Supreme Court clarifies test for § 271(b) induced infringement, invites Federal Circuit to revisit Muniauction test for § 271(a) direct infringement

by DLA Piper

Induced infringement, under § 271(b) of the Patent Act, requires a finding of a predicate direct infringement, under § 271(a).

This proposition, a “simple truth” according to the Supreme Court, does not, at first blush, seem controversial. The Court, however, found that the en banc Federal Circuit misapplied this rule by failing to apply (or reconsider) the Federal Circuit’s own precedent in Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008) (finding that § 271(a) direct infringement requires that each step of a claimed method has been performed either by the defendant or at the defendant’s direction or control). The Supreme Court, thus, reversed.

Limelight, the respondent and accused infringer, performs all but one step of the patented method claim, the so-called “tagging” step, which Limelight’s customers may perform. Prior to the Muniauction decision, a jury found that Limelight indirectly infringed the patented method. After the Muniauction decision, the district court found that the plaintiff had not proven direct infringement under § 271(a) because plaintiff did not prove that Limelight directed or controlled the “tagging” process. A Federal Circuit panel affirmed the ruling, but an en banc Federal Circuit reversed.  The en banc court found that § 271(b) infringement occurs when a defendant carries out some steps of the accused method and encourages – but does not necessarily “direct” or “control” – others to carry out the remaining steps, thus declining to review Muniauction.

Justice Samuel Alito, delivering the opinion on behalf of a unanimous Court, reasoned that induced infringement, under 35 U.S.C. § 271(b), requires an underlying direct infringement. Assuming without deciding the accuracy of the Federal Circuit’s Muniauction decision, the opinion reasoned there can be no indirect infringement when “the performance of all the patent’s steps is not attributable to any one person.” Because there was no finding below that Limelight either performed, directed, or controlled the tagging step, Muniauction instructs that there was no direct infringement; thus, there was no indirect infringement (even if Limelight encouraged tagging).

In so finding, the Supreme Court declined to question the merits of Muniauction, but invited the Federal Circuit to do so. The Court granted certiorari on a question “clearly focused on § 271(b), not § 271(a),” a question that presupposed Limelight had not committed direct infringement under § 271(a).  While declining to review Muniauction, the Court stated “the Federal Circuit will have the opportunity to revisit the § 271(a) question if it so chooses.”

This decision seems to settle for now the standard of proof for indirect infringement (i.e. that indirect infringement requires a finding of direct infringement). Commentators are touting this decision as a deterrent to patentees, especially certain non-practicing entities, who may bring induced infringement claims without being able to prove the elements of Muniauction.

The question then becomes whether the Federal Circuit (or the Supreme Court, given the opportunity) will revisit and revamp the Muniauction standard for direct infringement. For now, litigants and practitioners have guidance that induced infringement requires an underlying direct infringement, regardless of the direct infringement standard.

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.

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