Defending SCOTUS on Limelight Inducement Decision

There are some who are questioning the wisdom and correctness of the Supreme Court’s recent decision, authored by Justice Alito for a unanimous Court, in Limelight Networks, Inc. v. Akamai Technologies, Inc. One particular point of criticism seems to be centered around the fact that the Supreme Court failed to take into consideration the existence of 35 U.S.C. § 271(f). Section 271(f) was enacted by Congress to overrule a 1972 Supreme Court decision that held that supplying parts to be assembled outside the United States could not result in infringement of a U.S. patented combination machine because the assembly occurred outside the territorial reach of the U.S., and therefore beyond the scope of the exclusive rights granted by a U.S. patent.

We recognize that certain Supreme Court patent decisions over the past several generations have legitimately raised questions about the Court’s familiarity with overall patent law concepts. Indeed, the Supreme Court has been criticized, including here on IPWatchdog.com, for muddying patent waters, failing to articulate clearly applicable standards and promulgating rulings that seem internally inconsistent, if not scientifically inaccurate. Any legitimate criticism of Supreme Court patent jurisprudence should, however, be on a case-by-case basis. Further, it is important to recognize that the Supreme Court does from time to time get a patent decision perfectly correct. See Diamond v. Chakrabarty, Diamond v. Diehr, Octane Fitness v. ICON Health & Fitness, Highmark v. Allcare, Gunn v. Minton, Bowman v. Monsanto, i4i v. Microsoft and Kappos v. Hyatt.

This current criticism swirling around Limelight seems misguided. Arguing that the Supreme Court erred by misinterpreting, or failing to apply, 271(f) misses the point entirely. The question presented in the appeal to the Supreme Court was whether there can be infringement under 271(b) if there is no direct infringement under 271(a). Infringement under 271(f)(1) was not at issue in the case, and 271(f)(1) was not relied upon by the Federal Circuit below.

Furthermore, 271(f)(1) deals with shipping components overseas, which are then assembled. This is significant because the patent at issue in Limelight was U.S. Patent No. 6,108,703 (’703 patent), which claims a method of delivering electronic data using a “content delivery network.”

Limelight Decision

In the decision appealed to the Supreme Court, the Federal Circuit found inducement where there was no finding of direct infringement. The Federal Circuit even went so far as to specifically point out that they did not reach the question of whether there was direct infringement. In other words, the decision of the Federal Circuit, which was based on 271(b), held that it is possible to be liable for inducing infringement even when there has been no finding of direct infringement under 271(a). All that the Federal Circuit seemed to require was that all of the steps of the method have been performed, regardless of by whom.

However, as the Supreme Court pointed out, the Federal Circuit had previously held in its Muniauction decision that “a method’s steps have not all been performed as claimed by the patent unless they are all attributable to the same defendant,” Limelight slip op. at 5-6. Therefore, no direct infringement of a method patent can occur under the Federal Circuit’s own rule unless the method’s steps are attributable to a single party. Since following the Federal Circuit’s own precedents no direct infringement had been proven in the Limelight case, it was a simple matter to overrule Federal Circuit’s finding of liability for inducement under 271(b). Without proof of direct infringement, the holding violates the Supreme Court’s well established rule in Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U. S 336 (1961) that there must be direct infringement before there can be liability for inducement under 271(b). As the Supreme Court simply stated, “Limelight cannot be liable for inducing infringement that never came to pass.” Slip op. 9.

Section 271(f) and a Brief History

But what about 271(f)? Does this section, as some have claimed, provide a separate justification for the Federal Circuit’s holding in Limelight?

Before proceeding it is worth reviewing the statutory language of 271(f)(1), which is the part of the section that specifically deals with inducement. It says:

“Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.”

Once again, before proceeding, it is probably helpful to discuss a little Supreme Court history. In Deepsouth Packing Co., Inc. v. Laitram Corp., 406 U.S. 518 (1972), the United States Supreme Court held that a manufacturer who shipped unassembled parts of a patented shrimp deveining machine out of the U.S. to be assembled by its customers abroad was not liable for patent infringement. The Supreme Court held that the shipment of unassembled components of the deveining machine did not constitute patent infringement because “it is not an infringement to make or use a patented product outside of the United States.”

Displeased with the Supreme Court ruling in Deepsouth, Congress flexed their muscle, as they are Constitutionally allowed to do, and passed 35 U.S.C. 271(f) for the express purpose of overruling the Supreme Court’s Deepsouth decision. See Patent Law Amendments of 1984, S. Rep. No. 98-663, pp 2-3 (1984) (describing Section 271(f) as a response to the “Deepsouth decision which interpreted the patent law not to make it infringement where the final assembly and sale is abroad”). The Supreme Court acknowledged the overruling of Deepsouth in its decision in Microsoft Corp. v. AT&T Corp., 550 U.S. 437, 444 & n.3 (2007).

Federal Circuit en banc on 271(f) and Methods

In 2009, in Cardiac Pacemakers, Inc. v. Mirowski Family Ventures, LLC, the Federal Circuit sitting en banc had an opportunity to discuss 271(f) and whether the statute is applicable to a method.

Cardiac argued that the use of the term “patented invention” in 271(f) indicated Congress’s intent to include all classes of invention within that statute’s reach. The Federal Circuit disagreed, saying that they could simply not ignore “language of that section, which… makes it clear that it does not extend to method patents.” Specifically, the Federal Circuit focused on the fact that method steps do not constitute physical components used in performance of the method. Thus, the Federal Circuit concluded that 271(f) does not reach the infringement of a method.

Conclusion

Not only was 271(f) not at issue in the case, not only was the specific question accepted for appeal by the Supreme Court related to inducement under 271(b), but it is not possible to infringe a method claim under 271(f).

Therefore, whatever 271(f)(1) may say about inducement being possible without direct infringement when components are shipped overseas, we fail to see how that is applicable to a 271(b) case that relates to a method claim.