Federal Circuit Expands Direct Divided Infringement

20 August 2015 PharmaPatents Blog

In an en banc, per curiam decision in Akamai Technologies, Inc. v. Limelight Networks, Inc., on remand from the Supreme Court, the Federal Circuit broadened the circumstances under which a party can be liable for direct infringement under 35 USC § 271(a) even if it does not perform all steps of a method claim. While the decision was rendered in a case involving methods for delivering content over the internet, it has important implications for pharmaceutical and biotechnology method patents.

Procedural History of Akamai

When it first addressed this case, the Federal Circuit determined that Limelight could be liable for indirect infringement under 35 USC § 271(b), even if no party was liable for direct infringement under 35 USC § 271(a). (You can read my summary of the original per curiam decision here.). The Supreme Court granted certiorari, and reversed that decision, issuing a somewhat scathing opinion that characterized the “Federal Circuit’s analysis [as] fundamentally misunderstand[ing] what it means to infringe a method patent.” The Supreme Court held that that there can be no liability under § 271(b) unless there is direct infringement under § 271(a), and emphasized that a “patent is not infringed unless all the steps are carried out.”

Broader Meaning of Direct Infringement

For a method claim, direct infringement under § 271(a) occurs when all steps are performed by or attributed to a single entity. According to Federal Circuit precedent, the actions of one entity can be attributed to another if (1) the accused entity directs or controls the other’s performance, or (2) the accused entity and the other are part of a joint enterprise. In Muniauction, Inc. v. Thomson Corp., 532 F. 3d 1318 (2008), the court determined that the first test can be satisfied only if there is “an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps.”

In this remand decision, the Federal Circuit took up the Supreme Court’s invitation to revisit § 271(a), and interpreted the direct infringement statute more broadly than it had before:

We conclude, on the facts of this case, that liability under § 271(a) can also be found when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.

The court also reiterated that whether a single entity directed or controlled the acts of another is a question of fact to be decided by the jury.

Implications for Pharmaceutical and Biotechnology Method Patents

Although Akamai involved methods for delivering content over the internet, this decision has important implications for pharmaceutical and biotechnology method patents, since the expanded definition of direct infringement may give applicants more flexibility in how they define and claim their inventions. Having additional claiming options may be particularly helpful for diagnostic and personalized medicine method claims, where multiple actors may carry out individual steps, such as obtaining a physiological sample, analyzing it for a diagnostic marker, making a diagnostic determination, and/or administering a personalized treatment. Such flexibility also may be helpful in overcoming subject matter eligibility challenges, since methods of treatment are generally considered to be patent-eligible even where related diagnostic methods may not be.

Of course, it remains advisable to obtain claims that are likely to be infringed by a single actor, since a patent holder asserting direct, divided infringement will have to establish that one alleged infringer is liable for the actions of the other parties who carry out the other steps. While the Federal Circuit upheld the jury verdict that found Limelight liable where its customers carried out several method steps, would a jury find that a doctor, diagnostic company, or pharmaceutical company “directs or controls” the actions of a patient?

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