SCOTUS Overrules Federal Circuit on Induced Infringement

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).