Yesterday, the United States Supreme Court in a unanimous decision held that induced infringement of a method claim only arises if there is direct infringement by a single party who either performs, or directs or exercises control over, the entire process. Limelight Networks, Inc. v. Akamai Technologies, Inc., Case Number 12-786. By requiring one party to perform or control every step of a patent, the Court made it easier to fend off inducement claims when the alleged infringement involves multiple actors.
The case addressed the issue of induced infringement. “Whoever actively induces infringement of a patent shall be liable as an infringer.” 35 U.S.C. § 271(b). The Court in Limelight overturned an en banc Federal Circuit opinion holding that induced infringement may occur “even if no one would be liable as a direct infringer … because those who performed the remaining steps did not act as agents of, or under the direction or control of, the defendant.” Akamai Technologies, Inc., v. Limelight Networks, Inc., 692 F.3d 1301, 1319 (Fed. Cir. 2012). The Supreme Court assumed as controlling (although expressly not ruling on) the Federal Circuit's 2008 decision in Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008), which held that direct infringement can be found under § 271(a) if a third party is performing some of the steps of a method claim only when a single defendant exercises control or direction over the entire process such that every step is attributable to the controlling party. Muniauction reiterated “the proposition that direct infringement requires a single party to perform every step of a claimed method.” Muniauction at 1329.
The parties did not dispute that Limelight did not perform one of the method steps and, hence, that there was no direct infringement. The Supreme Court stated, quite bluntly, that the Federal Circuit “fundamentally misunderstands what it means to infringe a method patent.” “[O]ur case law leaves no doubt that inducement liability may arise ‘if, but only if, [there is] … direct infringement.’” Citing Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 341 (1961) (emphasis deleted). Thus, unless a single party is performing (or directing / controlling) all of the steps of a method there can be no direct or induced infringement. A holding to the contrary would “deprive § 271(b) of ascertainable standards” because a court would not be able to assess when a patent holder’s rights would be violated; moreover, the development of “two parallel bodies of infringement law” would be needed.
The Court left open the possibility of revisiting the interpretation of § 271(a) requiring that a single party have control over the entire claimed process to find direct infringement. It noted that such an issue was not part of the question presented for which certiorari was granted. In this case, Limelight’s customers performed one of the steps of the method claim. Akamai asserted that Limelight “provide[d] instructions and offer[ed] technical assistance” to the customers. Although not addressed in Limelight, “mere ‘arms-length cooperation’ will not give rise to direct infringement by any party.” Muniauction at 1329, citing NTP, Inc. v. Research in Motion, 418, F.3d 1282, 1371 (Fed. Cir. 2005).
In view of Limelight, patent drafters must continue to heed the age-old wisdom of drafting claims that can be infringed by a single actor. Litigators must also assess who has control over a method and who is performing each of the steps of the method when counseling on the merits and risks of potential infringement litigation. And until the Federal Circuit takes up the Court’s invitation to further addressMuniauction and determine if divided infringement is a viable defense to direct infringement for purposes of 35 U.S.C. § 271(a), the ruling will likely make it easier for those accused of induced infringement of method patents to defend themselves in cases in which the patent's steps are performed by multiple actors.