Supreme Court Rejects Federal Circuit's Liberal Induced Infringement Standard and Holds Inducement Requires Direct Infringement | Practical Law

Supreme Court Rejects Federal Circuit's Liberal Induced Infringement Standard and Holds Inducement Requires Direct Infringement | Practical Law

In Limelight Networks, Inc. v. Akamai Technologies, Inc., the US Supreme Court held that liability for inducing patent infringement under 35 U.S.C. § 271(b) only exists if there is direct infringement under 35 U.S.C. § 271(a), overruling a US Court of Appeals for the Federal Circuit decision that held inducement does not require direct infringement.

Supreme Court Rejects Federal Circuit's Liberal Induced Infringement Standard and Holds Inducement Requires Direct Infringement

by Practical Law Intellectual Property & Technology
Published on 02 Jun 2014 • USA (National/Federal)
In Limelight Networks, Inc. v. Akamai Technologies, Inc., the US Supreme Court held that liability for inducing patent infringement under 35 U.S.C. § 271(b) only exists if there is direct infringement under 35 U.S.C. § 271(a), overruling a US Court of Appeals for the Federal Circuit decision that held inducement does not require direct infringement.
On June 2, 2014, in Limelight Networks, Inc. v. Akamai Technologies, Inc., the US Supreme Court held that liability for inducing patent infringement under 35 U.S.C. § 271(b) only arises if there is direct infringement under 35 U.S.C. § 271(a) (No. 12-786, (S. Ct. June 2, 2014)). The unanimous Supreme Court rejected a US Court of Appeals for the Federal Circuit standard that allowed inducement liability without requiring direct infringement attributable to a single entity.

Background

Akamai Technologies, Inc. owns US Patent No. 6,108,703 ('703 patent) covering a method of delivering content by tagging certain internet content for storage on Akamai's servers. Akamai sued Limelight Technologies, Inc. for infringement of the '703 patent in the US District Court for the District of Massachusetts. After a jury found that Limelight directly infringed the '703 patent, the Federal Circuit decided Muniauction, Inc. v. Thomson Corporation, where the court held that a party directly infringes a method claim if either:
  • It performs every step of the claimed method.
  • It performs some but not all of the claimed method steps and exercises control or direction over those who perform the remaining method steps.
(532 F.3d 1318 (Fed. Cir. 2008).)
Based on Muniauction, the district court held that Limelight cannot directly infringe the '703 patent because it did not perform the claimed tagging step or control the Limelight customers who performed this step. A Federal Circuit panel affirmed the finding of no direct infringement. Sitting en banc, the Federal Circuit reversed the panel decision and found that induced infringement does not require direct infringement attributable to a single entity (Akamai Technologies, Inc. v. Limelight Networks, Inc., 692 F.3d 1301, 1319 (Fed. Cir. 2012)). The court further held that Limelight could induce infringement if it performed some of the claimed method steps and encouraged others to perform the remaining steps. It did not revisit the direct infringement standard in Muniauction.

Outcome

In a unanimous decision, the Supreme Court reversed the Federal Circuit and held that inducement liability under 35 U.S.C. § 271(b) only arises when there is direct infringement under 35 U.S.C. § 271(a), explaining that:
  • Supreme Court precedent confirms that inducement liability requires direct infringement (see Aro Manufacturing Co. v. Convertible Top Replacement Co., 365 U.S. 336, 341 (1961)).
  • The Federal Circuit and the parties agreed that inducement liability requires direct infringement.
  • Section 271(f)(1) of the Patent Act (35 U.S.C. § 271(f)(1)) shows that Congress knows how to impose liability for inducing activity that does not itself constitute direct infringement, and courts should not create liability for inducing non-infringing conduct where Congress has not done so.
  • The Federal Circuit's view would deprive inducement liability of any ascertainable standards.
The Supreme Court found no inducement by Limelight because there was no direct infringement of the patented method. In finding no direct infringement, the Supreme Court:
  • Assumed (without deciding) the correctness of the direct infringement standard in Muniauction.
  • Declined to review the Muniauction direct infringement standard because:
    • it was outside the scope of the certiorari grant and not addressed in the petitioner's opening brief; and
    • the Federal Circuit could address it on remand.

Practical Implications

The Supreme Court's decision should make it easier to defeat induced infringement claims for method patents, especially if the accused infringer performs some (but not all) steps of the claimed method and does not direct or control the persons who perform the remaining steps. In light of this decision and the intent requirement for inducement liability, direct infringement claims for product or system patents will become even more attractive to patent owners.