For a discussion of the Supreme Court’s recent decision to grant cert to resolve the fractured Federal Circuit en banc decision in Akamai Technologies, Inc. v. Limelight Networks, Inc. (Nos. 2009-1372, -1380, -1416, -1417) on what constitutes joint infringement and inducing infringement, take a look at our post today on DRI Today’s blog.
The Supreme Court announced on Friday that it will hear four additional intellectual property cases this term, which makes nine total intellectual property cases this term so far. Brief summaries of the issues presented are provided below, along with links to more information about each of these cases from our friends at SCOTUSblog.
Limelight Networks, Inc. v. Akamai Technologies, Inc. (No. 12-786)
The issue in this case is whether a party may be liable for infringement under either 35 U.S.C. § 271(a) or § 271(b) where two or more entities join together to perform all of the steps of a process claim.
Nautilus, Inc. v. Biosig Instruments, Inc. (No. 13-369)
Two issues are raised in this case. Does the Federal Circuit’s acceptance of ambiguous patent claims with multiple reasonable interpretations—so long as the ambiguity is not “insoluble” by a court—defeat the statutory requirement of particular and distinct patent claiming? And, does the presumption of validity dilute the requirement of particular and distinct patent claiming?
The issue in this case is whether the court of appeals erred in holding that a private party cannot bring a Lanham Act claim challenging a product label regulated under the Food, Drug, and Cosmetic Act.
The issue in this case is is whether, in a declaratory judgment action brought by a licensee under MedImmune, the licensee has the burden to prove that its products do not infringe the patent, or whether (as is the case in all other patent litigation, including other declaratory judgment actions), the patentee must prove infringement.
This case was argued on November 5, 2013.
Lexmark International v. Static Control Components (No. 12-873)
The issue in this case is whether the appropriate analytic framework for determining a party’s standing to maintain an action for false advertising under the Lanham Act is (1) the factors set forth in Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters (“AGC”), 459 U.S. 519, 537-45 (1983), as adopted by the Third, Fifth, Eighth, and Eleventh Circuits; (2) the categorical test, permitting suits only by an actual competitor, employed by the Seventh, Ninth, and Tenth Circuits; or (3) a version of the more expansive “reasonable interest” test, either as applied by the Sixth Circuit in this case or as applied by the Second Circuit in prior cases.
This case was argued on December 3, 2013.
Highmark Inc. v. Allcare Management Systems (No. 12-1163)
The issue in this case is whether a district court’s exceptional-case finding under 35 U.S.C. § 285 (in a patent infringement lawsuit), based on its judgment that a suit is objectively baseless, is entitled to deference.
This case will be argued on February 26, 2014.
Octane Fitness v. Icon Health and Fitness (No. 12-1184)
The issue in this case is whether the Federal Circuit’s promulgation of a rigid and exclusive two-part test for determining whether a case is “exceptional” under 35 U.S.C. § 285 improperly appropriate a district court’s discretionary authority to award attorney fees to prevailing accused infringers in contravention of statutory intent and this Court’s precedent, thereby raising the standard for accused infringers (but not patentees) to recoup fees and encouraging patent plaintiffs to bring spurious patent cases to cause competitive harm or coerce unwarranted settlements from defendants?
This case will be argued on February 26, 2014.
Alice Corporation Pty. Ltd. v. CLS Bank International (No. 13-298)
The issue in this case is whether claims to computer-implemented inventions—including claims to systems and machine, processes, and items of manufacture—are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court.
Yesterday, in McKesson Technologies Inc. v. Epic Systems Corp. (No. 2010-1291), the Federal Circuit granted McKesson’s petition for a rehearing en banc regarding the standards for joint infringement of a patent. This order comes just a little over a month after the Court granted a similar petition for a rehearing en banc in Akamai Technologies, Inc. v. Limelight Networks, Inc. (No. 2009-1372), which we discussed in an earlier post.
The Federal Circuit has apparently taken a special interest in the appropriate standards for imposing liability for joint infringement of a patent. Yesterday’s order expands the scope of the previous order and seeks briefing on two new issues:
“If separate entities each perform separate steps of a method claim, under what circumstances, if any, would either entity or any third party be liable for inducing infringement or for contributory infringement? See Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565 (Fed. Cir. 1983).”
“Does the nature of the relationship between the relevant actors—e.g., service provider/user; doctor/patient—affect the question of direct or indirect infringement liability?”
The first question is almost identical to that posed in Akamai, but it phrases the question in terms of inducing infringement or contributory infringement, whereas the one posed in Akamai was directed to direct infringement. By doing so, the Federal Circuit will be addressing all potential forms of joint infringement of method claims. The second question expands the scope to address the question of the relationship between the parties, which was central to the Akamai panel’s determination that joint infringement requires some form of an agency relationship.
The underlying case
McKesson owns a patent directed to a method of communication between healthcare providers and patients that involves personalized web pages. Epic is a software company that developed a web-based software package that it licenses to healthcare providers to allow patients to view their medical records, scheduling information, and treatment plans.
The parties agreed that no single party performed every step of the allegedly infringed method claim, rather, the patients performed some steps and the medical provider performed others. Nonetheless, McKesson argued that Epic was liable under an induced infringement theory, which requires a direct infringer. McKesson argued that Epic’s customers (the doctors/healthcare providers) controlled or directed their patients to perform the missing steps in the claim, so that Epic directly infringed under a joint infringement theory.
Recognizing that there was no agency relationship between doctors and their patients, McKesson argued that the special nature of the doctor/patient relationship should also be sufficient to support joint infringement. The Court disagreed, finding no agency relationship or other contractual relationship under the standards discussed in Akamai. The Court then affirmed the district court’s grant of summary judgment for Epic.
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.
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.
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