Method claims just got more valuable and harder to evade infringement liability. To prove induced infringement, it is no longer necessary that the claimed steps be performed by a single entity. (The single entity requirement still exists for direct infringement liability to attach, however, although the claimed steps may be performed either personally or vicariously, e.g., through an agent.)
Background / Facts: This case is a rehearing en banc to decide the issue of divided infringement. It consolidates two appeals on related but slightly different facts. In the first case, Akamai Technologies, Inc., owned a patent that covers a method for efficient delivery of web content by placing some of a content provider’s content elements on a set of replicated servers and modifying the content provider’s web page to instruct web browsers to retrieve that content from those servers. Accused infringer Limelight maintains a network of servers and, as in the patented method, it allows for efficient content delivery by placing some content elements on its servers. Limelight, however, does not modify the content providers’ web pages itself. Instead, Limelight instructs its customers on the steps needed to do that modification. In the second case, McKesson Information Solutions LLC owned a patent covering a method of electronic communication between healthcare providers and their patients. Accused infringer Epic is a software company that licenses its software to healthcare organizations. The licensed software includes an application called “MyChart,” which permits healthcare providers to communicate electronically with patients. McKesson alleged that Epic induced Epic’s customers to infringe McKesson’s patent. Epic does not perform any steps of the patent. Instead, those steps are divided between patients, who initiate communications, and healthcare providers, who perform the remainder of the steps.
Issue(s): Whether 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 (as in the Akamai case), or if the defendant has induced other parties to collectively perform all the steps of the claimed method, but no single party has performed all of the steps itself (as in the McKesson case).
Holding(s): Yes. “To be clear, we hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity.” The court’s reasoning focused on the distinction between direct infringement per se and direct infringement liability. “Requiring proof that there has been direct infringement as a predicate for induced infringement is not the same as requiring proof that a single party would be liable as a direct infringer.” Thus, while it is most certainly still the case that there can be no indirect infringement without direct infringement, indirect infringement does not require direct infringement liability (which only attaches to single entities) – only direct infringement per se (which may attach to divided actions). With this new approach, the court addressed and explicitly overruled their 2007 decision in BMC Resources, Inc. v. Paymentech, L.P. requiring that, in order for a party to be liable for induced infringement, some other single entity must be liable for direct infringement. “We now conclude that this interpretation of section 271(b) is wrong as a matter of statutory construction, precedent, and sound patent policy.” Because direct infringement is a strict liability tort, it had been thought that extending liability for divided infringement would ensnare actors who did not themselves commit all the acts necessary to constitute infringement and who had no way of knowing that others were acting in a way that rendered their collective conduct infringing. This is still the case and nothing in the opinion changes the law on direct infringement liability. However, unlike direct infringement, induced infringement is not a strict liability tort; it requires that the accused inducer act with knowledge that the induced acts constitute patent infringement. If a party has knowingly induced others to commit the acts necessary to infringe the plaintiff’s patent and those others commit those acts, there is no reason to immunize the inducer from liability for indirect infringement simply because the parties have structured their conduct so that no single defendant has committed all the acts necessary to give rise to liability for direct infringement. (The two specific cases Akamai and McKesson at bar were remanded for further consideration of inducement in view of the new standard.)