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Supreme Court Holds Liability for Induced Infringement of Method Patent Only if All Steps Attributable to One Person

By Kyle Pietari – Edited by Suzanne Van Arsdale [caption id="attachment_4448" align="alignleft" width="150"] Photo By: Marc Smith - CC BY 2.0[/caption] Limelight Networks, Inc. v. Akamai Technologies, Inc., et al., No. 12-786 (U.S. June 2, 2014) Slip Opinion A unanimous Supreme Court reversed the en banc United States Court of Appeals for the Federal Circuit, which had found that Limelight Networks, Inc. (“Limelight”) could be liable for inducing infringement of a method patent licensed to Akamai Technologies, Inc. (“Akamai”) by performing several of the method’s claimed steps, and then encouraging its customers to complete a final step. The Supreme Court held that there can be no liability for induced infringement of a method patent under 35 U.S.C. § 271(b) unless direct infringement has occurred under § 271(a) or another statutory provision. Akamai, slip op. at 1. Under Federal Circuit case law, direct infringement liability under § 271(a) requires that a single party perform all steps of the claimed method. Muniauction, Inc. v. Thomson Corp., 532 F. 3d 1318, 1329. In Muniauction, the Federal Circuit clarified that this requirement is satisfied even if multiple parties perform the steps, so long as one defendant  “exercises ‘control or direction’ over the entire process such that every step is attributable to the controlling party.” Id. Limelight argued and the Supreme Court agreed that, because Limelight did not control its customers’ performance of a step in the claimed method, but merely helped them independently perform that step, direct infringement never occurred under § 271(a). Akamai, slip op. at 2, 5–6. The Supreme Court further ruled that, absent direct infringement, there could be no inducement of infringement under § 271(b), and it rejected the Federal Circuit’s reasoning that induced infringement liability could be predicated on a direct infringement that occurred outside of any statutory provisions. Id. at 4–6. Patent Docs provides a thorough summary of the case. IPcopy provides commentary about the case’s potential relevance for patent attorneys. PatentlyO analyzes the Federal Circuit’s motivations behind its decision, concluding that it has a “fundamental discomfort with strict liability.” The Massachusetts Institute of Technology is the assignee of the patent at issue, U.S. Patent No. 6,108,703, and Akamai is the exclusive licensee. Akamai, slip op. at 1. The patent claims a method for delivering data over a “content delivery network,” id. at 2, which uses servers in multiple locations to reduce bandwidth costs and improve page load times. The method requires “tagging” components to be stored on servers. Id. Limelight, which performs several of the method’s claimed steps without a license, requires its customers to do their own tagging, although it gives instructions and supports them in doing so. Id. The Supreme Court reached its decision aware that it was allowing Limelight and others to circumvent infringement liability. Id. at 10. The Court rejected the Federal Circuit’s approach of finding induced infringement based on non-statutory direct infringement, worried that to hold otherwise would necessitate a new body of induced infringement law with “some free-floating concept of ‘infringement’ . . . untethered to the statutory text” and difficult to apply. Id. The Court found additional support for its reading in § 271(f)(1), which imposes liability for inducing the completion of a patented method outside the United States. Id. at 6. Congress clearly used § 271(f)(1) to impose inducement liability for activities that do not constitute direct infringement; absent such clarity, it appears Congress elected not to do so in § 271(b).  Id. at 6–7. PatentlyO’s article states that the Federal Circuit’s decision was an attempt “to move multi-actor infringement from direct infringement to inducement . . . to relocate such infringement from the harsh rules of strict liability to the more forgiving rules of intent-based indirect liability.” PatentlyO and the Supreme Court in its Akamai opinion express concern that the Federal Circuit’s decision in Muniauction prevents a finding of direct infringement when two parties cooperatively infringe a method patent, but when neither controls the other. Akamai, slip op. at 10. The Supreme Court called on the Federal Circuit to revisit the issue on remand, id., through which it will have the opportunity to close what could be exploited as an infringement liability loophole. Kyle Pietari is a J.D. student at Harvard Law School, Class of 2016. Kyle is from Denver, Colorado.