Inducement of Infringement Requires Proof of Direct Infringement

Inducement of Infringement Requires Proof of Direct Infringement

In Limelight Networks, Inc. v. Akamai Technologies, Inc., (for a copy of the opinion, click here) the Supreme Court reversed the Federal Circuit’s holding that Limelight could be liable for actively inducing the infringement of Akamai’s patent claims even though, under the Federal Circuit’s governing standards, no party could be held liable for directly infringing the claims.  We discussed the case in a September 2012 blog post.

In order to find a party liable for inducing infringement, the courts have long held that someone must have actually committed direct infringement. In other words, one could not be liable for inducing an act of patent infringement that never actually occurred.

Limelight dealt with an issue that comes up frequently in cases involving internet or other computer-network implemented inventions: Divided infringement. In a case called Muniauction v. Thomson Corp, the Federal Circuit held that a method claim could only be infringed if a single party performed all of the steps or if it controlled or directed others who performed some of the steps. Limelight performed some of the steps of Akamai’s claims, but Limelight’s customers—which Limelight did not control or direct—performed others. Recognizing that its Muniauction decision precluded a finding that any one directly infringed Akamai’s claims, the Federal Circuit nevertheless held that Limelight could be held liable for inducing infringement. The Supreme Court disagreed and reversed.

What is notable about the Limelight decision is the fact that the Supreme Court repeatedly states that it is not deciding whether Muniauction was correctly decided. Thus, the Limelight opinion assumes that direct infringement can only occur when a single party performs all of the steps of a method claim or performs only some of the steps while a party it controls or directs performs others. The Supreme Court expressly declined to consider whether the Federal Circuit correctly decided Muniauction.

As a rule, patent drafters should try to draft claims such that one party is likely to perform all of their steps. This has long been the case and still is. However, because of the nature of telecommunications and the internet, the Muniauction rule may provide infringers with a way to circumvent patents by simply splitting up the performance of steps of a claimed method. The Limelight opinion indicates that the Supreme Court is sensitive to the issue, but that it believes the Federal Circuit’s attempt to address the issue by changing the law of induced infringement is wrong. Thus, we may eventually see the Supremes consider the holding of Muniauction and whether direct infringement of method claims can only occur when all steps are carried out by a single actor or those acting under its control or direction.

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