Yogi Berra is famously known to have said, “When you come to a fork in the road, take it.” In its recent en banc decision in Akamai Technologies v. Limelight Networks, Nos. 2009-1372, -1380, -1416 and -1417, the U.S. Court of Appeals for the Federal Circuit demonstrated how deeply a court can split without taking the fork in front of it at all.
Avoiding the divided direct infringement issue on which en banc review had been granted, the court rewrote the law of induced patent infringement instead. In a decision labeled per curiam, notwithstanding its length and the importance of the issue, a slim majority (six out of 11 on the en banc panel) held that a person may be liable for inducing infringement even though no other person is liable for infringing the patent directly. Although reconsideration is unlikely and congressional revision unlikely too, at least during this election year, Supreme Court review is possible. Lengthy dissents appear to lay the groundwork for further consideration.
The issue that so deeply divided the court concerned so-called “divided liability”; i.e., whether anyone may be held liable for the “infringement” of a method patent by multiple parties when no single party performs all the steps of the method. Under relatively recent Federal Circuit precedent, it had appeared established both that there could be no liability for direct infringement unless entities controlled or directed by one person performed all of the steps of a patented method and also that there could be no liability for indirect infringement in the absence of a liable infringer. In other words, “unless the accused infringer directs or controls the actions of the party or parties that are performing the claimed steps, the patentee has no remedy, even though the patentee’s rights are plainly being violated by the actors’ joint conduct.”
The Federal Circuit granted en banc review in Akamai and a consolidated appeal (McKesson Technologies Inc. v. Epic Systems Corp.) and invited amicus participation to decide whether this rule should be liberalized. Though not surprisingly, “[m]uch of the briefing in these 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 majority decided it was “not necessary for us to resolve that issue today because we find that these cases and cases like them can be resolved through an application of the doctrine of induced infringement,” which, of course, had not been briefed by the parties or amici.
Overruling its own precedent, and carefully sidestepping Supreme Court authority that appeared to block the way, the Federal Circuit held “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.” A patentee must still prove that there has been direct “infringement” — in the sense that all of the steps of the patented method have been performed — but, it is no longer required that anyone be liable for that infringement, a definition of “infringement” a little more malleable than one might have supposed. Further, the court observed that its decision was “not predicated on the doctrine of direct infringement” and so “we have no occasion at this time to revisit any of those principles regarding the law of divided infringement as it applies to liability for direct infringement under 35 U.S.C. § 271(a).”
The Federal Circuit’s decision, if it survives, has a number of effects. First and foremost, it will no longer be possible to evade liability by dividing infringement of a method claim. It remains the case, however, that induced infringement, unlike direct infringement, requires that the inducer act with knowledge of the patent and that the induced acts constitute patent infringement. Thus, in theory, there is no risk of being held liable for inducing others to infringe unless one is aware that those others are practicing some of the claimed steps.
However, inducers who, for example, have performed some of the claimed steps themselves and invited their customers to perform other steps in order to avoid liability, will no longer have a defense because neither alone performs the entire method. It is now sufficient that “the inducer ’cause[s], urge[s], encourage[s] or aid[s]‘ the infringing conduct and that the induced conduct is carried out.”
Separately, whether for good or ill, it will no longer be critical for patentees and their counsel to draft patent claims to anticipate and foreclose divided infringement. Though it remains good advice to draw method claims to a single actor, failing to do so will no longer render a patent a paper patent, and it may now also be advisable to draw some claims to multiple actors.
The majority’s decision to treat the question of induced infringement separately from the question of direct infringement is a marked departure from prior cases, including recent ones, and drew strong dissents from Federal Circuit Judges Richard Linn and Pauline Newman. Though both judges disagreed with the majority on the fundamental issue decided, each would have preserved the principle that indirect infringement requires direct infringement in a different way; that is, confronted with the question that had been framed for en banc review, both dissents, unlike the majority, actually took the fork, but in different directions.
According to Judge Linn and three judges who joined him, indirect infringement requires proof of direct infringement by a single party (or its agent(s)). In other words, Judge Linn advocated for the status quo, in which no liability for divided infringement existed, directly or indirectly, except in the case of a single mastermind. Judge Newman, like Judge Linn, would require liability for direct infringement as a prerequisite to induced infringement, but she alone would expand the scope of direct infringement to include performance of the claimed method “through the cooperation or interaction of more than one party,” and she would apportion liability among the “joint infringers.” Thus, she would have solved the problem of divided infringement by dramatically liberalizing the standard for direct infringement.
Both dissents appear (implicitly) to advocate for Supreme Court or Congressional review. Judge Newman criticized the majority decision for setting a new rule that is “not in accordance with statute, precedent and sound policy,” and that “raises new issues unrecognized by the majority, and contains vast potential for abuse.” Judge Linn was also critical, asserting in the very first sentence of his dissent that “this court assumes the mantle of policy maker,” and going on to accuse the court both of rewriting statute to achieve its preferred outcome and displacing the Supreme Court’s longstanding precedent. At this writing, whether either body will rise to the dissenters’ challenges remains to be seen.
And so, though it ain’t over till it’s over, in the meantime it is reasonable to expect various changes in the behavior of patent holders and their targets. For example, by shifting the focus from direct infringement (a strict liability offense) to indirect infringement (which has a culpable mental state) the court may, among other things, have incentivized patent holders to put targets on notice and targets to seek exculpatory opinions of counsel.
Existing opinions of counsel that rely on the previous law concerning “divided infringement” should be revisited and modified, as necessary. One should also expect dramatically increased attention to claims of induced infringement in patent litigation. Patentees who can show that (a) the defendant knew of its patent, and either (b) induced the performance of the steps of the claimed method by one or more others or (c) performed some of the steps itself while inducing another(s) to perform the remainder are now likely to pursue such claims. ■