The Supreme Court reverses the Fed. Cir.’s holding that a defendant that carried out some steps of a method patent, and encouraged customers to carry out remaining steps, could be liable for inducement though neither the defendant nor the customers were liable as direct infringers.
Limelight Networks, Inc. v. Akamai Technologies, Inc., 572 U.S. ___ (June 2, 2014) (ALITO for the Court, all Justices joining) (CAFC: en banc, per curiam) (D. Mass.: Zobel) (5 of 5 stars)
The Fed. Cir. erred when it reasoned that, though no person had violated the provisions of § 271(a), a “direct infringement” sufficient to serve as predicate for inducement liability could nevertheless be held to have occurred. Section 271(b) does not create liability for inducing conduct that does not constitute direct infringement. Under Deepsouth Packing, noninfringing conduct—though infringing if committed in altered circumstances—cannot form the basis for contributory infringement. The same rule applies for inducement.
The Supreme Court rejected Akamai’s arguments that it should not matter that no one committed direct infringement, because the harm to patentee was equivalent. Because neither Limelight nor its customers violated § 271(a), no direct infringement was committed, and as such, the patentee’s rights had not been violated. Slip op. at 8.
The Supreme Court also rejected Akamai’s efforts to analogize § 271(b) to the federal aiding and abetting statute. Applying criminal law’s prohibition against divided commission of a crime would be inconsistent with the Patent Act’s “cornerstone principle that patentees have a right only to the set of elements claimed in the patents and nothing further.” Id. at 9. The Supreme Court also held that, to whatever extent pre-Patent Act law might have permitted liability against Limelight, such was again inconsistent with the Patent Act’s overall approach to patent liability. The Supreme Court acknowledged concern that some might use its holding to strategically evade liability through divided performance of method patent steps, but concluded that its holding was required by the Patent Act’s text and structure.
Finally, the Supreme Court rejected Akamai’s invitation to review current standards for direct infringement under § 271(a), e.g., Muniauction. Such analysis was not contemplated by the petition for certiorari.