Federal Patent Law contains an entire section, §271, dedicated to patent infringement. This section outlines three types of infringement – direct infringement (§271(a)), induced infringement (§271(b)), and contributory infringement (§271(c)). The direct infringement subsection states:
“. . . whoever without authority makes, uses, offers to sell, or sells any patented invention within the United States, or imports into the United States any patented invention . . . infringes the patent.” (emphasis added)
In the context of utility patents, direct infringement occurs when one makes, uses, offers to sell, or sells a device that possesses all the limitations in a patent’s claim. For method patents, a party directly infringes when it performs every step in a claim of a patent. In either case, an infringer does not have to know that the patent exists, simply committing the steps is infringement.
The U.S. Federal Circuit Court of Appeals defines the “whoever” in §271(a) according to the “Single Party” or “Mastermind” Rule. The rule requires a single entity to commit all infringing actions, either personally or vicariously. Accordingly, liability attaches when someone directs a third party to undertake some of the infringing activity on its behalf. This makes sense, because as stated, direct infringement requires a party to infringe upon all limitations in a patent’s claim. If companies could escape liability by having intermediaries perform a token step in a method patent – or add a single component to a device covered by a utility patent – patent rights would be nearly worthless.
However, the “Mastermind” / “Single Party” Rule has some – albeit poorly defined - limitations. The Federal Circuit has held that the infringer must exercise control over the third party’s actions such that all activity can be attributed to the “mastermind.” However, direct infringement does not occur when the relationship between the alleged infringer and the third party is “arm’s-length cooperation.”
Seemingly, these arm’s-length relationships are where induced infringement, §271(b), would come into play. In pertinent part, § 271(b) states, “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” This law recently became the center of a controversy in a case decided by the Supreme Court, Limelight Networks, Inc. v. Akamai Technologies, Inc. As is commonplace with patent litigation, the holding came down to the interpretation of a few words, and left more questions than answers.
Akamai Technologies holds the rights to a method patent for the efficient delivery of web content. Akamai owns several server centers, spread across the globe. Web sites contract with the company to place content on these servers. Generally, these are large data or multi-media files. Akamai, in turn, delivers this content to the web sites’ customers. This system permits increased download speed because customers are able to access the content on an Akamai server within their geographic region. Further, it eliminates the need for web sites to implement their own global server systems. The method patent’s steps require that first, Akamai software parse through a customer’s web site and automatically “tag” files for server storage. The servers then copy these tagged files for customer access. Limelight Networks hosts a similar server system. However, rather than automatically tagging files, Limelight’s customers must tag their files designated for server storage. Further, the company provides its customers with detailed instructions on how to tag files, and the system requires this step.
Akamai brought suit claiming that Limelight infringed the method patent under theories of both direct and induced infringement. In its direct infringement argument, Akamai claimed that Limelight exercised direct control over its customers when they performed the method patent’s tagging-step. Alternatively, Akamai argued that Limelight induced its customers to infringe the method - by providing a system requiring users to perform the tagging-step, and including the requisite instructions.
In its holding, the Federal Circuit declined to address the matter under direct infringement. Rather, the Court decided the case using § 271(b), induced infringement. In Limelight’s situation, there was no direct infringement, because the company did not perform all claimed steps of the method patent – its customers finished the job. Moreover, the Court held that Limelight did not wield sufficient control over its customers to be a direct infringement “mastermind.”
However, luckily for Akamai, the Circuit held that infringement under §271(b) does not require that any party – whether the inducer, induced, or a combination thereof - commit direct infringement. Accordingly, the Circuit held that induced infringement occurred if: (1) Limelight knew of Akamai’s patent; (2) performed all but one of the patent’s steps; (3) induced the content providers to perform the remaining step, tagging; and (4) that the content providers actually engaged in tagging.
The Federal Circuit justified its reasoning, in part, by dissecting the language of §271 (a) and (b) respectively. First, it noted that §271(a) states that whoever makes, uses, sells, etc., “infringes the patent.” In contrast, §271(b) labels anyone who actively induces “infringement” to be “an infringer.” The Court reasoned that the differing structures between the subsections indicated that §271(b)’s “infringement” did not necessarily refer to the same actions as outlined in §271(a). Taking it another step, the Circuit determined that freed induced infringement from the “Mastermind” requirement.
Further, the Court likened induced infringement to criminal conspiracies. A defendant is guilty of conspiracy when it assists or induces a third party to commit a crime. The defendant’s guilt does not depend on whether the third party actually carried out the offense. Rather, a defendant’s guilt rests solely on whether it induced another to commit a crime. Accordingly, the Court determined, that §271(b) implied the same treatment for infringers.
On June 2nd, the Supreme Court handed down its own ruling in Limelight Networks, Inc. v. Akamai Technologies, Inc. In short, the Court concluded that a finding of induced infringement requires direct infringement. However, the opinion – rife with scathing remarks towards the Federal Circuit– leaves several key issues for the lower court to address on remand.
The Supreme Court vehemently disagreed with the Federal Circuit’s decision. The Court plainly stated, “ . . . our case law leaves no doubt that inducement liability may arise if, but only if, there is direct infringement.” Further, Justice Alito stated:
“The Federal Circuit’s analysis fundamentally misunderstands what it means to infringe a method patent. A method patent claims a number of steps; under this Court’s case law, the patent is not infringed unless all the steps are carried out.”
Further, Justice Alito reiterated that direct infringement requires all steps be attributable to the same actor.
However, the Court stressed that the Federal Circuit’s interpretation of § 271(b) was at issue, not that of § 271(a). Justice Alito based the opinion “[a]ssuming without deciding that the Federal Circuit’s” “Mastermind” requirement was good law. Further, the Justice went on:
“But the possibility that the Federal Circuit erred by too narrowly circumscribing the scope of § 271(a) is no reason for this Court to err a second time by misconstruing §271(b) to impose liability for inducing infringement where no infringement has occurred. . . the question presented is clearly focused on § 271 (b), not § 271(a) . . . Our decision on the § 271(b) question necessitates a remand to the Federal Circuit, and on remand, the Federal Circuit will have the opportunity to revisit the § 271(a) question if it so chooses.”
As it stands today, the Supreme Court’s holding requires a finding of direct infringement under § 271(a), before attaching liability to an inducer under § 271(b). Therefore, due to the “Mastermind” requirement, a sole actor - whether the inducing or the induced party - must have every step of the claimed method attributed to their actions. And it would seem, that Limelight avoids liability for now. However, on remand, the stage is set for the Federal Circuit to loosen its “Mastermind” requirement for direct infringement under § 271(a).