On April 20, 2011, the U.S. Court of Appeals for the Federal Circuit agreed to address the question of whether and under what circumstances there can be joint liability for patent infringement. Akamai Techs., Inc. v. Limelight Networks, Inc., No. 2009-1372, slip op. (April 20, 2011) (Akamai Order) (http://tinyurl.com/3owbrx9). In particular, the court granted Akamai’s request for a rehearing en banc of the decision in Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010) (Akamai I). At the rehearing, the entire court will consider under what circumstances there can be joint liability when two or more parties collectively perform all of the steps of a method claim but no one party performs all of the claim’s steps. This rehearing was foreshadowed and called for by Judge Bryson in his concurrence in McKesson Technologies Inc. v. Epic Systems Corp., No. 2010-1291, 2011 WL 1365548 at *6 (Fed. Cir. April 12, 2011) http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/10-1291.pdf. See also Foley’s prior alert (http://tinyurl.com/4xpugbk).
The court’s order, which was made public on April 21, 2011, vacated the Akamai I opinion and ordered the parties to submit additional briefing on the following question:
If separate entities each perform separate steps of a method claim, under what circumstances would that claim be directly infringed and to what extent would each of the parties be liable?
Akamai Order at 2.
By agreeing to rehear this case en banc, the Federal Circuit is agreeing to address a question that has frequently arisen in the context of computer-implemented inventions: Under what circumstances do parties that collectively perform every step of a claimed method directly infringe that claim? Under current law, the specific claim language used can mean the difference between a finding of direct infringement and a holding that a claim is unlikely ever to be infringed in a commercially significant manner.
Internet-implemented inventions provide perhaps the simplest example of this issue. Imagine a claimed method that includes the step of receiving data from an individual user and providing a response based upon that data. If the claimed method is written so that this step consists of a service provider receiving data input by a user and then transmitting the response, the service provider performs each of the steps of the claimed method and may be a direct infringer. If, however, the claim is written to require the user to act — by “inputting data” or “sending a request,” for example — then the service provider does not perform every step of the method as claimed and cannot, under current law, be a direct infringer. The only possible exception is where the patent holder could demonstrate that the service provider “directs and controls” the user. BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007). The implications of this result is magnified by cases indicating that where there is no direct infringer, there can be no liability for indirect infringement, i.e., inducement or contributory infringement. See, e.g., Dynacore Holdings Corp. v. U.S. Phillips Corp., 363 F.3d. 1263, 1272 (Fed. Cir. 2004).
The court’s recent decision in McKesson provides a real-world example. In that case, the claimed method included the step of a user “initiating a communication.” The court held that its earlier decisions in earlier decisions in Akamai I.; Muniauction, Inc., v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008); and BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) compelled a determination that there was no liability for direct infringement. The McKesson Court emphasized that parties can only be held jointly liable for infringement of a method claim if the parties have an agency relationship or if one party is contractually obligated to the other to perform the steps. McKesson, 2011 WL 1365548 at *3 (citing Akamai I, 629 F.3d at 1320).
A rehearing en banc signals the court’s interest in revisiting whether this rule for establishing joint liability for infringement is appropriate. By vacating Akamai I, the court could either affirm or overturn in whole or in part its holdings in Muniauction, BMC Resources, and McKesson.
Briefing in the en banc case should be completed this summer with argument likely in fall 2011. A decision could be reached as early as late 2011 or early 2012.
Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and our colleagues. If you have any questions about this update or would like to discuss this topic further, please contact your Foley attorney or the following:
George C. Best
Silicon Valley, California
Cynthia J. Franecki
Vice Chair, IP Litigation Practice
Jeanne M. Gills
Vice Chair, IP Department