Infringement of Method Claim Shouldn’t Require a Single Entity
|Written by AIPLA
Posted: Apr. 6, 2014 @ 10:30 am
EDITORIAL NOTE: What follows is the Summary of the Argument from the AIPLA amicus brief in Limelight Networks, Inc. v. Akamai Technologies, Inc. The brief is filed by Wayne P. Sobon, who is the current President of the AIPLA, with Jeffrey I.D. Lewis listed as Counsel of Record. Lewis is himself a former AIPLA President. Also on the brief with Lewis is Scott B. Howard.
The cornerstone of Petitioner’s argument is that it follows from the language and simple structure of Sections 271(a) and 271(b) of Title 35 “that § 271(b) proscribes conduct that induces actionable direct infringement of a patent as described in § 271(a).” Pet. Br. at 1 (emphasis added). In doing so, Petitioner focuses on the elements of a claim for induced infringement under 35 U.S.C. § 271(b), but hides the true issues of this case – what is the meaning of “infringement” and is there patent liability when someone causes all of the steps of a method patent to be performed but no single entity performs all of the steps of the method claim by him or herself?
Recent Federal Circuit law has, without any statutory basis, limited infringement under Section 271(a) to the actions of a single entity, and some amici have even mistakenly characterized the single entity rule as settled law, e.g., Brief of Amici Curiae Cargill, Inc. et al. at 4 (but it is not, as shown below and in district court cases in the accompanying footnote  ). It is that erroneous limitation that leads to confusion over whether or not direct infringement is necessary for a finding of indirect, induced infringement.
AIPLA believes that the so-called “single entity” rule for deciding method claim infringement under 35 U.S.C. § 271(a), where multiple actors perform the claim steps, as set out in recent Federal Circuit panel decisions  as well as in the instant case, is based both on an incorrect construction of Section 271(a) and of the statutory structure of Section 271 as a whole. In concluding that only principles of agency law determine the ambit of such infringement liability, the Federal Circuit has mistakenly strayed from the traditional tort law basis of patent infringement and has created loopholes for method claim infringement that drastically reduce the exclusive rights conferred by validly issued patents – it has, in effect, reduced the scope of method patents until they have little relevancy.
Section 271 generally, and Section 271(a) in particular, must be construed to allow for infringement of a method claim by more than one entity – in doing so, however, AIPLA suggests it also is fair and appropriate to separate participation in infringement from actual liability. Specifically, the Court should clarify that infringement occurs when actions representing all the claimed elements are present, without regard to the number of actors. But, identifying the party or parties responsible for that harm, i.e. those who may be held liable and subject to paying damages, should be separately assessed under traditional principles of tort law liability for joint tortfeasors, especially as developed in the case law both before and after the 1952 Patent Act.
As the panel decisions in Muniauction and BMC set out, it is inequitable to let the party(ies) who masterminded the infringement avoid responsibility, and they should be liable for damages, whether or not the mastermind conducted any infringing step. However, those who practice a claimed method step without substantive comprehension of the overall method being practiced should not be liable, e.g., for damages. (For instance, the mere user of a website who fills in a database or follows instructions should not ordinarily be liable for infringement even if that was a claimed method step, whereas those who ran the website or provided the instructions could be subject to liability. )
Infringement of a method claim under Section 271(a) requires that every step be performed, but it does not require that every step of the claimed method be performed by a single entity or person. That is clear from both the actual language of Section 271(a) and the statutory structure of 271 as a whole.
At the textual level, the subject of Section 271(a) is “whoever.” Congress set forth in 1 U.S.C. § 1 that singular terms include plurals unless the context indicates otherwise, e.g., “a single person,” and therefore Section 271(a) applies to one or more persons.  There is nothing in the context or history of Section 271(a) that indicates Congress intended to limit Section 271(a) to “single entities” and immunizing joint tortfeasors. While proof of infringement requires evidence that all steps of a method claim are performed, nothing in the language of Section 271(a) requires they be done by a single entity. Moreover, the legislative history and overall statutory structure of Section 271 indicate that Congress wrote the direct infringement provision of Section 271(a) very broadly, but went into more detail in the subsequent paragraphs on indirect infringement.
