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Changes in the Law Governing Patent Infringement Are on the Horizon

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Much has been written about what the Supreme Court decided in Limelight Networks, Inc. v. Akamai Technologies, Inc. However, the case is more important for what the Court did not decide, than for what was actually decided.  On June 2, the Supreme Court reversed a Federal Circuit decision concerning what constitutes indirect infringement of a patent. In doing so, the Court’s decision signals a significant possibility of future changes in the law concerning what constitutes direct infringement of a patent.

In 2008, the Federal Circuit decided in the Muniauction case that in a patent claiming a method or a process as the invention, direct infringement required a single entity to perform all of the steps of the claimed method.  During oral argument of the Limelight Networks case before the Supreme Court, Chief Justice Roberts suggested that the Federal Circuit law governing direct infringement “makes it pretty easy . . . to get around patent protection.”  The Chief Justice said, “All you’ve got to do is find one step in the process and essentially outsource it . . . or make it attractive for someone else to perform that particular step and you’ve essentially invalidated the patent.”

In Limelight Networks, the Supreme Court noted that a natural consequence of the Federal Circuit’s Muniauction decision was that it permitted “a would-be infringer to evade liability by dividing performance of a method patent’s steps with another whom the defendant neither directs nor controls.”  Some commentators have suggested that this is a problem in patents directed to software inventions involving the Internet, because a patented method for such software can involve method steps that are performed by a user or customer who is not controlled or directed by the would-be infringer.

In Limelight Networks v. Akamai Technologies, the Federal Circuit attempted to close this loophole by changing the law governing indirect infringement, or more specifically, the law governing inducement of infringement. The approach taken by the Federal Circuit was to allow liability for inducement of infringement even if there was no single entity that performed all of the steps of the patented method, (in which case there would be no direct infringement under the Muniauction rule).

In the Limelight Networks decision, the Supreme Court refused to allow the Federal Circuit to make this change in the law governing inducement of infringement. The Court held that there can be no inducement liability unless there is direct infringement. The Court acknowledged the concerns that the Federal Circuit attempted to address.  But the Court stated, “the possibility that the Federal Circuit erred by too narrowly circumscribing the scope of [direct infringement] is no reason for this Court to err a second time by misconstruing [the patent statute] to impose liability for inducing infringement where no [direct] infringement has occurred.” The Court also said, “[a] desire to avoid Muniauction’s natural consequences does not justify fundamentally altering the rules of inducement liability.

The Muniauction rule was not before the Supreme Court in this case. However, the Limelight Networks opinion concluded with a suggestion that the Federal Circuit “will have the opportunity to revisit the [direct infringement] question if it so chooses.” Thus, future changes in the Federal Circuit’s Muniauction rule governing direct infringement of a patent appear likely.