Induced, Joint and Contributory Infringement

Supreme Court and Federal Circuit Tackle Divided Infringement

Bonita Lewis Bell

October 12, 2011

Infringement Standards Clarified

SCT – Induced Infringement

O Global-Tech Appliances v. SEB S.A., 131 S. Ct. 2060 (U.S. 2011)

CAFC – Joint and Contributory Infringement

O Akamai Tech. v. Limelight Networks, 629 F.3d 1311 (Fed. Cir. 2010)

O McKesson Tech. v. Epic Sys., 98 U.S.P.Q.2d 1281 (Fed. Cir. 2011)

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2011 – A good year for CAFC

Supreme Court decided three patent cases in 2011:

• Microsoft Corp. v. i4i Ltd.

• Stanford University v. Roche Molecular Sys. Inc.

• Global-Tech Appliances, Inc. v. SEB S.A.

Federal Circuit is 3-0

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Inducing Infringement

Global-Tech Appliances v. SEB

S.A., 131 S. Ct. 2060 (U.S. 2011)

Out of Frying Pan . . .

SEB S.A. invented a cool touch deep fryer and sold them in the U.S. under the T-Fal brand name

• Sunbeam asked Global-Tech to provide deep fryers meeting certain specs

• Global-Tech bought a SEB fryer in Hong Kong (no U.S. patent markings) and copied it

• Global-Tech commissioned a clearance opinion, but did not mention the SEB fryer to its attorney

• Attorney did not find the SEB patent, and gave the fryer a clean opinion

• Sunbeam and others sold the fryer in the U.S.

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. . . Into the Deep Fryer!

SEB sues Sunbeam and then Global-Tech• Sunbeam for direct infringement – settled

• Global-Tech for:• Direct infringement for sales or offers for sale in the

U.S.

• Inducing Sunbeam and others to offer infringing goods

• Jury verdict for SEB on both counts and a finding of willfulness

• DCt rejected Global-Tech post trial arguments of no inducement because of lack of actual knowledge of the patent

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If you can’t stand the heat . . .

CAFC affirmed DCt:

Induced infringement under §271(b) requires a “plaintiff [to] show that the alleged infringer knew or should have known that his actions would induce actual infringements” and the showing “includes proof that the alleged infringer knew of the patent.”

Deliberate indifference = actual knowledge

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. . .get out of the SCOTUS!

Global-Tech v. SEB, 131 S. Ct. 2060 (U.S. 2011)

1. Does active inducement require (a) an

intent to cause infringement or (2) merely an

intent to cause action that result in

infringement?

2. Absent direct proof of knowledge, must

plaintiff show more than “deliberate

disregard of known risk that [plaintiff] had a

protective patent”?

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What’s Defendant’s Intent?

“Whoever actively induces infringement of a patent shall be liable as an infringer.” §271(b)

• Ambiguity similar to §271(c) – Aro Mfg. v. CTR (1964)

• Aro – Defendant knows “that the combination for which his component was especially designed was both patented and infringing.”

• Followed by courts and unchanged by Congress

Defendant must have knowledge that the induced acts constitute patent infringement.

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Std of Proof Absent Actual Knowledge

SCt rejects CAFC’s “deliberate indifference” test in favor of “willful blindness”

1. Subjective belief that there was a high probability that a fact existed; and

2. Deliberate actions to avoid learning the fact.

Higher std will be more difficult to meet than

CAFC’s “deliberate indifference” 10

Joint and Contributory InfringementAkamai and McKesson

What Constitutes Joint Infringement?

OPatent claim contains a series of elements performed by multiple parties.

ODirect infringement requires that all steps must be performed.

OEach entity asserts that it does not infringe because it does not perform all the steps.

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2008 Dec. 20102007

BMC Resources v.

Paymentech498 F.3d 1373 (Fed. Cir. 2007)

“control or direct” each step

of the method

Muniauction v. Thomson Corp.532 F.3d (Fed Cir. 2008)

“control or direction over the entire

process”; providing instructions insufficient

Akamai v. Limelight629 F.3d 1311 (Fed. Cir. 2010)

To show control (or

direction) must be agents

or contractually obligated

Road to En Banc Review

Akamai Tech. v. Limelight Networks

Method to speed delivery of webpage content using “tagging”

• “Tagging” step claimed

• Limelight was aware of the patents

• Limelight contracts required customer to “tag” the content on the Limelight server

• Limelight provided technical assistance to perform tagging

• Limelight performed the remaining steps of the claim

Limelight’s “contract did not obligate it customers to perform any of the method steps. It merely explains that the customer will have to perform the steps if it decides to take advantage of Limelight’s service.” 14

Road to En Banc Review

Centillion Data v. Qwest 631 F,3d 1279 (Fed. Cir. 2011)

“System” infringed by

customer, although customer

not agent of defendant

En Banc Rehearing of

Akamai Granted

McKesson Tech. v. Epic Sys.98 U.S.P.Q.2d 1281 (Fed. Cir. 2011)

Without agency there is no

infringement; concurrence &

dissent questioned ruling

En Banc Rehearing of

McKesson Granted

Jan.

2011

April

2011

May

2011

McKesson Tech. v. Epic Sys.Method of e-communication between healthcare provider and patient using personal webpage

• Claims required patient to initiated communication w/webpage

• Doctor set up personal webpages for their patients and performed all steps, except initiating communication

• Patient is not required to use the personal webpage

Method steps are performed by multiple parties and none “directs or controls” the other.

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McKesson Divides the Panel

• Majority (J. Linn) – relying on Akamai found no agency or contractual relationship between the patient and doctor; thus, no infringement

• Concurring (J. Bryson) – Agreed with the result based on precedent, but questioned the precedent

• Dissent (J. Newman) – The BMC line of cases conflict with past CAFC precedent. “A patent that cannot be enforced on any theory of infringement, is not a statutory patent right.”

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Nov. 2011

Road to En Banc Review

“If separate entities each perform separate steps of a

method claim, under what circumstances, if any, would

either entity or any third party be liable for inducing

infringement or for contributory infringement?”

“Does the nature of the relationship between the relevant

actors – e.g., service provider/user; doctor/patient –

affect the question of direct or indirect infringement

liability?”

While CAFC has you on ice . . .

Method claims that require multiple actors are unenforceable unless one party “controls or directs” the other party(ies).

When drafting claims, consider whether one party will perform all steps

O “A patentee can usually structure a claim to capture infringement by a single party.”

O Include a mix of system/apparatus and method claims

O Use continuation application to retain flexibility to adapt to changes

O May be possible to correct claims via reissue

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