Federal Circuit Rules Patent Infringement Can Exist Even When Many Perform Different Steps

August 31, 2012, by Mandour & Associates, APC

 Orange County – The Federal Circuit ruled Friday that patent infringement can be found even when multiple parties perform the different steps of a claimed method and none performs them all, resurrecting Akamai Technologies Inc.’s online content delivery system patent claims agains Limelight Networks Inc.

The appeals court’s en banc ruling also meant Epic Systems Corp., in a related case, will have to face McKesson Corp.’s patent infringement allegations over a system of doctor-patient communication.

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, the Federal Circuit said.

The court reconsidered and overruled its own 2007 decision in which it held that in order for a party to be liable for induced infringement, some other single entity must be liable for direct infringement.

When a single actor commits all the elements of infringement, that actor is liable for direct infringement, and when a single actor induces another actor to commit all the elements of infringement, the first actor is liable for induced infringement.

But when the acts necessary to give rise to liability for direct infringement are shared between two or more actors, problems arise, the Federal Circuit said.

The court addressed the fundamental question of whether a defendant may be held liable for induced infringement if the defendant has performed some of the steps of a claimed method and has induced other parties to commit the remaining steps, as in the Akamai case, or if the defendant has induced other parties to collectively perform all the steps of the claimed method, but no single party has performed all of the steps itself, as in the McKesson case.

Much of the briefing in the two cases was directed to the question whether direct infringement can be found when no single entity performs all of the claimed steps of the patent. The Federal Circuit said it was unnecessary for the court to resolve that issue in its ruling because it found that such cases can be resolved through an application of the doctrine of induced infringement.

In the Akamai case, because Limelight’s customers and not Limelight itself performed one of the steps of the claimed method, the district court granted Limelight’s motion for judgment as a matter of law.

In the McKesson case, the district court granted summary judgment of noninfringement on the ground that the patients, and not Epic’s direct customers, performed the step of initiating the communication.

Circuit Judge Pauline Newman filed one dissenting opinion, while Circuit Judge Richard Linn, joined by Circuit Judges Timothy Dyk, Sharon Prost and Kathleen O’Maley, filed another.

The en banc court has split into two factions, neither of which resolves the issues of divided infringement, Judge Newman said. A scant majority of the court adopted a new theory of patent infringement, based on criminal law, in which any entity that encourages, induces or otherwise aids the infringing conduct is liable for that conduct.

The majority further held that only the inducer is liable for divided infringement, and that the direct infringers are not liable although the patent rights are plainly being violated by the actors’ joint conduct.

“These are dramatic changes in the law of infringement,” Newman said. “This new rule simply imposes disruption, uncertainty, and disincentive upon the innovation communities.”

The majority’s approach is contrary to both the Patent Act and to the Supreme Court’s longstanding precedent that if there is no direct infringement of a patent there can be no contributory infringement, Linn said.

The court, in its opinion, “assumes the mantle of policy maker,” he said.

“The majority opinion is rooted in its conception of what Congress ought to have done rather than what it did,” Linn said. “It is also an abdication of this court’s obligation to interpret Congressional policy rather than alter it.”

“When this court convenes en banc, it frees itself of the obligation to follow its own prior precedential decisions,” he said. “But it is beyond our power to rewrite Congress’s laws. Similarly, we are obliged to follow the pronouncements of the Supreme Court concerning the proper interpretation of those acts.”