Akamai and McKesson: Inducement Liability for Infringement by Multiple Actors

In August, we reported that a decision in the en banc Federal Circuit rehearings of Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010) and McKesson Techs. Inc. v. Epic Sys. Corp. , 98 U.S.P.Q.2d 1281 (Fed. Cir. 2011) appeared to be imminent. As predicted, on August 31, 2012, the Federal Circuit issued an en banc, per curiam opinion deciding both cases.

Each case had at issue the question of whether or not a method claim may be directly infringed when all of the claimed steps are not performed by a single party. In its per curiam majority opinion, the Court overruled its 2007 decision in BMC Resources, Inc. v. Paymentech, L.P., and held that induced infringement can be found even if a single actor is not liable for direct infringement. The per curiam majority opinion was joined by only six members of the eleven member panel (Judges Rader, Lourie, Bryson, Moore, Reyna and Wallach).

As a threshold point, the Court decided that it was unnecessary to reach the question of whether liability for direct infringement under 35 U.S.C. § 271(a) can be found when no single actor performs all of the claimed steps of a method claim. Instead, the Court held that infringement can be found under a theory of inducement, under 35 U.S.C. § 271(b), so long as all of the steps of the method are performed and a party knowingly induces one or more actors to perform the steps. This theory applies both when the party induces performance of all of the steps entirely by others, as well as when the party performs some of the steps itself. The Court supported its holding by finding that sections 271(a) and (b) of the Patent Act do not specifically require that the act of actual infringement required for a finding of inducement be limited to a single entity. In addition, the Court argued by analogy to the criminal law and general tort law that finding a party to be liable for acts committed by innocent intermediaries was “not an idiosyncrasy of the patent law.”

In a dissenting opinion authored by Judge Linn (and joined by Judges Dyk, Prost and O’Malley), Judge Linn took issue with the majority’s holding that induced infringement may be found absent a finding of direct infringement. Judge Linn asserted that direct infringement is governed by section 271(a) of the Patent Act, and that section 271(a) in fact requires that “all steps of a claimed method be practiced, alone or vicariously, by a single entity or joint enterprise.” In essence, Judge Linn expressed that, opposed to the majority’s holding, “[the] well established doctrine of vicarious liability is the proper test for establishing direct infringement liability in the multi-actor context.”

In a separate dissenting opinion, Judge Newman disagreed with the opinions of the majority and Judge Linn, opining that “[the] en banc court has split into two factions, neither of which resolves the issue of divided infringement.” Judge Newman argued that the majority’s holding, as a “spontaneous judicial creation” that “interactive and collaborative infringement is not actionable,” was wrong and failed to address the issue on which the cases were taken en banc (and which was briefed by a considerable number of amici curiae). Judge Newman disagreed with Judge Linn’s assertion that section 271(a) requires infringement to be performed by a single entity, arguing rather that direct infringement is properly found with the performance of all claimed steps by multiple actors. Addressing the topic of remedies, Judge Newman suggested that each of the actors would be held liable in accordance with traditional tort principles as contributory infringers.

With the lack of agreement by a substantial majority of the panel, we suspect that there is a reasonable likelihood that one or more of the parties may successfully petition the Supreme Court to reconsider the en banc decision. In the meantime, the present holding may make it easier for method patent holders in, for example, the interactive computer services, medical diagnostics and personalized medicine spaces, to enforce their patents. In addition, practitioners should pay attention to the majority opinion’s instructions on remand, and particularly the need to demonstrate knowledge of the asserted patent, inducement of the steps claimed in the patent and that these steps were performed, in order to find liability.

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