Appeals Court Says Companies Can Be Guilty Of Inducing Infringement... Even If There Is No Direct Infringement

from the going-off-the-reservation dept

Another day, another troubling ruling out of the Federal Circuit court (CAFC) which handles patent appeals. We wrote about this a little over a year ago. It actually involved CAFC reviewing two separate, but similar cases, concerning whether or not companies could be found liable for inducing infringement if no single party actually violates the patent, but a group of different parties, combined, serve to infringe on all the claims of the patent. This is tricky for a variety of reasons. In one case, involving Akamai suing Limelight, Limelight doesn't directly infringe on all of the claims of Akamai's patents, because some of the steps are completed by Limelight users, rather than by Limelight itself. Similarly, in the case of McKesson v. Epic Systems, Epic doesn't infringe on any of the claims of McKesson's patent -- but in combination, its users may do so, though none do so individually.

So here's where it gets tricky. The lower court had found that since no single party infringes on a patent, then there's no direct infringement. And if there's no direct infringement then there's no infringement that the defendants could "induce." This seems reasonable. The fear, with these cases, was that CAFC would say that multiple different parties, each doing different pieces that are covered by claims, could be lumped together into direct infringers, even if none of them fully infringes. That could create massive liability for purely innocent bystanders who do a minor link in a chain.

Thankfully, CAFC does not go that far in its ruling (though one dissenting judge felt it should). Instead, it just basically wipes out the concept that you can't have inducement without direct infringement, arguing that inducement is apparently something entirely separate from direct infringement. That's... troubling. You can see the reasoning (and it's worth reading the whole thing), in that they're saying if multiple parties, through their separate actions, combine to infringe -- and all those actions are directed by a third party -- then isn't it reasonable to assume that that party is still "inducing" infringement? But, as the dissenters note, that seems to be making up a wholly new interpretation of inducement, far from the one that Congress or the courts has allowed in the past. As one of the dissents notes:
The majority opinion is rooted in its conception of what Congress ought to have done rather than what it did. It is also an abdication of this court’s obligation to interpret Congressional policy rather than alter it. When this court convenes en banc, it frees itself of the obligation to follow its own prior precedential decisions. But it is beyond our power to rewrite Congress’s laws. Similarly, we are obliged to follow the pronouncements of the Su-preme Court concerning the proper interpretation of those acts.
In other words, CAFC's majority ruling here has gone off the reservation in a big way to fashion a ruling of how it thinks the world should work, but not in accordance with what the law actually says.

It also opens up a huge can of worms. Because even if no one party is actually infringing, suddenly third parties can be liable for inducing infringement. Infringement that... um... didn't occur. So that seems like a problem. Of course, it would have been even worse if they had gone with the plan that cobbled together direct infringement by all the separate players, even those who were doing very minor things (such as tagging content, in the Akamai case).

Either way, it seems likely that some of the parties here will ask the Supreme Court to weigh in, and hopefully they'll clarify that without someone infringing directly, there is no infringement to "induce."

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  1. identicon
    Mr. Curious, 7 Sep 2012 @ 12:20pm

    Re: Re: Re: Unanswered position

    If company B can show that steps 1-20 have inherent value without steps 21-25, has the patent of company A (steps 1-25) still been infringed?
    If so, doesn't the patent held by A essentially grant control of *all*of steps 1, 2, 3, ..., 25? After all, 25 different parties could all collaborate to contribute a single step to the 25 step process, thereby duplicating the process described by A's patent.

    My worry here is that it's very likely that one of the 25 steps in A's patent involves words like "the internet", "via HTTP", or "web-based".

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