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I NDIRECT AND D IRECT I NFRINGEMENT A FTER A KAMAI 9 th Annual Advanced Patent Litigation Course July 26, 2013 Presented by Casey L. Griffith

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I NDIRECT I NFRINGEMENT

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Whoever actively induces infringement of a patent shall be liable as an infringer. Not a strict liability tort. Requires knowledge of patent the alleged infringer must knowingly induce infringement and possess specific intent to encourage anothers infringement. Does not require proof of agency or direction and control. Requires a finding of direct infringement first (pre Akamai). I NDUCED I NFRINGEMENT 35 U.S.C. 271(b)

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Significance of relying upon inducing infringement theory of liability: Knowledge of patent often only occurs after suit filed (or notice letter sent). Induced infringement is not a strict liability tort. Liability for induced infringement therefore can only arise after accused infringer becomes aware of patent. So, effectively, damages for induced infringement often only accrue with filing of suit. Direct infringer may be liable for six years prior to suit. I NDUCED I NFRINGEMENT 35 U.S.C. 271(b)

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Liability for induced infringement required findings of both: 1. Inducement of direct infringement and 2. Direct infringement was committed by a single actor. Made imposing liability for infringement of method patents extraordinarily difficult where no single entity practiced each of the steps of the claimed method. P RE -A KAMAI - T HE S INGLE -E NTITY R ULE M ETHOD C LAIMS

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Same general rule as method claims, i.e., liability for induced infringement required findings of both inducement of direct infringement and direct infringement was committed by a single actor. But requisite direct infringement in context of inducing infringement of system claims may be easier to prove. For example, direct infringement may arise out of controlling system as a whole and obtaining benefit from it. P RE -A KAMAI - S INGLE -E NTITY R ULE WITH A T WIST S YSTEM C LAIMS

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In Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012) (en banc), the Federal Circuit held an alleged infringer may be liable for induced infringement of a method patent if: (1) The defendant has performed some of the steps of a claimed method and has induced other parties to commit the remaining steps; or (2) The defendant has induced other parties to collectively perform all the steps of the claimed method, even where no single party has performed all of the steps itself. A KAMAI T HE S INGLE E NTITY R ULE A BOLISHED

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Distinguished requiring proof of direct infringement from requiring proof that a single party was liable as a direct infringer. Deemed that a party who induces others to collectively practice the steps of the method has same impact as inducing a single direct infringer. Addressed the problem where infringers could escape liability by simply dividing infringing conduct among multiple parties. S INGLE E NTITY R ULE A BOLISHED (C ONT D )

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No requirement that a single entity directly infringe means that many more claims are potentially infringed Obvious benefit for plaintiffs: District courts denying summary judgment motions that would have been granted pre-Akamai Akamai = Significant Expansion of Potential Liability

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Pre-Akamai, in my opinion, inducing infringement claims often were asserted by plaintiffs as a just- in-case claim Abolition of the single entity rule changes that Good-faith belief of non-infringement is relevant evidence that tends to show that an accused inducer lacked the intent required to be held liable for induced infringement Defendants should give greater consideration to obtaining an opinion of counsel Akamai Opinions of Counsel More Important?

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Dont limit opinions of counsel to non- infringement: Good faith belief of invalidity may be a defense to induced infringement. See, e.g., Commil USA, LLC v. Cisco Sys., Inc., - - - F.3d - - -, 107 U.S.P.Q.2d 1290 (Fed. Cir. June 25, 2013) Commil cases raises issue of whether good faith belief in many other defenses could be defense against liability for induced infringement, such as: Laches License Exhaustion Akamai Opinions of Counsel More Important? (Contd)

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Dont wait to see if/how Federal Circuit resolves issue of relevance of good faith belief in other defenses Take steps now to establish good faith defenses Dont forget to preserve argument at trial Preserve Your Argument Part I Defendants

