Timothy R. Holbrook, the Potential Extraterritorial Consequences of

• Citation: Vol. 26 No. 2
• Publication year: 2010

THE POTENTIAL EXTRATERRITORIAL CONSEQUENCES OF AKAMAI

Timothy R. Holbrook*

INTRODUCTION

Patent infringement arises when all of the limitations found in a particular claim of a patent are present in a device.1 For a patented system, the apparatus must have all the required components as delineated in the claim.2 For a patented method, all of the steps of the method must be performed.3

Historically, the issue of “who” was the infringer was relatively straightforward because most systems and methods were utilized in discrete, unitary settings. In the modern era, however, particularly with inventions being implemented over the Internet, the issue of “divided infringement” has arisen

in two particular contexts.4 The first arises when the accused device is owned

by multiple parties, such as an invention that operates over the Internet and includes one party’s servers and another party’s home computer.5 No one owns the entire system, and some of the steps of a given method are performed on the servers while others on the home computer.6 The second form of divided infringement arises when systems cross international borders.7 For example, should there be infringement of a U.S. patent if one of the users of an Internet- based invention is located outside of the United States?8

Courts, and particularly the U.S. Court of Appeals for the Federal Circuit, have struggled with addressing these scenarios. The result has been a bifurcated approach that treats patented systems and patented methods differently. To infringe a patent claiming a system, courts assess who controls

* Associate Dean of Faculty and Professor of Law, Emory University School of Law.

1. See BLACK’S LAW DICTIONARY 852 (9th ed. 2009).

2. Cf. Theodore U. Ro et al., Patent Infringement in Outer Space in Light of 35 U.S.C. § 105: Following the White Rabbit Down the Rabbit Loophole, 17 B.U. J. SCI. & TECH. L. 202, 211 (2011) (quoting NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1317 (Fed. Cir. 2005)).

3. Id.

4. See generally Mark A. Lemley et al., Divided Infringement Claims, 33 AIPLA Q.J. 255 (2005).

5. See generally id. at 256–63.

6. See id.

7. See generally id. at 263–67.

8. See id. at 270–71.

   and benefits from the system and where that person is located.9 Thus, there can be infringement of system claims in these divided situations. In contrast, the Federal Circuit has offered strict rules for the infringement of patented methods. To infringe a claimed method, all of the steps of the method must be performed by a single entity or by someone controlled by that entity.10 Control

   is satisfied when the third party is an agent or is under a contractual obligation to perform the various steps of the method.11 Additionally, all the steps of the method must be performed within the United States; if a single step of the claimed method is performed outside of the United States, then there is no infringement.12

   
   

   When the United States Court of Appeals for the Federal Circuit agreed to review Akamai Technologies, Inc. v. Limelight Networks, Inc.13 and McKesson Technologies Inc. v. Epic Systems Corp.14 observers believed the court would address whether and under what circumstances a party could be held liable for the direct infringement of a patented method when multiple parties perform the claimed steps.15 As the court characterized the issue:

   
   

   When a single actor commits all the elements of infringement, that actor is liable for direct infringement under 35 U.S.C. § 271(a). When a single actor induces another actor to commit all the elements of infringement, the first actor is liable for induced infringement under

   35 U.S.C. § 271(b). But when the acts necessary to give rise to liability for direct infringement are shared between two or more actors, doctrinal problems arise.16

   
   

   The territorial rules for using systems and methods were not at issue.

   
   

   Rather than answering the direct infringement question, the court left the law on direct infringement intact. Instead, it changed the standard for inducing

   
   

9. See infra notes 26–29 and accompanying text.

10. See infra notes 24–25 and accompanying text.

11. Id.

12. Lemley, supra note 4, at 263–64.

13. 419 F. App’x 989 (Fed. Cir. 2011) (order granting en banc review).

14. 98 U.S.P.Q.2d (BIA) 1281 (Fed. Cir. 2011) (order granting en banc review).

