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Thursday, September 6, 2012
by Tony Dutra
It was the Friday before Labor Day and the patent community had been inundated all week with articles about how the jury in the Apple v. Samsung case reached its verdict. It was the perfect time for the Federal Circuit to try to sneak in an en banc decision that will likely have more effect on patent law in the future than Apple's iPhone design patents will.
The court held 6-5 that patent owners probably don't need to worry so much about trying to show joint infringement any more. The court instead expanded the definition of inducement, which, it seems, is most often the issue in these cases anyway.
The court's opinion addressed two cases simultaneously: Akamai v. Limelight and McKesson v. Epic Systems. Both cases featured patents covering methods performed over the internet. Akamai and McKesson sued the parties making money out of the infringement, even though infringement required that those companies' internet users perform one or more of the steps of the claims asserted.
Fortunately for the patent owners, Epic Systems was a software provider that played no part in the direct infringement at all, so McKesson sued Epic for inducement. When they argued their case before the en banc court, McKesson had an option Akamai lacked (at the time, at least). While McKesson acknowledged the well known tenet that there can be no inducement without a showing of infringement, it argued that 35 U.S.C. §271(b), the inducement provision, requires only that there be an act of infringement, not that a single party must perform all the steps of that infringement.
Six members of the court bought that argument. They overturned a 2007 panel decision in BMC Resources v. Paymentech that established this "single entity" rule. And they remanded each case with instructions for lower courts to find inducement so long as all the steps of the claimed method were performed, even if by more than one party. That included Akamai, which had not pressed its inducement complaint given the BMC rule at the time. Since Limelight is a direct competitor and performs some but not all of the steps, the court's inducement holding thus encompassed essentially the same joint infringement charge without the requirement to show that one party had "direction or control" over the other - another BMC holding that, by the way remains intact.
And because it remains intact, joint liabililty is still an option. Inducement requires more elements than under the strict liability of direct infringement, and it's unclear which situations lend themselves better to which charge. Inducement, as of the Supreme Court's decision in Global-Tech Appliances v. SEB, requires a showing of actual knowledge of the patent and actions that induced the other party to perform the additional steps. Those elements may not be hard to show in these cases, where the application service provider is the inducer and would have no business if the user didn't perform the additional steps. But whether inducement is easy to show in other industries or related to other technologies remains to be seen.
One technology that will undoubtedly be implicated here is medical diagnostics. Owners of diagnostic patents are still reeling from the Supreme Court's decision in Mayo v. Prometheus. And what was quite clear in that case is that Prometheus - fearing the divided infringement that was at issue in the Federal Circuit cases - had deliberately tried to write a patent claim that could be infringed only by a diagnostic laboratory. That desire left Prometheus with a claim that the high court said was not patent eligible under Section 101.
Could Prometheus have saved the claim with some extra steps that were performed by a doctor? Maybe. And now, with the Akamai ruling, perhaps diagnostics companies like Prometheus could write such claims and charge competitors like Mayo with inducing the doctor to perform the extra steps.
But I'm getting ahead of myself. Limelight and Epic will file cert petitions, and the Federal Circuit's split decision is ripe for review. The Supreme Court may also see that its Mayo ruling left this claim design gap, and maybe Akamai offers a chance to fill that gap. The flip side of patent eligibility, as it were.
There's still a way to go before this is sorted out.
Akamai Technologies Inc. v. Limelight Networks Inc., No. 2009-1372 (Fed. Cir. Aug. 31, 2012)
McKesson Technologies Inc. v. Epic Systems Corp., No. 2010-1291 (Fed. Cir. Aug. 31, 2012)
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