Akamai / McKesson Ruling Changes Standard for Proving Induced Infringement

On August 31, 2012, the Court of Appeals for the Federal Circuit issued a ruling that, writes Tony Dutra at Bloomberg BNA,

“will likely have more effect on patent law in the future than Apple’s iPhone design patents will.”

Nicole Smith and Ryan Malloy (law firm Morrison & Foerster) explain:

“In the 6-5 decision, the court overturned its caselaw holding that a plaintiff alleging induced infringement must show that the defendant induced a single entity to perform all of the steps of the claimed method. The court held instead that the plaintiff must show only that the defendant induced one or more entities to perform all of the steps not performed by the defendant itself.”

In other words, patent owners no longer need to show that a company carried out all of the acts itself to demonstrate patent infringement, only that it induced other companies to do so.

It’s a significant development for the biotech industry, writes Kevin Noonan (McDonnell Boehnen Hulbert & Berghoff):

“The majority opinion, if upheld, would be a boon for biotechnology, if only because it would provide another way for claim drafters to protect diagnostic method claims. These claims, under attack in Mayo v. Prometheus and AMP v. USPTO, would be much more robust if they could include (as the Prometheus claims did not) a treatment step in a diagnostic method claim. Until last Friday, such claims could not be enforced because the actors — the diagnostician or testing lab and the treating physician — were not thought to be under each other’s control and thus there was no direct infringer who practiced every step.”

But the ruling may have negative repercussions as well. Law firm Fenwick & West:

“… while the decision allows patentees redress for unauthorized use of their inventions by a coordinated group of actors, it may increase the likelihood that entities could find themselves party to a lawsuit as an actor who performs less than all of a patented process without an efficient way to dispose of claims they believe are unmeritorious. That requirement is eliminated under the majority’s views, and thus infringement could be found under circumstances common in modern medicine — a physician orders an infringing diagnostic test and then treats using the diagnostic results as her guide.”

For your reference, a roundup of commentary and analysis on the ruling:

Akamai Technologies, Inc. v. Limelight Networks, Inc.: Federal Circuit Makes Proving Induced Infringement Easier (Armstrong Teasdale LLP):

“Prior to the decision last week, under the Federal Circuit’s prior case law, proving induced infringement required proof that at least one party directly infringed the asserted patent claims. In cases involving method claims, this required proof that one single infringer performed every step of the patented method. Thus, there existed a gap in induced infringement liability where some of the steps of a patented method were performed by one entity, and the remaining steps were performed by a second entity.” Read on>>

Akamai Technologies, Inc. v. Limelight Networks, Inc. and McKesson Technologies, Inc. v. Epic Systems Corp. (McDonnell Boehnen Hulbert & Berghoff LLP):

“In Akamai, the asserted patent claimed methods for delivering web content by placing content on a number of ‘replication servers’ and having web browsers access the content by being directed to those server pages. Accordingly there is no direct modification of content providers’ web pages; the defendant merely instructs users how to do so. In McKesson, the patent claims were directed toward electronic communication between patients and healthcare providers, whereby portions of defendant’s software permitted patients to access their healthcare records directly from physicians.” Read on>>

Akamai and McKesson Federal Circuit En Banc Opinion May Affect Certain Commercial and Technological Environments (Foley & Lardner LLP):

“At least for the present — as the prospect of Supreme Court review remains — Akamai brings significant clarity to the issue of ‘divided infringement,’ where different entities perform different steps of a patented process or method. The Court held that a party may be liable for induced patent infringement, where the act of infringement is accomplished by a single actor, or through multiple actors having no agency or other relationship to the inducing party that would render the inducing party ‘vicariously’ liable for direct patent infringement.” Read on>>

Liability for Inducing Infringement Does Not Require a Single Entity Direct Infringer (Mintz Levin):

This case was of great interest to companies involved with technology that coordinates actions from multiple entities. For example, computer networking and social media technology require servers, network infrastructure and clients, all usually provided by different entities. Cellular communications technology requires handsets running an operating system, in communication with infrastructure and other handsets; each element typically provided by different entities. Cable television systems consist of third party media content; cable headends, infrastructure, set top boxes running software, and users.” Read on>>

Federal Circuit Clarifies Standard for Induced Infringement of Method Claims (Skadden, Arps, Slate, Meagher & Flom LLP):

“Previously, the Federal Circuit had held that for a party to be liable for induced infringement, another single actor had to be liable personally or vicariously for the underlying direct infringement. Now, in Akamai and McKesson, the Federal Circuit has softened this standard by eliminating the requirement that a sole controlling actor orchestrate the underlying direct infringement.” Read on>>

En Banc Federal Circuit Eases Requirements for Induced Infringement of Method Claims (Foley & Lardner LLP):

“The court did not disturb the principle that in order for ‘a party to be liable for direct patent infringement under 35 U.S.C. § 271(a), that party must commit all the acts necessary to infringe the patent, either personally or vicariously.’ The court explained that, ‘[i]n the context of a method claim, that means the accused infringer must perform all the steps of the claimed method, either personally or through another acting under his direction or control.’” Read on>>

Patent Litigation Alert: Federal Circuit Overhauls Divided Infringement Analysis (Fenwick & West LLP):

“This decision expands the circumstances where a party who does not perform a patented method may be liable for infringement. In framing the issue as one of inducement of infringement, the Federal Circuit doctrinally based liability under a rubric which historically has not been one amenable to easy resolution at the pleading or summary judgment stage.” Read on>>

Akamai and McKesson: Federal Circuit Expands the Law of Induced Infringement (K&L Gates LLP):

“The Federal Circuit remanded the Akamai and the McKesson cases to the district courts for further proceedings. In order for Akamai and McKesson (and other future patentees) to prevail on their claims of induced infringement, they must show that (1) the defendants were aware of the patentee’s patent; (2) the defendants induced the performance of the steps of the method claimed in the patent (either by performing some of the steps itself and inducing one or more other entities to perform the remaining steps or by inducing one or more entities to perform all of the steps claimed); and (3) the steps were actually performed.” Read on>>

Federal Circuit Hands Personalized Medicine Patent Holders New Tool for Enforcement (Foley & Lardner LLP):

“The case is important to diagnostic method patents and personalized medicine because it is not uncommon for two or more parties to collectively perform all elements of a single diagnostic claim. For example, personalized medicine method claims that would be performed by two or more actors can relate to determining if a patient is likely to develop a disease…” Read on>>

The Federal Circuit’s Akamai/McKesson Decision Abolishes the “Single-Entity Rule” for Inducement (Morrison & Foerster LLP):
“The Federal Circuit’s decision simplifies the law of induced infringement, and significantly strengthens it for patentees. Plaintiffs in patent litigation should consider whether the change in law provides a good-faith basis for amending their complaints and infringement contentions to assert new theories of induced infringement.” Read on>>

Court of Appeals Expands Inducement for Patent Infringement (Morgan Lewis):

“Divided infringement remains a viable defense to accusations of direct infringement, especially with respect to method claims. The August 31 opinion leaves in place the jurisprudence on this issue. However, for method claims where showing “direction or control” is either problematic or simply very expensive to prove, plaintiffs may now forgo even trying. This may result in new patent infringement complaints that do not even allege direct infringement. Operators of e-commerce portals should be particularly cognizant of this.” Read on>>

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