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California Texas New Jersey North Carolina

Divided Infringement after Akamai

Jerry R. Selinger November 2012

Round 2

Attorney Work Product 2

The Relevant Statutes

Direct Infringement

“[W]hoever without authority makes . . . any patented invention infringes the patent.”

Active Inducement 35 U.S.C. § 271(b) - “Whoever actively induces

infringement of a patent shall be liable as an infringer.”


BMC Resources, 498 F.3d 1373 (Fed. Cir. 2007)

Representative portion of claims at issue: A method of paying bills using a telecommunications

network . . . comprising the steps of: . . .

Prompting the caller to enter a payment number . . .

Accessing a remote payment network associated with the payment number . . .

The accessed remote payment network determining . . . Whether sufficient available credit or funds exist in an account associated with the payment number . . .



“Infringement requires . . . a showing that a defendant has practiced each and every element of the claimed invention.” Id. at 1380.

The Federal Circuit rejected a “participation and combined action” standard that BMC argued had been adopted in On Demand Machine Corp. v. Ingram Industries, 442 F.3d 1331 (Fed. Cir. 2006). On Demand’s approval of jury instruction

dismissed as dicta.



“Courts faced with a divided infringement theory

have . . . generally refused to find liability where one party did not control or direct each step of the patented process.” Id. at 1380.

“[E]xpanding the rules governing direct infringement to reach independent conduct of multiple actors would subvert the statutory scheme for indirect infringement. . . . Under BMC's proposed approach, a patentee would rarely, if ever, need to bring a claim for indirect infringement.” Id.

Akamai (en banc)

6-5 (sort of)

Rader, Lourie, Bryson, Moore, Reyna and Wallach Newman Linn, Dyk, Prost, O’Malley


Akamai (en banc)

Holdings A defendant may be held liable for induced

infringement if the defendant has performed some of the steps of a claimed method and has induced other parties to commit the remaining steps. The situation in Akamai

A defendant may be held liable if the defendant has induced other parties to collectively perform all the steps of the claimed method, but no single party has performed all the steps itself. The situation in McKesson


Akamai (en banc)

Caveats and more Much of the briefing “has been directed to whether

direct infringement can be found when no single entity performs all of the claimed steps of the patent.”

It is “not necessary for us to resolve that issue today because these cases can be resolved through an application of the doctrine of induced infringement.”

In doing so, “we reconsider and overrule” BMC in which we held that some single entity must be liable for direct infringement for a party to be liable for inducement.


Akamai (en banc)

Rationale “[T]hat there can be no indirect infringement without

direct infringement, is well settled.” But, “[r]equiring proof that there has been direct infringement

as a prerequisite for induced infringement is not the same as requiring proof that a single party would be liable as a direct infringer.” (Emphasis in original.)

One who knowingly induces others to engage in acts that collectively practice the patented method “has the same impact on the patentee as a party who induces the same infringement by a single direct infringer.”

There is no reason to hold that the second inducer is liable for infringement, but the first is not.


Akamai (en banc)

Rationale The text of § 271 (b) “is entirely consistent with this

analysis.” Section 271(b) is structured differently from 271(a)

“Nothing in 271(b) indicates that the term ‘infringement’ is limited to infringement by a single entity.”

The legislative history of the 1952 Act But all they point to is 1948 testimony by Mr. Giles Rich.


Akamai (en banc)

Rationale Aiding and abetting liability under 18 U.S.C. § 2(a)

Which makes one who causes an innocent party to commit an act which, if done with the requisite intent, would constitute an offense

Although the primary actor is not liable

Analogy to tort law Common law of joint tortfeasance

But most citations are to a single entity

“[I]t is unlikely that Congress intended to endorse the ‘single entity rule,’ at least for the purpose of induced infringement ….”


Akamai (en banc)

Rationale Prior Aro Supreme Court case is distinguishable

Aro held the car owner did not infringe because replacing fabric was a permissible “repair.”

“In a word, if there is no infringement of a patent there can be no contributory infringer[.]” Aro, 365 U.S. at 345.

But that does not stand “for the proposition that there can be no induced infringement if there is actual infringing conduct but the acts necessary to constitute the infringement are committed by more than one party.”

“Unlike the present case, which deals with method claims, Aro dealt with product claims.”


Akamai (en banc)

The dissent Judge Newman

Direct infringement may be by more than one entity “whoever” in § 271 (a) “embraces the singular and plural” But liability for inducement requires direct infringement

Judge Lynn There can be no liability for indirect infringement without

direct infringement By a single actor

Aro “expressly rejected interpreting the 1952 Act to divorce indirect infringement from direct infringement.” “The Court was not just talking about underlying conduct, but

underlying liability.”



Travel Sentry, Inc. v. Tropp, Nos. 2011-1023, -1367 (Fed. Cir. November 5, 2012) (nonprecedential)

To establish liability for 271(a) infringement of a method claim, either one entity must perform all steps or one entity must exercise “control or direction” over the performance of each claim step. Slip Op. at 13-14.

“We left open to possible future cases whether some form of liability for divided infringement could occur in some circumstances under § 271(a). While a reasonable fact-finder could . . . find that direction could be separated from control and lead to . . . .” Id. at 15.


DSU Medical, 471 F.3d 1293 (Fed. Cir. 2006) (en banc)

DSU asked for an instruction that the inducer need only “intend to cause the acts of the third party that constitute infringement.”

District court added language requiring that the inducer “must have known or should have known that its action would cause the direct infringement.”



Federal Circuit clarified that the patentee has the burden of showing that the alleged infringer’s actions induced infringing acts and that the inducer knew or should have known that his actions would induce actual infringements.

Relied on Grokster copyright case Required “purposeful, culpable expression and

conduct . . . .”



Must know of the patent. Must have “an affirmative intent to cause direct infringement.” “[R]equires evidence of culpable conduct ….” Must have “specific intent and action to induce infringement.”

Knowledge of the acts that infringe is not enough. Knowledge of possible infringement is not enough.



Federal Circuit affirmed denial of motion for new trial “The record contains evidence that ITL did not believe its

Platypus infringed. Therefore, it had no intent to infringe.” See also Kinetic Concepts, Inc. v. Blue Sky Medical

Group, 554 F.3d 1010 (Fed. Cir. 2009) Principal of Defendant testified that it never intended to

infringe the patents Another principal testified that he thought they were

practicing a public domain method Although “practicing the prior art” is not a patent infringement

defense, it could nullify intent requirement for inducement Federal Circuit upheld final judgment of non-infringement

Impact of 35 U.S.C. § 298 “The failure of an infringer to obtain the advice of

counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to inducement infringement of the patent.”

But it only is applicable to patents issued on or after September 16, 2012.



Takeaway thoughts

Legal opinions Can be used to negate the intent requirement for

inducement, as well as to affirmatively negate willful infringement.

Other options Have Congress correct the effective date of § 298 to

be effective without regard to when a patent issued. But consider relying on an opinion of counsel in all events.

There will be a round 3. Cert. petitions are due December 28, 2012.


Questions?

Ibm presentation jerry selinger

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