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D IRECT I NFRINGEMENT

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When a single actor commits all the elements of infringement, that actor is liable for direct infringement under 35 U.S.C. 271(a). Direct infringement has not been extended to cases in which multiple independent parties perform the steps of a method claim. Direct infringement is a strict liability tort. D IRECT I NFRINGEMENT 35 U.S.C. 271(a)

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Courts have found vicarious liability for direct infringement when the infringing acts are committed by an agent of the accused infringer or a party acting pursuant to the accused infringer's direction or control, and where multiple parties combine to perform every step of a claimed method and one party exercises control or direction over the entire process. V ICARIOUS L IABILITY D IRECT I NFRINGEMENT

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The determination of vicarious liability is fact-specific. Courts have considered: Whether the accused provides direction to another entity for performance or simply contracts out the steps to a third party. The nature of the contract if one exists; the mere fact that one exists is often not sufficient. The nature of the relationship; making information available, prompting, instructing, or facilitating the third party, without more, is often not sufficient. Companies generally are not vicariously liable for the actions of their customers. V ICARIOUS L IABILITY D IRECT I NFRINGEMENT

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Federal Circuit ordered en banc rehearing of Akamai focused on the following issue: If separate entities each perform separate steps of a method claim, under what circumstances would that claim be directly infringed and to what extent would each of the parties be liable? To surprise of practitioners, Akamai (en banc) was resolved on 271(b) induced infringement grounds Perception is that Akamai is of no relevance to direct infringement Akamai Was Supposed to Address Direct Infringement Through Vicarious Liability

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Judges Linn and Newman both dissented, in separate opinions. Both advocated for expanding the scope of liability for direct infringement beyond strict "direction or control" agency analysis of the single-entity rule. Judge Newman: The court should simply acknowledge that a broad, all-purpose single- entity requirement is flawed, and restore infringement to its status as occurring when all of the claimed steps are performed, whether by a single entity or more than one entity, whether by direction or control, or jointly, or in collaboration or interaction. Advocated treating patent infringement as a tort, rather than requiring strict liability. A KAMAI D ISSENTING O PINIONS S UGGEST B ROADER S COPE OF D IRECT I NFRINGEMENT L IABILITY

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Judge Linn: I would hold that direct infringement is required to support infringement under 271(b) or 271(c) and properly exists only where one party performs each and every claim limitation or is vicariously liable for the acts of others in completing any steps of a method claim, such as when one party directs or controls another in a principal-agent relationship or like contractual relationship, or participates in a joint enterprise to practice each and every limitation of the claim. The acts of each participant in a joint enterprise are, by definition, imputed to every member. A KAMAI D ISSENTING O PINIONS S UGGEST B ROADER S COPE OF D IRECT I NFRINGEMENT L IABILITY ( CONT D )

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Post-Akamai decision: Travel Sentry, Inc. v. Tropp, 2011-1023, 2012 WL 5382736 (Fed. Cir. Nov. 5, 2012): We therefore left open to possible future cases whether some form of liability for divided infringement could occur in some circumstances under 271(a). While a reasonable fact-finder could in some circumstances find that direction could be separated from control and lead to infringement liability, such circumstances have not found their way into our precedent at the present time. We therefore will review this appeal under the rubric of induced infringement. A KAMAI D ISSENTING O PINIONS S UGGEST B ROADER S COPE OF D IRECT I NFRINGEMENT L IABILITY ( CONT D )

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Do not limit your direct infringement contentions to direction and control For any limitations not practiced directly by a defendant, offer proof and argument re: action jointly, or in collaboration, or interaction with another (Judge Newman dissent); and participation in a joint enterprise (Judge Linn dissent) Preserve Your Argument Part II Plaintiffs

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Petitions for writ of certiorari to the Supreme Court have been filed Amicus Curiae briefs filed by Google, Altera, and CTIA. Supreme Court did not grant cert. before end of term, but it did invite the views of the Solicitor General S TAY T UNED

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