In yet another unanimous patent decision, the US Supreme Court criticized the Federal Circuit and limited the scope of infringement for method claims in Limelight Networks, Inc. v. Akamai Technologies, Inc.1 In doing so, the Supreme Court has clarified that all steps of a method claim must be performed by a single actor in order for the claim to be infringed. The Court acknowledged that steps performed pursuant to an agency relationship or by a party contractually obligated to perform steps can still lead to liability for infringement of a method claim. However, the Court expressly rejected the Federal Circuit's holding that third party acts can "count" towards infringement of a method claim under an inducement theory. The Supreme Court's opinion is particularly harsh towards the Federal Circuit, declaring that the "Federal Circuit's analysis fundamentally misunderstands what it means to infringe a method claim."2
In the Federal Circuit's en banc decision that was overruled by the Supreme Court, the Federal Circuit had concluded that Limelight infringed a method claim where its customers performed one of the claimed steps. While Limelight does provide instructions to its customers and offers assistance regarding how to perform the claimed step, Limelight does not perform all of the steps of the claimed method, nor do its customers. In finding infringement of the method claim, the Federal Circuit focused on a theory of induced infringement.
The Supreme Court opined that application of the Federal Circuit's approach would yield two parallel bodies of infringement law ‒ one for liability for direct infringement and one for liability for inducement ‒ which would "deprive §271(b) of ascertainable standards."3 The Supreme Court found that §271(f) reinforced its interpretation of §271(b). Given that §271(f) only allows for infringement when the combination of components occurred within the United States, it is clear that Congress knows precisely how to impose liability for inducing activities, and chose not to do so with §271(b).
Akamai presented a number of arguments in favor of holding that method claims could be infringed by multiple actors. One argument was based on a theory of tort liability, another was based on an analogy with a federal aiding and abetting statute, and the final argument was based on patent law principles that were established before the enactment of the Patent Act of 1952.
The Supreme Court rejected the tort law based principles that, finding that no tort case had been identified where liability was imposed on an innocent third party who had taken action that did not violate rights. Here, the problem was not that there was no third party liable for direct infringement, but rather that no direct infringement had been committed by anyone. The Supreme Court also rejected the comparison to the federal aiding and abetting statute, finding that infringement of a method claim is not akin to two parties who divide all of the elements of a crime. While dividing the elements of a crime means that both parties are guilty under the aiding and abetting statute, the same does not apply for infringement of a method claim. Using the backdrop of the Patent Act of 1952, the Court focused on the limits of a patentee being only to the elements claimed in their patents. This limitation was deemed non-analogous with the background of aiding and abetting principles. Finally, the Court concluded that the rights conveyed by the Patent Act of 1952 do not support a finding of liability for induced infringement when multiple parties perform steps of a method claim.
While the Supreme Court acknowledged that liability could be avoided by dividing the performance of method steps among various parties, such an occurrence does not justify changing the law regarding inducement liability. The decision thus possibly paves the way for design arounds for method claims and weakens method claims in patents. Parties seeking to avoid liability for infringement can do so by eliminating a single step that third parties, such as suppliers or customers, may have to perform. This decision also provides motivation to patentees to reduce the number of steps in method claims and focus on key steps that will have to be performed by single entities in order to enhance the chance of finding liability of infringement in the future.
Footnotes
1. No. 12-786 (June 2, 2014).
2. Slip Op. at 5.
3. Slip Op. at 6.
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