Induced infringement is a form of liability for indirect patent infringement. Until recently, in order to establish that a defendant induced another party to infringe a patented method, the patent plaintiff had to establish that one party, either by itself or through its agents, directly infringed the patented method by performing all of the claimed steps.

However, in Akamai Technologies v. Limelight Networks, 692 F.3d 1301 (Fed. Cir. 2012), the U.S. Court of Appeals for the Federal Circuit handed down a game-changing decision concerning what constitutes induced infringement. Prior to Akamai, the patentee had to prove induced infringement by showing that a single entity was induced to perform each step of a method patent. However, this changed when the Federal Court decided that induced infringement could be achieved by multiple parties performing the various steps of a patented method.

Under the new Akamai test, the test for induced infringement requires that the patentee show that the inducer (1) knew of the method patent; (2) induced the performance of steps of the method; and (3) that the claimed method steps were performed. It is no longer necessary to prove that all the steps were performed by a single actor; all that is required is that all of the claimed steps were performed. It is enough that the inducer “cause[s], urge[s], encourage[s], or aid[s]” the infringing conduct and that the induced conduct is carried out.

Applying Akamai, in Aristocrat Technologies Australia PTY Ltd. v. International Game Technology, No. 10-1426 (Fed. Cir. Mar. 13, 2013), the Federal Circuit vacated the district court’s summary judgment on induced infringement and remanded for further proceedings. In its Aristocrat Technologies opinion, the Federal Circuit highlighted two parts of Akamai:

“As we stated in Akamai, ‘[r]equiring proof that there has been direct infringement as a predicate for induced infringement is not the same as requiring proof that a single party would be liable as a direct infringer.’ Akamai, 692 F.3d at 1308-09. Thus, ‘[a] party who knowingly induces others to engage in acts that collectively practice the steps of the patented method—and those others perform those acts—has had precisely the same impact on the patentee as a party who induces the same infringement by a single direct infringer; there is no reason, either in the text of the statute or in the policy underlying it, to treat the two inducers differently.’ Id. at 1309.”

Applying Akamai again in Move v. Real Estate Alliance Ltd., No. 12-1342 (Fed. Cir. Mar. 4, 2013), the Federal Circuit held that the district court erred by not analyzing inducement under 35 U.S.C. § 271(b). The Federal Circuit revisits the Akamai rule that although all the steps of a claimed method must be performed in order to find induced infringement, it is not necessary to prove that all the steps were committed by a single entity. The Federal Circuit remanded for a determination on induced infringement under the standard set forth in Akamai.

In light of these decisions, it appears that the law of induced infringement has taken a turn that favors patentees. The decisions potentially make it easier to prove infringement of method claims, and thereby give added value to method claims regardless of whether the claimed steps are performed by different entities. For example, patents with method claims that, either implicitly or explicitly, require action by two or more parties to infringe may now be enforceable under Section 271(b) under the new standard for induced infringement.

Unlike direct infringement under Section 271(a), to be liable for induced infringement, the party must have knowledge of the asserted patent, according to Akamai. Knowledge is typically established by sending a letter to the potential infringer. Sending a letter, however, usually gives the recipient sufficient case or controversy to preemptively file a declaratory judgment action challenging the infringement and/or validity of the patent. Therefore, establishment of induced infringement must be weighed against risking a declaratory judgment action and the resulting loss of control of timing and jurisdiction of an infringement suit.

The new standard of induced infringement may have an impact on potential infringers as well. Potential infringers that previously relied on dividing method steps between entities to circumvent infringement liability may need to readdress method infringement issues in light of the change. Potential infringers may want to obtain opinions of counsel to obviate inducement. Likewise, any noninfringement opinion that relies upon divided infringement may also need to be reassessed in light of the strengthened inducement standard.

For potential method claims, care should still be taken to draft method claims that encompass a single actor and minimize the number of active steps in the claim. However, given the new inducement standard, additional method claims could be included that recite claim steps performed by different entities.

For now it appears induced infringement has been strengthened and must be addressed by patentees, potential infringers and patent drafters. However, given the attention given to these induced infringement cases, it would not be surprising if the U.S. Supreme Court decides to hear Akamai on appeal and change the standard of induced infringement yet again.

Daniel N. Calder is a shareholder at Volpe and Koenig, an intellectual property law firm with offices in Philadelphia and Princeton. He focuses his practice on patent prosecution and procurement. Matthew E. Herd is a law clerk with the firm, and Jessica N. Morton is vice president of intellectual property at IP Shakti LLC.