In one of two patent decisions today, the Supreme Court has again acted rein in the Federal Circuit’s expansion of patent owner rights, this time by limiting the applicability of induced infringement of U.S. patents (572 U.S. __) (June 2, 2014). Direct infringement of a patent occurs when a person practices every limitation of a claim either themselves or by an agent. By contrast, induced infringement – a form of indirect infringement – occurs when one “induces” another to directly infringe the claims.
The Court granted cert in Limelight Networks, Inc. v. Akamai Technologies, Inc. (pdf) to review the Federal Circuit’s holding that inducing infringement could be premised on “divided infringement,” i.e., where the limitations of a patent claim are practiced by more than one party such that no single party could be held liable for direct infringement. The unanimous Supreme Court reversed, holding that inducement liability must be premised on a direct infringement for which a single person party could be held liable.
The Court faulted the Federal Circuit for distinguishing between direct infringement and a direct infringer. The Court reasoned that if accused acts or products do not render a single person liable for direct infringement, direct infringement is absent – precluding liability for inducing infringement.
The Court acknowledged the risks while explaining the necessity of its holding (Slip Op. at 10):
Finally, respondents, like the Federal Circuit, criticize our interpretation of §271(b) as permitting 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. We acknowledge this concern. Any such anomaly, however, would result from the Federal Circuit’s interpretation of §271(a) in Muniauction. A desire to avoid Muniauction’s natural consequences does not justify fundamentally altering the rules of inducement liability that the text and structure of the Patent Act clearly require—an alteration that would result in its own serious and problematic consequences, namely, creating for §271(b) purposes some free-floating concept of “infringement” both untethered to the statutory text and difficult for the lower courts to apply consistently.
The approach adopted by the Supreme Court will strictly limit the scope of induced infringement. It also permits a potential simple design around for method claims, whereby an infringer may escape liability by simply having another party perform part of the method. For companies doing business in the U.S., this decision may provide some relief from accusations of induced infringement in cases where patent claims lack any direct infringer.
Similarly, this decision should encourage those drafting patent claims to select a scope for which a single direct infringer can be identified. Such a strategy improves the likelihood of success for the patentee for both direct and induced infringement claims.
Patent practitioners expect that this decision should lead to improved patent drafting practices and ultimately to greater clarity in patent infringement litigation. The decision underscores the skill involved in properly protecting innovations in today’s constantly developing legal environment.