On August 31, 2012, the Federal Circuit issued its highly anticipated en banc decision regarding Akamai Technologies, Inc. v. Limelight Networks, Inc., No. 2009-1372, -1380, -1416, -1417 and McKesson Technologies, Inc. v. Epic Systems Inc., No. 2010-1291 [enhanced version available to Lexis.com subscribers]. In a 6-5 decision addressing both cases, the court redefined the law regarding induced infringement of method claims, overruling previous precedent. In particular, the court addressed so-called "divided infringement" of method claims - where no single entity performs all of the method steps, but rather, multiple entities collectively perform all of the method steps. In contrast to previous precedent, the court held that proof of induced infringement in these circumstances does not require a showing that the multiple entities have an agency relationship. According to the court, "it is no longer necessary to prove that all of the steps were performed by a single entity." Both Akamai and McKesson were reversed and remanded for further consideration.
Background The patents at issue in the Akamai and McKesson cases are directed to methods of use. The claimed method in Akamai consists of placing some of a content provider's content elements on a set of replicated servers and modifying the content provider's web page to instruct web browsers to retrieve that content from those servers. The Akamai defendant maintained a network of servers, and as in the claimed method, it allowed for efficient content delivery by placing some content elements on its servers. The Akamai defendant, however, did not modify the content providers' web pages itself. Instead, it instructed its customers on the steps necessary to make these modifications, and the customers performed the modifications themselves.
The claimed method in McKesson relates to electronic communication between healthcare providers and their patients. The McKesson defendant did not perform any steps of the patent. Instead, those steps were divided between patients, who initiated communications, and healthcare providers, who performed the remainder of the steps.
In the respective district court cases, both defendants were held not to infringe the patents asserted against them. In Akamai, because the Akamai defendant's customers (and not the defendant itself or its agents) performed one of the steps of the claimed method, the district court granted its motion for judgment as a matter of law. In McKesson, the district court similarly granted summary judgment of noninfringement on the ground that the patients (and not the McKesson defendant itself or its agents) performed the step of initiating communications.
Federal Circuit Decision The Federal Circuit reversed and remanded both Akamai and McKesson. At the outset, the court made it clear that its decision was focused on the doctrine of induced infringement, not the doctrine of direct infringement. Induced infringement requires that "the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement," and the court confirmed that all steps of the claimed method must be performed in order to find induced infringement. However, the court held that it is no longer necessary that all such steps be performed by a single entity. Overruling previous precedent, the court stated that "[r]equiring proof that there has been direct infringement as a predicate for induced infringement is not the same as requiring proof that a single party would be liable as a direct infringer." According to the court, "there is no reason to immunize the inducer from liability for indirect infringement simply because the parties have structured their conduct so that no single defendant has committed all the acts necessary to give rise to liability for direct infringement." As a result, the court established that liability for inducement exists where the accused infringer had knowledge of the patent, induced a party or multiple parties to perform the steps of the claimed method, and the steps were actually performed.
The Federal Circuit found support for its conclusion in the language of the statute addressing induced infringement (35 U.S.C. § 271(b)) [enhanced version available to Lexis.com subscribers]. In particular, the court stated that "[n]othing in the text [of the statute] indicates that the term 'infringement' in section 271(b) is limited to 'infringement' by a single entity." The court further stated that the legislative history of the Patent Act of 1952 provided strong support for interpreting induced infringement not to require a single entity commit all of the acts necessary to constitute infringement.
The Impact of the Decision The Federal Circuit's en banc decision in Akamai and McKesson provides added importance to method claims, particularly where the method steps are divided/performed by multiple entities. The court eliminated the viability of arguments by an accused infringer that, as a matter of law, there is no induced infringement of method claims where the method steps are practiced by entities that are not owned, controlled, or in an agency relationship with the accused infringer. Note, however, that the decision does not expand liability to innocent actors. Intent is still required to prove induced infringement - only those that knowingly cause the act of infringement to occur will be found liable.
If you have any questions or wish to discuss how the court's decision may impact your company, please contact your attorney at Brinks Hofer Gilson & Lione.
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This Client Alert is intended to provide information of general interest to the public and is not intended to offer legal advice about specific situations or problems. Brinks Hofer Gilson & Lione does not intend to create an attorney-client relationship by offering this information and review of the information shall not be deemed to create such a relationship. You should consult a lawyer if you have a legal matter requiring attention. For further information, please contact a Brinks Hofer Gilson & Lione lawyer.
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