In general, patent infringement requires that the defendant include all elements of the claim(s). When the claim at issue defines a method, the elements are the steps of that method and the claim is infringed by performing all the included steps. This post discusses the legal ramifications when the steps of a claimed method are performed by different entities, what is known as divided infringement.
Patent infringement can be direct infringement. Direct infringement occurs in the relatively simple case where the defendant is a single entity which performs all steps of a method or otherwise infringes all the elements of a claim. Direct infringement can also occur when all the steps are performed by multiple parties, as long as those parties only include the defendant and its agents or others under the defendant’s direction or control, i.e., when all of the steps are attributable to a single party. Where no one entity performs all of the steps but all of the steps are performed by multiple entities, this is known as divided infringement.
A patent can also be infringed by induced infringement, where the defendant does not perform the steps itself but encourages or instructs someone else, e.g., the defendant’s customers, to perform all of the method steps. Induced infringement can also be found in divided infringement cases, e.g., if the defendant performs some steps and its agents perform the remaining steps.
The Supreme Court recently decided, in Limelight Networks v. Akamai Technologies, that there cannot be patent infringement without direct infringement. In other words, induced infringement can only be found where all of the steps are performed under the control or direction of a single party.
In the Limelight case, the Federal Circuit found induced infringement of method patents could occur when a defendant carries out some steps of the method and encourages others to carry out the remaining steps. The patents covered a method of delivering content over the internet, including a “tagging” step wherein certain content is tagged for storage on a separate server. The defendant carried out all of the steps of the claimed method, except the “tagging” step, which was done by defendant’s customers.
The Supreme Court said that this analysis “fundamentally misunderstands what it means to infringe a method patent.” The relationship between the defendant and its customers was not close enough to support direct infringement, so the Court reasoned that the performance of all the steps could not be attributed to the defendant under induced infringement either. In other words, liability for induced infringement can only be found when there is also direct infringement.
The case was sent back to the Federal Circuit, where it may be reviewed more broadly. The Court openly invited the Federal Circuit to revisit the direct infringement analysis not only on the particular facts of this case, but also the Federal Circuit’s precedent on that issue as well.