Divided Federal Circuit Panel Tackles Divided Infringement (Again)

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Divided Federal Circuit Panel Tackles Divided Infringement (Again)


In the week in which devoted fans await the final episode of the long–running TV drama, Mad Men, devoted Federal–Circuit watchers received the latest—but likely not the last—episode in the long–running drama of Akamai v. Limelight. This is the case that has not yet delivered on the promise of establishing with clarity when one party can be held liable for direct infringement of a method patent claim when it does not itself perform all of the steps of the method. The question is of grave concern to businesses frequently accused of infringing patents based on the behavior of customers who visit their websites or buy their products or services. It is of equal concern to businesses accused of directly infringing patents by using software or services they purchased from an upstream developer or manufacturer.

Recall that in the last episode of Limelight, the Supreme Court held that the Federal Circuit’s first resolution of the case was improper because it rested on the unstable conclusion that a patent claim could be directly infringed without their being someone who was the direct infringer. The high court sent the case back to the Federal Circuit for a do–over.

In a split opinion, the Federal Circuit today held that a business accused of patent infringement can only be held liable for direct infringement of a method patent claim based on the conduct of a third party if that third party is acting as the accused infringer’s agent, is contractually obligated to the accused infringer, or is engaged in a joint enterprise with the accused infringer.

The panel majority rejected the dissent’s view that liability could be extended further to include “parties who act in concert to collectively perform the claimed process pursuant to a common plan, design, or purpose.” In addition to finding the dissent’s legal reasoning flawed, the majority concluded that the dissent’s proposed expansion would have dramatic, negative, real–world consequences. Citing amicus briefs filed by a number of interested parties—including one we filed in the Supreme Court for Newegg and L. L. Bean—the majority noted, “The drastic expansion of predatory customer suits is not a theoretical concern….If the law were expanded to impose joint and several liability on users of a single prior art method step, it would subject swathes of innocent actors across diverse industries to these practices.”

Given the history here, there seems little doubt of another petition for rehearing en banc and/or Supreme Court review, but, for the moment, the Federal Circuit has brought back welcome sense and clarity to this area of patent law.

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