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SCOTUS Overrules Federal Circuit on Induced Infringement


Written by Gene Quinn
Patent Attorney & Founder of IPWatchdog
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Posted: Jun 3, 2014 @ 6:00 am
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Justice Samuel Alito

Yesterday the United States Supreme Court issued a decision in Limelight Networks, Inc. v. Akamai Technologies, Inc. In this case Justice Alito delivered the opinion of a unanimous Supreme Court overruling the Federal Circuit.

Justice Alito began the decision with this summation:

“This case presents the question whether a defendant may be liable for inducing infringement of a patent under 35 U. S. C. §271(b) when no one has directly infringed thepatent under §271(a) or any other statutory provision. The statutory text and structure and our prior case law require that we answer this question in the negative. We accordingly reverse the Federal Circuit, which reached the opposite conclusion.”

At issue was the alleged infringement of U. S. Patent No. 6,108,703 (’703 patent), which claims a method of delivering electronic data using a “content delivery network,” or “CDN.” The ’703 patent also provides for the designation of certain components of a content provider’s website to be stored on Akamai servers. The process of determining which component to store on Akamai servers was known as “tagging.”

Limelight Networks, Inc., also operated a CDN and carried out several of the steps claimed in the ’703 patent. But instead of tagging those components of its customers’ websites that it intends to store on its servers, Limelight requires its customers to do their own tagging. Akamai argued Limelight “provides instructions and offers technical assistance” to its customers regarding how to tag. The Federal Circuit dodged the question about whether there was direct infringement under 35 U.S.C. 271(a), but instead found that there was induced infringement under 35 U.S.C. 271(b). The problem with this ruling was that it was a legal impossibility. Well settled law had long stood for the proposition that there can be no induced infringement if there is not indirect infringement. Thus, this bizarre ruling by the Federal Circuit had those in the patent community scratching their head. It was easy to predict a Supreme Court reversal.

In a hard-hitting, direct opinion Justice Alito stated: “The Federal Circuit’s analysis fundamentally misunderstand what it means to infringe a method patent.”Alito went on to correctly explain that a method patent claim is made up of steps, with each step being pertinent, ultimately saying the undeniably true: “a patentee’s rights extend only to the claimed combination of elements, and no further.”  Thus, If Limelight Networks did not perform every step of the method claim, which they did not, then there could be no infringement.

Not satisfied, Alito explained that the Federal Circuit’s approach would deprive §271(b) of ascertainable standards, and then asked: “If a defendant can be held liable under §271(b) for inducing conduct that does not constitute infringement, then how can a court assess when a patent holder’s rights have been invaded?” A very good question indeed.

In trying to make sense of the Federal Circuit ruling, Alito explained:

The Federal Circuit seems to have adopted the view that Limelight induced infringement on the theory that the steps that Limelight and its customers perform would  infringe the ’703 patent if all the steps were performed by the same person.

At the end of the day the Supreme Court simply ruled that a defendant may not be held liable for inducing patent infringement under 35 U.S.C. 271(b) when there is no direct infringement under 35 U.S.C. 271(a).

 

 


About the Author

is a US Patent Attorney, law professor and the founder of IPWatchdog.com. He is also a principal lecturer in the top patent bar review course in the nation, which helps aspiring patent attorneys and patent agents prepare themselves to pass the patent bar exam. Gene started the widely popular intellectual property website IPWatchdog.com in 1999, and since that time the site has had many millions of unique visitors. Gene has been quoted in the Wall Street Journal, the New York Times, the LA Times, USA Today, CNN Money, NPR and various other newspapers and magazines worldwide. He represents individuals, small businesses and start-up corporations. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

7 comments
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  1. An idea I’ve been kicking around to address this clearly unfair “infringement is taking place … yet no one is solely infringing” conundrum:

    Would including the following verbiage at the end of a method claim –possible via a dependent claim — protect an inventor from such “multiple-player” infringers?:

    “(The method of claim 1,) wherein not all of the steps are performed by the same entity.”

    Any authority(ies) in support or against such an approach?

