Wednesday, September 05, 2012

Akamai and McKesson: dramatic changes in the law of infringement

The Court of Appeals for the Federal Circuit ruled on August 31 in Akamai and McKesson.

From the decision:

Much of the briefing in these cases has been directed to the question whether direct infringement can be found when no single entity performs all of the claimed steps of the patent. It is not necessary for us to resolve that issue today because we find that these cases and cases like them can be resolved through an application of the doctrine of induced infringement. In doing so, we reconsider and overrule the 2007 decision of this court in which we held that in order for a party to be liable for induced infringement, some other single entity must be liable for direct infringement. BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007). To be clear, we hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity.

Of background:

This court has held that for a party to be liable for di-rect patent infringement under 35 U.S.C. § 271(a), that party must commit all the acts necessary to infringe the patent, either personally or vicariously. See Cross Med. Prods., Inc. v. Medtronic Sofamor Danek, Inc., 424 F.3d 1293, 1311 (Fed. Cir. 2005); Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565, 1568 (Fed. Cir. 1983). In the context of a method claim, that means the accused in-fringer must perform all the steps of the claimed method, either personally or through another acting under his direction or control. Direct infringement has not been extended to cases in which multiple independent parties perform the steps of the method claim. Because direct infringement is a strict liability tort, it has been thought that extending liability in that manner would ensnare actors who did not themselves commit all the acts neces-sary to constitute infringement and who had no way of knowing that others were acting in a way that rendered their collective conduct infringing. See In re Seagate Tech., LLC, 497 F.3d 1360, 1368 (Fed. Cir. 2007) (en banc) (“Because patent infringement is a strict liability offense, the nature of the offense is only relevant in determining whether enhanced damages are warranted.”). For that reason, this court has rejected claims of liability for direct infringement of method claims in cases in which several parties have collectively committed the acts necessary to constitute direct infringement, but no single party has committed all of the required acts. See BMC, 498 F.3d at 1381 (“Direct infringement is a strict-liability offense, but it is limited to those who practice each and every element of the claimed invention.”); see also Muniauction, 532 F.3d at 1329 (same).

As to induced infringement:

Induced infringement is in some ways narrower than direct infringement and in some ways broader. Unlike direct infringement, induced infringement is not a strict liability tort; it requires that the accused inducer act with knowledge that the induced acts constitute patent in-fringement. See Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068 (2011). In fact, this court has described the required intent as follows: “[I]nducement requires that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another’s infringement.” DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006) (en banc) (internal quotation marks omitted).1 On the other hand, inducement does not require that the induced party be an agent of the inducer or be acting under the inducer’s direction or control to such an extent that the act of the induced party can be attributed to the inducer as a direct infringer. 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. Arris Grp., Inc. v. British Tele-comms. PLC, 639 F.3d 1368, 1379 n.13 (Fed. Cir. 2011); see also Tegal Corp. v. Tokyo Electron Co., 248 F.3d 1376, 1379 (Fed. Cir. 2001); Nat’l Presto Indus., Inc. v. West Bend Co., 76 F.3d 1185, 1196 (Fed. Cir. 1996) (analogizing inducement to aiding and abetting violations of criminal laws).

In conclusion:

Although the patentee in Akamai did not press its claim of induced infringement at trial, it argues this court should overrule “the mistaken view that only a single entity can infringe a method claim.” That argument, while focused on direct infringement, is critical to the conclusion that divided infringement can give rise to liability, whether under a theory of direct infringement or induced infringement. While we do not hold that Akamai is entitled to prevail on its theory of direct infringement, the evidence could support a judgment in its favor on a theory of induced infringement. For that reason, we conclude that Akamai should be given the benefit of this court’s ruling disapproving the line of divided infringe-ment cases that the district court felt compelled to follow. We therefore reverse the judgment in both cases and remand in both cases for further proceedings on the theory of induced infringement.

Judge Newman's dissent began:

This en banc court has split into two factions, neither of which resolves the issues of divided infringement. A scant majority of the court adopts a new theory of patent infringement, based on criminal law, whereby any entity that “advises, encourages, or otherwise induces,” maj. op. 14, or “causes, urges, encourages, or aids the infringing conduct,” id. at 15, is liable for the infringing conduct. The majority further holds that only the “inducer” is liable for divided infringement, and that the direct in-fringers are not liable although the patent rights are “plainly being violated by the actors’ joint conduct.” Id. at 10. These are dramatic changes in the law of infringement.


Neither faction provides a reasonable answer to the en banc questions concerning divided infringement. However, the issues of liability and remedy arising from interactive methods and collaborative performance are readily resolved by application of existing law. Issues of induced infringement are not new, but this aspect is ill served by the majority’s distortion of the inducement statute, 35 U.S.C. §271(b), and has no support in theory or practice. This new rule simply imposes disruption, uncertainty, and disincentive upon the innovation com-munities. I respectfully dissent.


Blogger hadley said...

That is dramatic. They are desperate to find some way to attack distributed internet-enabled processes, I expect.

At the same time, they don't want to scare Ma and Pa Kettle away from the Internet by making them co-infringers simply because their client software was one piece of a giant infringing computer network of which they are completely unaware.

If I was a patent troll looking to shut down someone's operation, I would love to get a list of a hundred thousand end users and accuse them all of infringement (or rather, pull the RIAA trick of "inviting" them to get a patent license from me).

Word would be blasted across the web and my target would be brought to its knees.

I can see why leaving the little guy out of it makes sense.

Unfortunately it is quite a stretch to argue that this new intepretation is covered by the statutes.

3:41 PM  

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