Federal Circuit Expands Liability for Induced Infringement of Method Patents

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Patent law holds that a party can be held liable for direct infringement when that party performs all steps of a patent claim. In contrast, there is no direct infringement where multiple parties collectively – but independently – perform all steps of a patent claim. Historically, there could be no indirect infringement without direct infringement, that is, indirect infringement required proof that at least one party performed all steps of the patent claim.

That precedent changed last August when the Federal Circuit issued its decision in Acamai Tech’s, Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012). Limelight Networks and Epic Systems were defendants in separate patent suits, brought by Akamai Technologies Inc. and McKesson Technologies Inc., respectively. The Federal Circuit heard the appeals in tandem because they both involved the same issue of indirect patent infringement. In both cases, multiple, independent parties collectively performed a patented method. For example, in the Limelight case, Limelight’s customers (as opposed to the company itself) performed one of the claimed steps. Before Limelight, there could be no indirect infringement because no one party performed all steps of the claimed method.

The Federal Circuit’s ruling in Limelight and McKesson expands the scope for indirect infringement by removing the requirement of direct infringement by at least one party. Now, a party may be liable for indirect infringement if (i) it knows of the method patent, (ii) it induces the performance by others of steps that it does not perform, and (iii) all of the method steps are actually performed. In a 6-5 decision, the majority of the Federal Circuit held that “all the steps of a claimed method must be performed in order to find induced infringement, but . . . it is not necessary to prove that all the steps were committed by a single entity.”  Limelight, 692 F.3d at 1306.

The practical implications are substantial. For patent holders, Limelight opens up new enforcement possibilities (and hence new licensing opportunities). Patent holders should consider whether any potential multi-party activity may give rise to previously unavailable infringement actions. Keep in mind, however, that indirect infringement requires proof of knowledge and intent on the part of the indirect infringer, in addition to proof that the method steps were all performed by someone.

For potential infringers, Limelight significantly expands the scope of potential liability for method claims. Businesses should examine their commercial activities and identify the potential for new exposure to indirect infringement liability. Specifically, a party that does not directly infringe a method claim due to non-performance of one or more steps should consider whether it could be inducing others to perform the missing steps, particularly if it has notice of an allegation of infringement.

In separate petitions to the U.S. Supreme Court, both Limelight and Epic Systems have asked the Supreme Court to overturn the Federal Circuit’s decision. The Supreme Court has not yet decided whether to hear the appeals.

 

Topics:  Akamai Technologies, Covered Business Method Patents, Indirect Infringement, Induced Infringement, Infringement, McKesson Technologies, Patents

Published In: Intellectual Property Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Lewis Roca Rothgerber | Attorney Advertising

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