Federal Circuit Changes Standard for Proving Inducement of Patent Infringement

 

The Federal Circuit caused quite a stir in the patent world last week when it drastically changed the rules for asserting and proving inducement of patent infringement claims. My partner, Terry Clark, our resident patent guru, wrote the following article to alert our clients to these changes with the able assistance of Brian Iverson. I thought it would make a great blog post as well. Both Terry and Brian are key players in Bass’ intellectual property group and I’m honored to have them as guest stars on the blog. Without further ado, here’s Terry and Brian’s post:
On Friday, August 31, 2012, the U.S. Court of Appeals for the Federal Circuit issued its long-awaited en banc decision in Akamai Technologies, Inc. v. Limelight Networks, Inc. and McKesson Technologies, Inc. v. Epic Systems Corp., dramatically changing the law of patent infringement in a 6-5 decision.The en banc opinion holds that an accused infringer can be held liable for inducement to infringe a claimed method if (1) the accused infringer knew of the patent; (2) the accused infringer induced performance of the steps of the method claimed in the patent, and (3) those steps were performed, even if the patent owner cannot prove direct infringement.  In so holding, the Federal Circuit expressly overturned prior precedent requiring proof of direct infringement by a single entity as an element of an inducement claim.  Under the new rule, “all the steps of a claimed method must be performed in order to find induced infringement, but . . . it is not necessary to prove that all the steps were committed by a single entity.”

As Judge Newman writes in a dissenting opinion, “the court adopts a new theory of patent infringement, based on criminal law, whereby an entity that ‘advises, encourages, or otherwise induces,’ [o]r ‘causes, urges, encourages, or aids the infringing conduct,’ is liable for the infringing conduct.”

The Akamai decision raises some immediate concerns.  First, will the decision give rise to new inducement-only patent infringement litigation where the patent owner cannot prove direct infringement?  Second, what remedies are available to address inducement when the ultimate conduct is not actionable?  Third, as noted by Judge Newman in her dissent, “[s]ince the inducer is liable when he breaches the ‘duty’ not to induce, is the inducer subject to multiplication of damages?”  Finally, when or how, does a potential inducer fulfill his or her “duty to exercise due care to determine whether or not he is infringing” to avoid willful infringement? See e.g., Newman, J., dissenting, quoting Underwater Devices Inc. v. Morrison-Knudsen Co., Inc., 717 F.2d 1380, 1389 (Fed. Cir. 1983).

Paige again: Only time and much litigation will provide the answers to these questions but, for now, be aware that inducement claims are a whole new ball game.

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