Yesterday, the Court of Appeals for the Federal Circuit issued a unanimous en banc ruling in Akamai v. Limelight, altering the reach of patent liability for induced infringement of a method claim under 35 U.S.C. § 271(b). This is the second time the en banc court has considered Akamai. Three years ago, in a splintered decision, a majority of the court had ruled that liability for induced infringement was possible where no single entity had performed all the steps of a claim, but where those steps were divided between two or more parties, one of whom had induced the other(s) to infringe. In 2014, the Supreme Court reversed, essentially reinstating this single entity rule, and after a panel opinion largely adopting the Supreme Court’s reasoning, a unanimous en banc court has now broadened – at least somewhat – the scope of divided infringement liability, relative to the Supreme Court’s decision.
More specifically, the Federal Circuit concluded that an entity may be held liable for others’ performance of steps of a method claim “in two sets of circumstances: (1) where that entity directs or controls others’ performance, and (2) where the actors form a joint enterprise.” Noting the court’s prior holdings that these circumstances are met where there is an agency relationship between the relevant actors or there are explicit contractual duties to perform the steps of the method claims, the en banc court added another such circumstance in which liability may 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.” Because this third condition was present in the case under consideration, the Federal Circuit deemed Limelight liable for infringement.
Exactly thirteen months ago, after the Supreme Court’s decision but before the Federal Circuit had considered the case on remand, I had blogged here about the case’s potential implications for diagnostic method patents. (For those interested in this field, I then wrote a longer article about diagnostic technologies more broadly, which features a more detailed explanation of this issue.) Essentially, my argument was that the increasing restrictions the courts have placed on patentable subject matter under 35 U.S.C. § 101 would interact with these new divided infringement rules.