Inducement with Divided Infringement after Akamai Tech. v. Limelight Networks and McKesson Tech. v. Epic Systems
September 18, 2012
As diagnostics, end-user sophistication, and mobile and web-based technologies grow, so does the likelihood that potential infringement is carried out across multiple users or entities, i.e., divided infringement. Divided infringement scenarios exist where a single entity does not perform every element of a claim, but rather different entities perform the different steps of a claim. This divided infringement scenario occurs frequently as customers begin performing critical steps in implementing technologies – for instance, a doctor performing a collection or diagnostic step or a server user modifying a webpage. The divided infringement defense has grown more popular in recent years, paralleling the rising importance of method claims used to describe cutting edge computer software, business method inventions, and diagnostic and therapeutic inventions in biotech. This is particularly relevant where companies have been able to strategically avoid claims by performing less than all steps of a method claim and having their customers or other entities perform remaining elements of the claim.
Under claims for direct infringement under §271(a) of the 1952 Patent Act (the make, use, or sell provision), divided infringement is a complete defense as infringement here follows the single-entity rule. See Warner-Jenkinson Corp. v. Hilton Davis Corp. Until last month, it was also a complete defense to inducement theories arising under §271(b).
On August 31, 2012, the Court of Appeals for the Federal Circuit abated the divided infringement defense by enabling patent holders to advance claims against divided infringers based on an inducement theory. In the combined decisions of Akamai Tech. v. Limelight Networks and McKesson Tech. v. Epic Systems Co. (Fed. Cir. 2012) (En Banc), the court ruled per curiam, six to five, that inducement as defined by 35 U.S.C. §271(b) does not require a single, direct infringer – that merely knowingly inducing the performance of each claim limitation, regardless of who is performing that limitation, is inducement under §271(b).
The majority held that there can be induced infringement in the absence of a single, directly infringing entity. The court determined that entities should not be immunized from infringement merely because they have delegated infringement activity, thus overruling the previous standards set by the Federal Circuit in BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) and Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008). In overruling the precedent, the majority drew from criminal law and tort law principles to determine that common law requires imposing liability for inducement of a tort or crime even if the person being induced is unaware that his act is injurious and is not liable for that reason. In application to divided infringement, the majority explains that “a party may be liable for inducing infringement even if none of the individuals whose conduct constituted the infringement would be liable, as direct infringers, for the act of infringement that was induced.”
Considerable limitations on the inducement doctrine still exist. For instance, the first prong of the inducement test requires that a joint infringer knowingly induce the activity. The exact extent of the intent prong is still hazy, but is likely to mean that the inducing infringer have knowledge of the asserted patent and have knowledge that the induced (and divided) activities are collectively infringing the asserted patent. The court in Akamai distinguished the inducement cause of action under §271(b) from the infringement cause under §271(a), specifically with respect to strict liability.