Supreme Court Smackdown

The U.S. Court of Appeals for the Federal Circuit gets little respect from the U.S. Supreme Court. Witness its 1-5 win-loss record in the term just ended. But Justice Samuel Alito Jr.’s recent slap-down of those judges has some patent lawyers fuming. Alito, not the appellate court, made a basic mistake, these lawyers say.

It wasn’t the outcome in Limelight Networks v. Akamai Technologies that spurred the subsequent rush of patent blog posts about Alito’s decision for a unanimous court. It was his tone—and his mistaken reading of a key point in what the Federal Circuit actually said.

Akamai had accused Limelight of patent infringement after Limelight performed some of the steps of a patented method of delivering electronic data and allegedly encouraged its customers to take the remaining steps. The Federal Circuit, in more than 100 pages detailing differing views, held that Limelight could be held liable for inducing infringement.

The Supreme Court, in an 11-page ruling, reversed, holding that there must be direct infringement with all of the steps performed by one party. In his opinion, Alito wrote that the analysis by the Federal Circuit, which was specially created to bring uniformity to patent law, “fundamentally misunderstands what it means to infringe a method patent.” He offered a hypothetical to demonstrate the circuit court’s misunderstanding:

“What if a defendant pays another to perform just one step of a 12-step process, and no one performs the other steps, but that one step can be viewed as the most important step in the process? In that case, the defendant has not encouraged infringement, but no principled reason prevents him from being held liable for inducement under the Federal Circuit’s reasoning, which permits inducement liability when fewer than all of a method’s steps have been performed within the meaning of the patent.”

But the en banc Federal Circuit majority said no such thing. It wrote: “To be clear, we hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity.”

Reaction to Alito’s analysis was swift. “The opinion is harsh toward the Federal Circuit, but somewhat poorly written,” Dennis Crouch of the University of Missouri School of Law wrote on the Patently-O blog. “In particular, the Supreme Court seems to have misunderstood that the Federal Circuit holding actually does require all steps of the method to be carried out in order for a finding for inducement.”

David Hricik of Mercer University School of Law wrote on the same blog: “What we need is judicial restraint by the Supreme Court. They do not understand the technology, the law or implications of what they do, and this is particularly true in 101 jurisprudence, where they simply can’t seem to read the statute or harmonize their own cases (no one can).”

Although the infringement liability issues in Limelight were complex, Eric Guttag said on the IPwatchdog blog: “Nevertheless, that does not excuse the utter carelessness in Alito’s opinion, as well as its disingenuous ‘scolding’ of the Federal Circuit’s analysis of the situation in Limelight Networks as showing a ‘fundamental … misunderstanding [of] what it means to infringe a method patent.’ The Federal Circuit’s mammoth opinion at least tried to ‘analyze’ the alleged infringement situation (as well as the relevant infringement statutes) in Limelight Networks, while Alito’s miniscule opinion did nothing of the sort.”

Jason Rantanen of the University of Iowa College of Law, who also blogged about Alito’s mistake, said the Alito comment evidenced the high court’s careless approach to patent cases, particularly during the just-ended term.

The court takes a large number of patent cases each term, Rantanen observed, but seems to be saying with its often cursory analyses that “it’s not going to spend a tremendous amount of time being supercareful.”

A version of this story appeared in The National Law Journal, an affiliate of Corporate Counsel.

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