271(a) question if it so chooses.” Akamai has already urged the
Federal Circuit to address its decision in Muniauction, en banc. Akamai advocates that
Muniauction “improperly restricts the scope” of direct infringement, allowing parties to evade
liability by simply delegating the performance of different steps to other parties. Given this
controversy, it is likely that Akamai’s request will be granted, and the Federal Circuit will sit en
banc. While it is unlikely that the court will completely overrule Muniauction, it is possible that
the Federal Circuit will allow direct infringement to be found even if every step of the claimed
method is not performed or controlled by a single entity, thus providing for induced infringement
liability. In its reconsideration of Muniauction, the Federal Circuit may have the opportunity to
lower the threshold of “control” that is necessary to find induced infringement, where the steps
of a method are divided between multiple parties.
II. Nautilus, Inc. v. Biosig Instruments, Inc.
35 U.S.C. § 112, ¶ 2 of the Patent Act requires a patent specification to “conclude with
one or more claims particularly pointing out and distinctly claiming the subject matter which the
applicant views as the invention.”
35 U.S.C. § 112, ¶ 2.
To meet this statutory requirement, a patent must contain
clear and definite language in order to provide adequate knowledge of what the claimed invention is, so that the public can determine what would cause infringement.
Biosig’s ’753 patent is directed to an exercise heart-rate monitor that is configured to
“mask” electromyogram (“EMG”) signals to allow for a more accurate reading of
electrocardiograph (‘ECG”) signals. The heart-rate monitor is enclosed inside a cylindrical bar
on an exercise machine, which the user grips with both hands. The bar contains two electrodes,
one “live” and one “common.”
asserting invalidity against an issued patent must prove indefiniteness by “clear and convincing
Biosig alleged patent infringement against Nautilus, claiming
that Nautilus’ StairMaster exercise machines used Biosig’s patented electrode technology.
During a Markman hearing to determine the proper construction of the ’753 patent claims, the
parties disagreed as to the proper construction of the claim reciting that the electrodes were to be
mounted in “spaced relationship with each other.”
1. A heart rate monitor for use by a user in association with
exercise apparatus and/or exercise procedures, comprising:
Claim 1 is representative, and recites:
an elongate member;
electronic circuitry including a difference amplifier having a first
input terminal of a first polarity and a second input terminal of a
second polarity opposite to said first polarity;
said elongate member comprising a first half and a second
a first live electrode and a first common electrode mounted on said
first half in spaced relationship with each other;
a second live electrode and a second common electrode mounted
on said second half in spaced relationship with each other;
said first and second common electrodes being connected to each
other and to a point of common potential....
The District Court construed “spaced relationship” to mean that there is a “defined
relationship between the live…and common electrode[s] on one side of the cylindrical bar,” and
Halliburton Energy Servs., Inc. v. M-I LLC, 514 F.3d 1244, 1249 (Fed. Cir. 2008) (stating that
the claims must be “sufficiently definite to inform the public of the bounds of the protected
Nautilus, slip op. at 3-4.
Id. at 6.
'753 patent col. 5 ll. 17-36 (emphases added).either the same or a different relationship between the electrodes on the other side of the bar.
The Federal Circuit reversed and remanded, determining that a claim will only be
indefinite when it is “insolubly ambiguous,” and is not “amenable to construction.”
Nautilus moved for summary judgment, arguing that this construction of “spaced relationship”
was indefinite under § 112, ¶ 2. The District Court granted the motion, holding that the words
“spaced relationship” did not indicate what the spacing should be, nor did it set up any
cognizable parameters to make that determination.
this standard to Biosig’s patent, the Federal Circuit held that the claim language, specification,
and prosecution history made it “plain that the distance separating the live and common
electrodes on each half of the bar” could not be “greater than the width of a user’s hands.”
majority noted that a skilled artisan would interpret “spaced relationship” to mean “that the
distance separating the live and common electrodes on each half of the bar ‘cannot be greater
than the width of a user’s hands’. . . because claim 1 requires the live and common electrodes to
independently detect electrical signals at two distinct points of a hand.”
B. Supreme Court Holding
In a unanimous decision, the Supreme Court vacated the decision of the Federal Circuit,
and remanded the case for further proceedings. The Court recognized that the parties agreed on
three main aspects of indefiniteness: (1) “definiteness is to be evaluated from the perspective of
someone skilled in the relevant art;” (2) “in assessing definiteness, claims are to be read in light
of the patent’s specification and prosecution history;” and (3) definiteness is measured from the
viewpoint of a skilled artisan “at the time the patent was filed.”
Moreover, the Court disagreed
with the Federal Circuit on the proper standard for indefiniteness. The Court stated that the
Federal Circuit’s “insolubly ambiguous” and “amenable to construction” test not only creates
confusion in the lower courts, but also allows patents to issue with imprecise claims.
Nautilus, slip op. at 6.
Id. at 7.
Id. at 8-9.
Id. at 12. Court stated that this standard “diminish[es] the definiteness requirement’s public-notice
function and foster[s] the innovation-discouraging ‘zone of uncertainty.’”
The Supreme Court held that the proper test for definiteness under § 112, ¶ 2 requires a
patent’s claims to “inform those skilled in the art about the scope of the invention with
reasonable certainty,” when viewed in light of the specification and prosecution history.
test attempts to balance the notions that a patent must be “precise enough to afford clear notice”
of the claimed invention, but also allows patent terms some small amount of uncertainty.
Court stated that this approach “mandates clarity, while recognizing that absolute precision is
C. Best Practices
The Court did not apply its newly articulated standard to Biosig’s claims, but
instead remanded the case back to the Federal Circuit.
The Supreme Court’s decision in Nautilus will allow patent infringing defendants
enhanced ability to assert invalidity for indefiniteness when ambiguous patent claim language is
present. As with Akamai, the full effects of this decision will be best articulated when lower
courts have had a chance to implement the new standard. However, patent drafters should be
cautious to avoid unduly ambiguous claim language, and claims should be written to preclude
multiple interpretations that may render the claims indefinite.
D. Future Considerations
It is unclear how broadly lower courts will apply the new Supreme Court indefiniteness
standard. The first indication will come from the Federal Circuit’s decision on remand. The
Federal Circuit may uphold Biosig’s claims just as it did under the prior “insolubly ambiguous”
standard, or it may invalidate the subject claims under the new standard. In any event, the
heightened standard for definiteness may allow summary judgment motions based on § 112, ¶ 2
to be more frequently decided early in the lawsuit, potentially at an early Markman hearing.
Id. at 11 (emphasis added) (stating that this standard “accords with opinions of this Court
stating that ‘the certainty which the law requires in patents is not greater than is reasonable,
having regard to their subject-matter.’”).
Id. at 9-10.
Id. at 11. While it appears that Akamai abrogates induced infringement under divided infringement
circumstances, and Nautilus seems to raise the bar for patent definiteness, the effect of these
decisions will not be fully felt until after the Federal Circuit decides these cases on remand.
Additionally, the Federal Circuit will likely address its previous decision in Muniauction, likely
allowing for a finding of direct infringement when divided infringement occurs. Until the
Federal Circuit and lower courts apply Akamai, patent practitioners should consider claims
directed to logically connected steps of a method. After Nautilus, patent claims should be
reviewed for definiteness and drafted to eliminate the possibility of multiple claim constructions.
However, applying the “reasonable certainty” test for indefiniteness may not require the Federal
Circuit to drastically alter its analysis. From a litigation perspective, the Nautilus standard
presents defendants confronted by ambiguous patent claims a revitalized invalidity theory in