11 June 2014

Method claims - SC rules on inducement & infringement

The US Supreme Court, on 2-6-2014, held that the petitioner was not liable for inducing patent infringement when it required third parties (customer) to carry out certain steps of the process covered by the method patent of the respondent [Limelight Networks Inc v. Akamai Technologies, No. 12–786].

Both parties were involved in delivering electronic data through Content Delivery Network (CDN). Several steps in the process were common to the process used by them though the petitioner performed some of the steps and, certain other steps called ‘tagging’ – storing of certain content on the service provider’s server – was done by the customer who used its services. The Federal Circuit held that even if steps were not attributable to a single party (the petitioner) making it liable for direct infringement, it had encouraged its customer to perform the other steps and was liable for inducing infringement. 


Inducement without direct infringement

The Supreme Court categorically held that when there is no direct infringement, a person cannot be liable for inducing infringement. It examined the relevant §271(b), §271(a) of the Code. Section 271 (a) talks of infringement when a person ‘makes, uses, offers to sell, or sells any patented invention’ without authority. 271 (b) relates to ‘actively inducing’ infringement.  The respondent drew an analogy that distributing the steps of the process – being performed by different persons – was like dividing the elements of a crime and each actor was liable as aiding and abetting a crime. The Supreme Court differed and opined that such a view was inconsistent with the principles of patent law. The protection under patent laws is for a set of claimed elements.


An infringer may evade liability by dividing the steps

In another decision by the Federal Circuit [(Muniauction, Inc. v. Thomson Corp., 532 F. 3d 1318 (2008)], it had opined that if a single person exercised ‘direction and control’ over the entire process, all actions were attributable to that single party. At first instance, going by this test it was held that there was no infringement by the petitioner, but in the subsequent en banc review the Federal Circuit rested on theory of inducement.

It was urged by the respondent and also appeared to be the view of the Federal Circuit that if such an interpretation were to be given to ‘inducing’ , it would be easy for an infringer to avoid liability by merely introducing other actors in the process. However, the Supreme Court was not persuaded by this argument. It observed that though the concern was a genuine one, the text of the statute as laid down does not support the reading of inducement when there is no infringement.

The Supreme Court was of the view that a method patent is not infringed unless all the steps are carried out and patentee’s rights extend to a claimed combination of events. It observed if infringement was considered in part, a person who makes another perform one of more and not the entire process would still be liable as an inducer though there was no direct infringement.   


Tort law and infringement

An interesting argument raised by the respondent though there were no supporting case laws was that tort law imposes liability on a defendant who harms another through a third party, even if that third party would not himself be liable. The Supreme Court made an important distinction that in the present case, the question was not if a third party was liable but whether infringement had been committed. There was no dispute that direct infringement had not been committed and this argument did not help the respondents.


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