Akamai/mckesson: Divided Patent Infringement in the Inducement Context
| Jurisdiction | United States,Federal |
| Citation | Vol. 42 No. 3 Pg. 39 |
| Pages | 39 |
| Publication year | 2013 |
By Mher Hartoonian
Articles Intellectual Property Law
Intellectual Property Law articles are sponsored by the CBA Intellectual Property Section. They provide information of interest to intellectual property attorneys who advise clients on protecting and exploiting various forms of intellectual property in the marketplace.
Coordinating Editors
K Kalan, Denver, of Berenbaum & Weinshienk PC—(303) 592-8301, kkalan@bw-legal.com; William F. Vobach, Littleton, of Swanson & Bratschun, L.L.C.—(303) 268-0066, bvobach@sbiplaw.com
About the Author
Mher Hartoonian is of counsel with Holland & Hart LLP in Denver—(303) 295-8079, mhartoonian@hollandhart.com. He is admitted to practice law in New York. His Colorado admission is pending.
Patentees now have another means of challenging those who induce patent infringement. In August 2012, the U.S. Court of Appeals for the Federal Circuit, in a sharply divided en banc opinion, ruled that inducing infringement may be found even where multiple entities perform the claimed method steps. The practical implications are far-reaching and impact patent prosecutors, litigators, and even those who provide opinions and counseling.
Intellectual property lawyers for years have recognized a hole in the law for indirect infringement with respect to method patents. An inducer could escape liability for infringement as long as more than one entity performed the underlying patented method steps. This is no longer true. In an opinion that consolidated for appeal two decisions, the Federal Circuit ruled en banc (6-5) that to find induced infringement of method claims, "it is not necessary to prove that all the steps were committed by a single entity."[1] The court overruled a 2007 Federal Circuit decision[2] to the extent it required one party to have committed the entire act of infringement, and arguably loosened the standards for induced infringement under § 271(b).
The nearly three dozen amici curiae briefs filed in Akamai Tech., Inc. v. limelight Networks, Inc. mid McKesson Tech., Inc. V. Epic Systems Corp. highlight the significance of the ruling for a wide range of industries. Fully understanding the implications of the Federal Circuit's opinion requires an examination of the basic principles of patent infringement and an analysis of the Federal Circuit's decisions.
Basic Principles of Patent Infringement
Patent infringement can be direct or indirect.[3] Direct patent infringement requires that a single party make, use, sell, offer to sell, or import a device that contains all the limitations of a patent claim, [4] or perform a method that contains all the limitations of a patent claim. Intent is entirely irrelevant for purposes of direct infringement.[5] The applicable statute creates strict liability for anyone who directly infringes.[6]
When an actor has direction or control through an agency relationship over one or more entities that collectively perform all the limitations of a patent claim, direct infringement is said to exist; the mastermind is the direct infringer.[7] To establish direction or control, every step must be attributable to the controlling party.[8] Simply providing instructions to a third party or cooperating at arm’s length are insufficient.[9] The mere existence of a contractual relationship between two parties does not necessarily suggest direction or control. The contract must obligate the third party to perform the claimed method steps.
The U.S. patent laws also recognize two species of indirect infringement: induced infringement and contributory infringement.[10] Unlike direct infringement, which requires a single party to infringe a patent, indirect infringement addresses scenarios involving multiple parties. Both forms of indirect infringement—that is, induced infringement and contributory infringement—still require that infringement actually occur. In other words, no liability attaches for unsuccessful attempts to induce another to infringe or contribute to another’s infringement.[11]
Generally, when a single actor actively and knowingly aids and abets another actor to infringe a patent, the first actor is liable for induced infringement.[12] For purposes of inducement, a patentee is not required to show that the induced party is an agent of the inducer or is acting under the inducer’s direction or control.[13] All that is necessary is that: (1) the inducer causes, urges, encourages, or aids in the infringing conduct; and (2) the induced conduct is ultimately carried out.[14]
The specific intent requirement for inducement requires more than an intent to cause the acts that produce direct infringement.[15] The inducer must know that the induced acts constitute patent infringement.[16] Liability also may exist where the defendant acts with "willful blindness"—that is, the defendant subjectively believed that there was a high probability that a patent existed and then took deliberate actions to avoid learning that fact.[17] This doctrine prevents defendants from escaping liability for inducement by deliberately insulating themselves from clear evidence of facts that are strongly suggested by the circumstances.[18]
Inducement is arguably both narrower and broader than direct infringement.[19] Although the accused inducer must intend to cause acts that constitute infringement or act with willful blindness, the induced parties do not need to be acting under the inducer’s direction or control to an extent that the acts are attributed to the inducer as a direct infringer. The statute is designed to shift liability in instances where, for example, a large number of induced direct infringer customers are difficult to sue individually.
The second type of indirect infringement, contributory infringement, applies when an entity
offers to sell or sells . . . a component . . . or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use. . . .[20]
Contributory infringement has a territorial limitation requiring the contributory acts to occur in the United States.[21]
Liability for indirect infringement cannot exist without an underlying direct infringement. For example, when an actor induces another actor to commit all the elements of infringement, direct infringement is unarguably present, and the first actor is liable for induced infringement. Historically, however, where an actor urged multiple parties to perform the claimed method steps, but lacked "direction or control" over those parties, the patentee had no remedy.[22] Direct infringement was lacking because a single party did not perform the claimed patent steps.
Akamai Tech. v. Limelight Networks and McKesson Techs. v. Epic Systems
On August 31, 2012, the Federal Circuit, sitting en banc, reversed and remanded the prior panel decisions in Akamai Tech. v. Limelight Networks[23] and McKesson Techs. v. Epic Systems, [24] and held that liability for induced infringement under § 271(b) could be found even if the steps of a patented method were divided between multiple parties.[25] The majority opinion was filed per curiam and included Judges Rader, Lourie, Bryson, Moore, Reyna, and Wallach. Five judges dissented: Judge Linn filed a dissenting opinion, in which Judges Dyk, Prost, and O’Malley joined, and Judge Newman filed a separate dissenting opinion.
Facts of the Cases and Procedural History
Akamai Technologies, Inc. owns a patent directed to a method for efficient delivery of Web content.[26] The claimed method allows placing a portion of a content provider’s content 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.[27] Akamai sued Limelight, which maintains a network of servers and allows for efficient content delivery by placing some content elements on its servers. Limelight did not itself modify the Web pages, but rather instructed its customers on the necessary steps to make that modification. Thus, the issue in Akamai was one of liability for inducement where the defendant had performed some of the steps of the claimed method and induced another party to commit the remaining steps.
McKesson Information Solutions LLC owns a patent directed to a method of electronic communication among healthcare providers and patients.[28] McKesson sued Epic, a software company that licensed an application that permits healthcare providers to electronically communicate with patients. Through the licensed application, the healthcare providers performed some of the claimed method steps, and the patients performed the remaining steps. Thus, the issue in McKesson was one of liability for inducement where the defendant itself did not perform any steps of the claimed method, but induced a number of parties to collectively perform those steps.
Both Limelight and Epic prevailed in their respective district court cases.[29] Limelight successfully moved for judgment as a matter of law by arguing that Akamai’s theory of joint liability, which was based on direct infringement, could not apply because Limelight did not control the actions of its customers. Epic successfully moved for summary judgment of noninfringement with respect to McKesson’s inducement allegations by similarly arguing that Epic did not exercise control over healthcare providers. The Federal Circuit affirmed both district court rulings in separate panel decisions before deciding to hear the cases en banc.[30]
The Federal Circuit’s Analyses and Rationale
The cases were consolidated and the Federal...
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