Federal Circuit Finds Direct Infringement When Multiple Parties Perform Separate Steps of a Patented Method
On August 13, 2015, the Federal Circuit in Akamai Technologies, Inc. v. Limelight Networks, Inc., No. 2009-1372, ruled en banc that there was direct infringement of a method patent, although the claimed steps were not all performed by one entity. This ruling will likely foster a major expansion of direct infringement allegations, under 35 U.S.C. §271(a), as to method patents.
The Federal Circuit rendered this important decision in response to the Supreme Court’s reversal of an earlier Federal Circuit decision finding active inducement, which included a remand to 'revisit the §271(a) question, if [the Federal Circuit] so chooses.' Limelight Network, Inc. v. Akamai Techs., Inc., 134 S. Ct. 2111, 2120 (2014).
Sitting en banc, the Federal Circuit determined that direct infringement can be found when there is 'participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.' 'In those instances, the third party’s actions are attributed to the alleged infringer such that the alleged infringer becomes the single actor chargeable with direct infringement.'
In addition, the Federal Circuit summarized that a party may be liable for direct infringement, even when a step is performed by another, where the party and the other party form a joint enterprise, which requires proof of (1) an agreement among members of a group; (2) a common purpose to be carried out by the group; (3) a community of pecuniary interest in that purpose among the members; and (4) an equal right to a voice in the direction of the enterprise, which gives an equal right of control. The Court further noted that direct infringement of method claims by multiple parties “is not limited solely to principal-agent relationships, contractual arrangements, and joint enterprises,” and vacated the earlier Federal Circuit panel decision that so held. Indeed, in footnote 3 of the en banc decision, the Federal Circuit overruled all of its earlier decisions to the extent that they too were based on this incorrect view of the law of direct infringement of method claims.
This Federal Circuit en banc decision is noteworthy in that it makes clear that a single actor need not actually perform every step of a clamed method patent, and that a party asserting direct infringement need not be limited to a principal-agent relationship, contractual language, or a joint enterprise. As to the exact factual contours of a legally sufficient direct infringement allegation, the Federal Circuit noted that it was outlining the governing legal framework in its decision, and that “other factual scenarios may arise which warrant attributing others’ performance of method steps to a single actor.” Accordingly, this area of the law will rapidly develop over the next few years.
If you have any questions or wish to discuss how this recent Federal Circuit en banc decision may impact your business, contact one of our Litigation Practice Group Attorneys.