Monthly Archives: April 2011

Federal Circuit to Revisit Joint Infringement Standard En Banc in Akamai Case

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

Yesterday, the Federal Circuit issued an order in the Akamai Technologies, Inc. v. Limelight Networks, Inc. (Case. No. 2009-1372) matter granting Akamai’s petition for the Court to rehear the appeal en banc. The Federal Circuit will be revisiting the concept of joint infringement of method patents to determine who can be liable for infringement when more than one party performs the required steps of a method claim.

 Issues to Be Considered by the En Banc Court

The Federal Circuit requested that the parties address one issue in this en banc consideration: “If separate entities each perform separate steps of a method claim, under what circumstances would that claim be directly infringed and to what extent would each of the parties be liable?”

Method claims, unlike apparatus or device claims, involve the performance of certain steps, often in a certain sequence. Because these steps can occur at different times, more than one actor or entity potentially can perform the steps. Direct infringement requires that a single actor or entity perform all of the steps, so it would appear an easy way to avoid infringement is to simply have more than one person or entity perform the steps. Joint infringement is a doctrine that addresses the unfairness of having a single entity simply contract out steps of the method to avoid liability.

Previous decisions of the Federal Circuit (such as Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318) held that simply providing instructions to another was not enough to create liability. There has to be direction and control sufficient to impose vicarious liability on the party giving the instructions.

In the original Akamai panel decision, the Federal Circuit confirmed that joint infringement only exists when “there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps.” 629 F.3d 1311, 1320.

The en banc decision will shed light on the correct standard for joint infringement of a method claim, which will be extremely important going forward for both patent drafters and competitors in the marketplace. The Federal Circuit will presumably answer to what extent a person can be held liable for infringement in a variety of situations.

  •  When can giving another instructions that cause infringement create liability?
  • What kind of contractual or legal relationship between the parties must exist for joint infringement to be possible?
  • Does the “mastermind” have to have knowledge of the patent or infringement?
  • Does it matter if either party to the joint infringement receives some additional benefit for performing a step?

Regardless of the outcome of this case, as a matter of prudent practice, patent practitioners should be careful in drafting method claims to avoid the multi-actor problem that joint infringement is meant to address. In most circumstances, a patent can be carefully drafted so that only one actor is needed to perform all of the steps. By doing so, the prudent patent drafter can altogether avoid the problem of joint infringement.

 Case History

The underlying case involved a method Akamai patented for providing a scalable solution to hosting web content on multiple servers to increase the ability of a web site to handle large traffic. The system allowed a content provider to outsource the storage and delivery of discrete portions of its website content. To utilize this method, a content provider must tag certain portions of its website.

Limelight is a competitor of Akamai’s and offered similar capabilities to its customers. While it did not perform all of the steps found in Akamai’s patent, it contractually required its customers to perform several of these steps. Thus, the issue was whether Limelight and its customers together infringed Akamai’s patent.

Initially, the jury found that there was joint infringement and returned a $41.5 million verdict in favor of Akamai. The District Court granted Limelight’s JMOL of noninfringement and threw out the jury’s verdict in light of the Muniauction case. The Federal Circuit originally upheld the District Court in a unanimous decision, finding that there was no proof that Limelight’s customers were agent of Limelight and contractually required to perform certain steps. While Limelight provided instructions on how to use the system and contractually required its customers to act in certain ways if they wanted to use the system, the customers were acting on their own behalf and were not obligated to do anything if they did not want to use Limelight’s services. The Court found this to be “arms-length cooperation” and not an agency relationship.

Advertisements

Oral Arguments in Microsoft v. i4i Limited on the Burden of Proof for Invalidity

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

The United States Supreme Court heard oral arguments today in Microsoft Corp. v. i4i Limited Partnership, Case No. 10-290, a case that calls into question what the proper burden of proof is to invalidate a patent claim. Microsoft challenges the long-standing standard of clear and convincing evidence and argued today that the proper standard of proof is merely by a preponderance of the evidence. Both i4i and the government argued that clear and convincing status quo should be maintained.