15. See Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301, 1306 (Fed. Cir. 2012) (en banc) (per curiam) (“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.”); id. at 1319 (Newman, J.,

    dissenting) (“Although review of the single-entity rule was the sole reason for this rehearing en banc, and the sole question briefed by the parties and the amici curiae, this aspect is not resolved by the majority . . . .”).

16. Id. at 1305 (per curiam).

    infringement under § 271(b). Now, it is possible to induce infringement even if no single entity performs all of the steps of the patented method or process, so long as all of the steps are eventually performed and a party has induced others to perform those steps.17

    
    

    The court’s sidestep of the direct infringement issue is problematic. In particular, the court and commentators have overlooked the court’s potential expansion of the extraterritorial reach of a patent under § 271(b). Before Akamai, direct infringement under 35 U.S.C. § 271(a) was a prerequisite for active inducement under 35 U.S.C. § 271(b). Section 271(a) contains territorial limits, and § 271(b) does not. To infringe under § 271(a), the activity must take

    place “within the United States.”18 Because active inducement before Akamai

    required an act of direct infringement, induced infringement had territorial constraints.19

    
    

    This state of affairs may change dramatically after Akamai. There, the Federal Circuit decoupled active inducement from § 271(a), meaning that infringement under § 271(b) is free-standing, and infringement is not defined by reference to other provisions of § 271. The decoupling also means that, as a statutory matter, the court has removed the territorial constraints from active inducement. This Article elaborates on this extraterritorial expansion of

    § 271(b), its potential consequences, and a variety of mechanisms that the

    Federal Circuit or Supreme Court could implement to limit such reach. At a minimum, this analysis provides a statutory argument against the Federal Circuit’s attempt to redefine induced infringement as an independent form of infringement. More broadly, this Article explores how the Federal Circuit’s

    
    

17. See id. at 1306 (“[W]e 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.”). Judge Linn, joined by three other judges, would retain the single-entity rule. See id. at 1337–38 (Linn, J., dissenting). Judge Newman also dissented, but on grounds far different than the other dissenters. She would reject the single-entity rule for direct infringement under § 271(a). See id. at 1322 (Newman, J., dissenting) (“The word ‘whoever’ in § 271(a) does not support the single-entity rule. . . . [W]hen more than one entity performs all of the steps, the claim is directly infringed.”).

18. 35 U.S.C. § 271(b) (2006). See generally Donald S. Chisum, Normative and Empirical Territoriality in

    Intellectual Property: Lessons from Patent Law, 37 VA. J. INT’L L. 603, 615–16 (1997); Timothy R. Holbrook,

    Territoriality Waning? Patent Infringement for Offering in the United States To Sell an Invention Abroad, 37

    U.C. DAVIS L. REV. 701, 719–20 (2004). Contributory infringement, however, remains limited to acts within the United States. 35 U.S.C. § 271(c); see also Chisum, supra, at 615–16. Contributory-like infringement protection is afforded to exports under 35 U.S.C. § 271(f).

19. Section 271(b) before Akamai could “be used by owners of U.S. patents . . . to reach conduct abroad

    that causes direct domestic infringement.” Chisum, supra note 18, at 614.

    decision in Akamai may have expanded the extraterritorial reach of U.S. patents through the inducement doctrine.

    
    

    1. ACTIVE INDUCEMENT’S TRADITIONAL LINKAGE TO TERRITORIALLY- LIMITED DIRECT INFRINGEMENT

       
       

       The Patent Act affords rather robust protection to patent owners against various forms of infringement. Section 271 of the Act delineates what constitutes infringing acts. The most basic provision is § 271(a), which defines infringement as arising when an unauthorized person makes, uses, sells, or offers to sell an invention within the United States or imports the invention into

       the United States.20 These infringers can be liable even if they are unaware of

       the existence of the patent: Patent infringement is a strict liability offense, and ignorance of the patent does not preclude liability.21 This Subpart will explore the law surrounding § 271(a) and § 271(b) as to the doctrine governing direct infringement, inducement of infringement, and the territorial constraints as to

       both.

       
       

20. 35 U.S.C. § 271(a). Congress has subsequently amended § 271 to include other forms of direct infringement. See Timothy R. Holbrook, Liability for the “Threat...