Having established that infringement exists when all steps are performed even by multiple actors, there is the separate question of liability for the principal director of the actions, i.e. the “mastermind”. Such liability should not require a formal agency relationship between a principal and other actors (as the Federal Circuit posits, carving out a special patent rule for patent tortfeasors). Instead, Section 271(a) liability should be based on a traditional joint tortfeasor analysis by showing that the liable party(ies) (1) performed at least one claimed step, and (2) substantially participated in producing the performance of the method steps (e.g., by the others involved). See Restatement of Torts §§ 875 cmt. c and 834 cmt. d (must show substantial participation to establish liability). Thus, liability should attach only to each named defendant who has had (a) some involvement in performing the claim steps, and (b) a substantial involvement in causing the infringing harm. This balances both the interests of patent owners and the unsuspecting public in accordance with traditional tort law.
This Section 271(a) analysis for direct infringement, however, is distinguishable from induced or contributory infringement under Sections 271(b) and (c); for those two indirect infringement categories a party may be held liable without personally practicing any of the steps of the claim. See, e.g., Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. __, 131 S. Ct. 2060 (2011) (as to Section 271(b) induced infringement), and Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176 (1980) (as to Section 271(c) contributory infringement). Accordingly, AIPLA’s position does not risk undermining the statutory structure that distinguishes direct from indirect infringement.
Direct infringement should not be limited only to an agency-type relationship between parties who perform the method steps or to a contractual obligation to another to perform the steps, and that liability for that infringement should attach to the principal director of the infringing actions. The law of direct patent infringement under 35 U.S.C. § 271(a) should conform to the traditional tort law basis for liability, without an alternate standard for patent infringement. Once direct infringement, properly understood, has been found under Section 271(a), whether a party is liable for indirect infringement can then be correctly assessed.
 Consider, for instance, pre-Federal Circuit cases like Mobil Oil Corp. v. W.R. Grace & Co., 367 F. Supp. 207, 253 (D. Conn. 1973), where the district court found that defendant liable for infringement of several patent claims related to catalyst preparation where the defendant’s customers performed several of the claimed steps. See Ralston Purina Co. v. Far-Mar-Co., Inc., 586 F. Supp. 1176, 1226 (D. Kan. 1984) (“It is well settled that a party cannot avoid infringement merely by having a third party practice one or more of the required steps”); E. I du Pont de Nemours & Co. v. Monsanto Co., 903 F. Supp. 680, 735 (D. Del. 1995), aff’d, 1996 U.S. App. LEXIS 17512 (Fed. Cir. July 17, 1996) (The “cases establish that a party cannot avoid liability for infringement by having someone else perform one or more of the steps of a patented process for them.”).
 Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008); BMC Res., Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007); Cross Med. Products, Inc. v. Medtronic Sofamor Danek, Inc., 424 F.3d 1293 (Fed. Cir. 2005); see Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010), vacated for en banc review, 2011 U.S. App. LEXIS 17130 (Fed. Cir. Aug. 10, 2011) (“Akamai I”).
 For instance, the district court in Applied Interact, LLC v. Vermont Teddy Bear Co., No. 04 Civ. 8713 (HB), 2005 U.S. Dist. Lexis 19070 (S.D.N.Y. Sept. 6, 2005), at *16-17, set out that because customers perform the claimed steps “in accordance with [defendant’s] instructions,” that was sufficient to show a “connection” between the defendant and the customers to deny defendant’s judgment motion.
 “In determining the meaning of any Act of Congress, unless the context indicates otherwise— words importing the singular include and apply to several persons, parties, or things; words importing the plural include the singular; … the words “person” and “whoever” include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals; … ” 1 U.S.C. § 1 (emphasis added).
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