As is their custom, the Justices peppered both sides with questions about what the burden should be, and the Justices did not seem to clearly favor either side. While initially arguing in its briefs that the Court should adopt a hybrid approach—clear and convincing evidence for anything considered by the Patent Office during prosecution and preponderance for everything else—that position was largely ignored today during oral arguments. Instead the parties and the Court focused on a uniform standard and what it should be.

Justice Breyer noted the tension that exists between not giving legitimate inventions the protections they deserve and giving protection to inventions that do not deserve it. Counsel for i4i particularly stressed the need for protecting inventors and their inventions. In particular, he reminded the Justices that an inventor must completely describe his or her invention to the public in order to obtain a patent, which prevents the inventor from protecting his or her invention in other ways. The Justices also focused on the exact language of the statute (35 U.S.C. § 282) and the Court’s prior cases addressing the burden of proof. The parties also discussed how to instruct a jury about prior art that the Patent Office did consider.

  • A copy of the transcript can be downloaded here.
  • The Supreme Court docket for this case is located here.
  • The various briefs can be found here.

A decision is expected later this summer. Note that Chief Justice Roberts did not participate in the oral argument.

Patent Reissue as a Hedge Against Invalidity?

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

A recent decision from the Federal Circuit provides a boon for patent owners who are interested in filing suit against infringers but are concerned that their claims may be too broad to survive an invalidity attack. The decision in In re Takana (Case No. 2010-1262, April 15, 2011), allows a patent owner to file a reissue application before the US Patent and Trademark Office and add narrower claims to patent solely as a hedge against a potential invalidity challenge in future litigation.

A reissue application requires the patent owner to offer to surrender his or her patent and reopen the prosecution and amend the claims if the proposed changes were the result of an error and made without deceptive intent:

Whenever any patent is, through error without any deceptive intention, deemed wholly or partly inoperative or invalid, by reason of a defective specification or drawing, or by reason of the patentee claiming more or less than he had a right to claim in the patent.

The Patent Office determined that the patent owner could not simply add a dependent claim to his patent through the reissue process. The Federal Circuit disagreed and concluded that the patent owner’s desire to add a narrower dependent claim to his patent was an error–claiming less than he could have claimed during prosecution–and was not done with a deceptive intent. It found nothing improper with the reason for adding the narrower claim was a concern that a potential infringer might be able to invalidate the broad, original claims.

The decision creates a real opportunity for patent owners that want to enforce their patents through litigation, but are concerned that the claims were too broad as they were drafted to survive an invalidity attack. As with any such opportunity, there are drawbacks, however. A patent owner must offer to surrender the patent and reopen the prosecution of the patent. There is always the possibility that an examiner will discover a new reason the calls into question the validity of the patent. There are no guarantees that the surrendered patent will be allowed again. In addition, the patent statute provides for intervening rights that protect the public when a patent owner changes its patent after it has issued (either through reissue or reexamination). These intervening rights may grant absolute and equitable protections for products that were on sale before the patent owner added the new claims. Thus, a patent owner may not be able to enforce the patent against currently-selling products. Intervening rights generally provide fewer protections to future products, though.

This decision presents new opportunities for patent owners and an ability to correct older patents that contain novel ideas that may have been inartfully claimed.

i4i v. Microsoft: Patent Case of the Year? Supremes to Decide

Posted by Henry M. Sneath, a principal, shareholder and IP Group Chair, and  Robert Wagner, an intellectual property attorney, both at Picadio Sneath Miller & Norton, P.C.  in Pittsburgh, Pennsylvania.

All of a sudden, the burden of proof in patent invalidity claims is under review. Where did that come from? i4i beat Microsoft in an infringement case in Texas and now Microsoft wants to change the battlefield rules. They have appealed to the Supreme Court, which will hear argument this  Monday April 18, 2011, that the burden of proof on patent validity challenges should be lowered from “clear and convincing” to “preponderance of the evidence.” Clear and convincing means that the proof must be substantially more likely than not, that the evidence is true.” This is less than “beyond a reasonable doubt” employed in criminal cases, but more stringent than “preponderance” which means simply “more likely than not.” Judges will frequently tell the jury that this inquiry is best visualized like the ‘scales of justice’, and if the evidence tips ever so slightly in favor of one party, then the burden of “preponderance” is met. “Clear and convincing” is a much steeper burden than preponderance – at least according to the law. Microsoft believes that it is much too steep for patent invalidation evidence.