  2. Gene,

    That Our Judicial Mount Olympus overruled the Federal Circuit majority in Limelight Networks v. Akamai Technologies isn’t surprising. But as Jason Rantanen astutely observed on Patently-O, Alito’s reasoning for the holding is abysmal. One statement by Alito in Limelight Networks is particularly problematical to me with respect to the impact of 35 USC 271(f)(1): “As this provision illustrates, when Congress wishes to impose liability for inducing activity that does not constitute direct infringement, it knows precisely how to do so.” That’s true, but what Alito and Our Judicial Mount Olympus won’t acknowledge is that Congress did “precisely” that with 35 USC 271(f)(1), as well as with 35 USC 271(f)(2) in overturning the two different aspects of SCOTUS’ Deepsouth Packing holding: (1) US patent laws do not apply extraterritorially (SCOTUS refused to acknowledge that impact of 35 USC 271(f) in its Microsoft v. AT&T decision); and (2) that infringement liability must always be predicated on one instance of direct/complete infringement by one entity (something the Federal Circuit correctly noted Congress had done away in 35 USC 271(f) with its 2001 Waymark decision). Besides glossing over what “whoever” means in 35 USC 271(a) (I’m sure Judge Newman will have convulsions over that faux pas given her concurring/dissenting opinion in the Federal Circuit’s en banc decision), Alito’s opinion fails to acknowledge that Congress also did away with the direct/complete infringement aspect of Deepsouth Packing even in 35 USC 271(a) which was amended to create infringement liability for an “offer for sale” (which requires no complete practice of the claimed invention at all, merely an “offer for sale” of the claimed invention). Essentially, Our Judicial Mount Olympus in Limelight Networks (again) refuses to accept that Congress has spoken on its Deepsouth Packing holding, and has rejected both aspects of that holding.

  3. Steve,

    Better yet, claim the invention as a system if possible, not simply a method. See 2011 case of Centillion Data Systems, LLC v. Qwest Communications International, Inc., where the Federal Circuit ruled that “use” (infringement) of a patented system occurs when a party puts that system “into service,” even if that party does not exercise “physical or direct control over each individual element of the” patented system. Because there was a single user of the patented system in Centillion Data Systems, there was easy proof of direct infringement under 35 U.S.C § 271(a). That avoids the problem in Limelight Networks where the claimed method required multiple actors to separately perform all of the claimed steps.

  4. Thanks EG.

    Any reason you can think of why my approach to method claims (which I’m thinking could be especially useful in the reexam, reissue, and maybe the continuation, contexts) would not be patent eligible?

    Seems like it’s (often) easier to amend claims via the addition of “wherein” clauses than with changes to the “main body” of claims.

  5. This was covered on Patentlyo, but is so egregious that it just can’t be swept under the rug. Alito’s opinion states:

    “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.”

    Good Lord. Alito completely misunderstands the Fed Circuit opinion, they never said such a thing. To make this worse, this was a unanimous decision so all the justices (supposedly) read and agreed with it. Someone needs to communicate to the Supreme Court somehow that this opinion is huge embarrassment for them and they need to be more careful in patent matters. (I am not contesting the actual end result).

  6. patent leather,

    I am seeing a tidal wave of ill-feelings towards the Supreme Court for the lack of care they are showing in criticizing a lower court for what the upper court considers a lack of care.

    I had always recognized that the Supreme Court was a bit out of touch with mainstream reality and “law on the street,” but what I am seeing now is of whole different effect – a completely new level.

    I fear a very real crises is brewing.

    And we have not yet seen the Alice case yet. Since I have postulated that absolutely no one will be pleased with whatever the Supreme Court comes out with in that case, we may yet break the camel’s back.

    Now don’t take this as an “End of the World” proclamation – we have seen a loss of faith in the highest court of the land before, and survived. But perhaps this level of – to be generous – ineptitude may unite Congress and awaken that body to action.

  7. patent leather,

    Ditto on how mind-boggling embarrassing Alito’s opinion in Limelight Networks is in not even characterizing accurately the Federal Circuit’s majority holding, as well as my point above regarding Our Judicial Mount Olympus’ blind reliance upon precedent (i.e., Deepsouth Packing) that Congress has rebuked and overturned by statute, i.e., 35 USC 271(f). Our Judicial Mount Olympus lives in a “glass house” and needs to stop continually “throwing rocks” at the Federal Circuit.