The Federal Circuit's Recent Changes to the Law on Induced Patent Infringement Borrow, Once Again, from Criminal Law

A criminal defendant cannot avoid criminal liability by arranging for others to complete a crime on his behalf, so why should a civil defendant be able to avoid liability for inducing patent infringement by arranging for others to engage in a series of steps that collectively practice the claims of a method patent?[1] According to the United States Court of Appeals for the Federal Circuit, the civil defendant should not escape such liability, and a contrary rule is capable of illogically rewarding the most calculated of plans to infringe the intellectual property of others.

Liable for Induced Infringement?

A contrary rule did exist, however, up until the Federal Circuit's recent holding in Akamai Technologies, Inc. v. Limelight Networks, Inc., No. 2009-1372, 2012 U.S. App. LEXIS 18532  (Fed. Cir. 2012).  Five years prior to Akamai, the Federal Circuit had held that "in order for a party to be liable for induced infringement, some other single entity must be liable for direct infringement."  Id. at *11 (citing BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007)) (emphasis added).  Accordingly, to avoid liability for induced infringement, parties have been "immunizing" themselves by inducing multiple other entities to commit the acts that, in conjunction, practice the claims of a method patent.[2] Akamai, 2012 U.S. App. LEXIS 18532, at *19.  According to the Federal Circuit's recent opinion in Akamai, such a loophole makes no sense:  "[T]here is no reason to immunize the inducer from liability for indirect infringement simply because the parties have structured their conduct so no single defendant has committed all the acts necessary to give rise to liability for direct infringement."  Id.  In fact, the "single entity rule" even creates an illogical loophole wherein an inducer can escape liability despite having performed some of the method steps itself.  Specifically, the single entity rule allows for the "bizarre result" of holding "someone liable for inducing another to perform all of the steps of a method claim but to hold harmless one who goes further by actually performing some of the steps himself."  Id. at *20.

Federal Criminal Code's "aiding and abetting" provision

In rejecting the single entity rule with regard to induced infringement of method patents, the Federal Circuit relied in part on the Federal Criminal Code's "aiding and abetting" provision, which contains "language similar to the language" of the Patent Act's induced infringement section.  Id. at *27 ("[The aiding and abetting] statute has been construed to permit the conviction of an accessory who induces or causes a criminal offense even when the principal is found not liable for the unlawful conduct.").  "As long as the induced criminal conduct occurs," the inducer's liability does not turn on whether one or more intermediaries "is factually guilty or even capable of committing the charged offense."  Id. at *28.  Applying this concept to patent law, the Federal Circuit has determined that, in the context of inducing infringement of a method patent, there need not be one underlying person or entity who actually engages in direct patent infringement by practicing, on its own, all steps of a method patent:  "To be clear, we hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity."  Id. at *11-12.

This is not the first time in the recent past that patent law has borrowed from criminal law with respect to induced infringement.  In May of 2011, the United States Supreme Court held that knowledge on the part of an alleged inducer of infringement may be established by evidence of willful blindness, which is "well established in criminal law."  Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068 (2011).  In doing so, it rejected the Federal Circuit's earlier "deliberate indifference to a known risk" standard, which was, in theory, easier for a plaintiff to meet because, by "demanding only 'deliberate indifference' …, the Federal Circuit's test did not require active efforts by an inducer to avoid knowing about the infringing nature of the activities."  Id. at 2071.

Ultimately, while a party can no longer avoid liability for inducing infringement of a method patent by craftily inducing multiple parties to practice all of the claimed steps, it has become more difficult for plaintiffs to prove knowledge where evidence of actual knowledge is lacking.  In a little over a year, therefore, the law on induced infringement has changed substantially due in part to the courts' express reliance on criminal law concepts.

[1] A method patent is one that discloses a proprietary process for accomplishing a result, such as "efficient delivery of web content" or "a method of communication between healthcare providers and their patients."  Akamai Technologies, Inc. v. Limelight Networks, Inc., No. 2009-1372, 2012 U.S. App. LEXIS 18532, at *12-13 (Fed. Cir. 2012).  In Akamai, for example, there were various steps to a method patent that covered the latter process and the defendant was accused of inducing multiple other entities (i.e., patients and their healthcare providers) to perform all of the steps of the plaintiff's patent.  Id. at *13.

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Jade Smarda |