In the United States, two possible types of indirect infringement are known, (i) induced infringement and (ii) contributory infringement. According to the doctrine of induced infringement, an act of actively inducing another party to infringe a patent shall itself be treated as an act of infringement. However, for induced infringement to be found, all the acts of direct infringement must be committed by a single actor. Thus if the steps were performed my multiple entities, the inducer could be found liable only if it “directs or controls” the actions of the other parties.
However, in a sharply divided 6-5 decision handed down on 31 August 2012, the majority of the Federal Circuit argued that the previous conclusion on indirect infringement didn’t make sense because someone who knowingly induced multiple unrelated parties to collectively practice the steps of the patented method has precisely the same effect on the patentee as someone who induced only one party to infringe and hence there is no reason to treat the two situations differently. The practical effect of this is that a party can be held liable for induced infringement if it performs some steps of a patent and induces others to perform the remaining steps.
This represents a significant shift in the law resulting in expanding the liability for induced infringement.
In deciding two cases (Akamai Technologies Inc v Limelight Networks and McKesson Technologies Inc v Epic Systems Corp) with the one opinion, the Federal Circuit emphasised that “[t]o be clear, we hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity”.
According to the Federal Circuit decision, a party may still be found liable for induced infringement even where certain steps of a patented method are performed by other unrelated parties. For example, if a party sets up a website that performs two steps of a patent (which may be performed within or outside the US), and has users perform the third step. Under the previous law, the website operator could not be found liable for inducement because there was no contractual relationship with the user. According to the recent ruling, the website operator would be found liable for induced infringement.
Given the far reaching consequences of the decision, it appears likely that the decision is destined for review by the US Supreme Court.