On June 2, the Supreme Court issued a decision regarding inducing infringement, Limelight Networks, Inc. v. Akamai Technologies, Inc., et al., (12-786). The Justices, reversing and remanding the widely split en banc decision from the Federal Circuit, held that one could not support a finding of induced infringement without a finding of direct infringement by a single person. The Court’s holding effectively reins in the potentially expanded liability for induced infringement created by the Federal Circuit decision.
Dashing the hopes of some of the observers, the Court in Limelight specifically declined to opine on the issue of whether it is possible to have direct infringement of a method claim where separate parties perform some of the steps in the claim but no party performs all of the steps of the claim. The Court declined to revisit the earlier Federal Circuit decision in Muniauction, Inc. v. Thomson Corp., 532 F. 3d 1318, which held that direct infringement of a claim could be found even if not all steps of the claim are carried out by a single party if one party “exercises ‘control or direction’ over the entire process such that each step is attributable to the controlling process.”
The facts in Limelight clearly presented the issue of whether a finding of direct infringement is a prerequisite to a finding of induced infringement. The Federal Circuit agreed in this instance that Limelight did not perform all the steps of the claimed method. Thus the question presented was whether Limelight could be liable for inducing infringement within the meaning of 35 U.S.C. §271(b) if Limelight performed some of the steps and “induced” its customers to perform the remaining steps of the claimed method, even where there was no underlying finding of direct infringement. In particular in Limelight, no underlying finding of infringement was established.
The District Court had found no inducement liability on the basis that there was no direct infringement. On appeal, the Federal Circuit, in a 6-1-4 decision held that there could be inducement without the underlying direct infringement. The Supreme Court, relying heavily on its well established Aro Mfg. Co. v. Convertible Top Replacement Co. decision (365 U. S. 336, 341), unanimously disagreed and held that a direct infringement finding was a necessary part of a finding of inducement liability.
Although many of the observers and the amicus curiae sought the Court to rule on the issue of “divided infringement,” facing the Muniauction case squarely, the Court specifically declined to do so. The question facing the Court was whether there can be inducement under §271(b) without direct infringement under §271(a), not the scope of infringement under §271(a). While there may be an implication that the Court would like to face the divided infringement issue, it declined to do so on these facts. In fact, the Court remanded the matter to the Federal Circuit, stating that “the Federal Circuit will have the opportunity to revisit the §271(a) question if it so chooses.”
This decision will impact certain method patent claims but most well written claims will survive unaffected. While the particular claims at issue in Limelight related to a method of delivering electronic data using a content delivery network (CDN), the Limelight decision is applicable beyond the realm of delivering web content. The analysis is similarly applicable to settings such as healthcare (e.g., delivery of diagnostic/therapeutic analyses) or manufacturing (e.g., production of goods involving assembly of multiple components). Those claims most affected by this decision are those where one party performs some of the steps of the claimed method and by necessity, the remaining steps are performed by another party. As such, patent owners and applicants of pending method claims should pay particular attention to crafting claims wherein: (i) every step of a method claim is performed by a single party (in order to meet the direct infringement prong) as a critical element of establishing liability for induced infringement liability; or (ii) if by necessity multiple parties together perform all the claimed steps in the method, then the steps are actually undertaken by multiple parties wherein a single defendant “exercises ‘control or direction’ over the entire process such that every step is attributable to the controlling party.” The outcome of the remand in Limelight and further consideration of Muniauction bear watching as the law of induced infringement liability continues to evolve.