The issue arose at trial in Texas when Microsoft wanted to introduce the prior art of i4i’s own previously designed and used software, which Microsoft claimed invalidated the i4i patent in suit (on sale bar). By the time the lawsuit was filed, the original source code for this prior work was lost, so Microsoft had to rely on circumstantial evidence about what the prior art did. Ultimately, they did not win before the jury or the Courts, and they argued that this was because of the high burden of proof (clear and convincing).

Originally, Microsoft contended that there should be a lower burden of proof (preponderance) only for items not considered by the PTO. It did not attempt to lower the bar for everything. The case has now morphed into an overall attack on the burden of proof in all cases, not just where the PTO has not considered the prior art in question. Microsoft proposes that everything should be preponderance, and, only as a fallback, that things not considered by the PTO need only be proved by a preponderance.

We think the arguments are fairly compelling that the standard needs to apply to everything equally, whatever that standard may be. A hybrid approach where invalidity based on some items need only be proved by a preponderance, while other items would require clear and convincing will simply be unworkable.

Among the problems we see (and the numerous amicus briefers saw) with the hybrid approach are:

1. What counts as being considered by the PTO? If it was disclosed? If it was specifically mentioned by the examiner?

a. If it is everything disclosed in the record, patentees will absolute deluge the PTO with references, which will make the examiner’s job more difficult and will result in references being buried and examinations taking longer.

b. If it is only things discussed by the examiners, that will be unfair to patentees. Examiners are not required to address every reference. They only have to discuss the most relevant ones. Thus, a duplicative reference that still is important may not be mentioned, even though it contains material that the examiner thought highly relevant. Now that reference will be evaluated under a lower burden.

c. Also, examiners frequently look at a number of references in their searches that are never identified in the record. Do these count? How would you find out what was looked at?

2. What do you do with invalidity positions that involve some references that were considered and some that were not?

3. What do you do with a reference that was considered for one basis (anticipation), but not another (obviousness)?

We  think it likely that the Supreme Court will adopt a blanket approach, either preponderance or clear and convincing. If it maintains the status quo, which we think is the better argument, nothing will change in the patent world. As far as we know, this has not been a pressing or disputed issue for years. If they do change to a preponderance standard, we expect that there will be a significant shift in Courts granting summary judgment motions for invalidity. We’re not sure that juries really pay much attention to preponderance or clear and convincing, although it might make a difference in a few cases.

We think that the major corporations siding with Microsoft hope that a change will make it easier to beat back troll (NPE) cases. In particular, larger corporations are likely to be able to afford to draft better patents with more prior art searching that the individual inventors cannot do or afford. We think that they are banking on their own patents’ strength not being affected too much, but with the perhaps underfunded trolls taking a hit. Overall, a shift to preponderance will only weaken patents and their enforceability. It will likely also encourage competitors to take more risks in creating products that arguably infringe; knowing that their burden of proof for invalidity has gone down significantly. We think it is hard to say whether companies will stop applying for patents. In the end, for some products the only thing you can do to protect them is to get a patent. There really aren’t many alternatives for products that are easily reverse engineered.

For ongong coverage of this Supreme Court argument, please check back with us regularly. You may also want to follow a great source for Microsoft news at the Nick Eaton’s Microsoft Blog from Seattle PI: http://blog.seattlepi.com/microsoft/2011/04/14/microsoft-i4i-at-supreme-court-patent-law-at-a-crossroads/

Henry Sneath                  Robert Wagner

Trend Begins Under New High Pleading Standard Imposed by Fed Circuit

by: Joseph R. Carnicella, intellectual property associate with Picadio Sneath Miller & Norton, P.C.

Check out this article published in The National Law Journal on April 1, 2011.  The Federal Circuit’s decision in In Re BP Lubricants USA Inc. has had an impact already (in only a 3 week period of time) on the number of false marking cases on the dockets across the country.