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Federal Circuit Changes the Rules for Inducing Patent Infringement

Patent owners enjoy a private right of action against infringers. Patent owners have the right to bring legal action against one who directly infringes their claimed invention, that is, one who, without authorization, makes, uses, offers to sell, or sells a patented invention within the U.S., or imports a patented invention into the U.S. during the term of the patent therefor. Patent owners also have the right to bring legal action against a party who actively induces others to infringe the owner’s patent. However, proving one liable for inducing infringement has historically been difficult. Courts repeatedly held that, in order to prove liability for inducing infringement, (1) actual direct infringement of the patent must occur and (2) the defendant intentionally encouraged another party to commit the direct infringement. Defendants could avoid liability by encouraging multiple parties to collectively perform the steps of a patented method so that no single party completed all the steps, and therefore no single party directly infringed the patent.  

A recent decision by the Federal Circuit has expanded the scope of inducement, making it easier for patent owners to prove liability for inducement. The cases of Akami Tech. v. Limelight Networks and McKesson Tech. v. Epic Systems were jointly reviewed en banc by the Federal Circuit. In these cases, the patent owners had difficulty proving that the defendants induced patent infringement, as the defendants allegedly intentionally encouraged separate parties to perform different steps of patented methods. In Akami, the defendant allegedly performed several steps of a patented method and induced other parties to complete the remaining steps. In McKesson, the defendant allegedly induced other parties to collectively perform all the steps of a patented method, but no single party performed all the steps itself.

The en banc Federal Circuit held that inducement of infringement no longer requires that a single entity perform all the steps required for direct infringement of a patented method. Under the new holding, inducement liability exists where the accused infringer (1) knew of the patent, (2) induced performance of the steps of the method, and (3) those steps were actually performed. This decision closes a loophole that has allowed entities to knowingly and intentionally take advantage of a patented method while avoiding the need to take a license from the patent owner.

This decision is particularly important for owners of patents related to online technology, where the controller of a host system may perform several steps of a patented method and a user accessing the system performs the remaining steps. Before this decision, such concerted actions would not create liability for inducing infringement as no single party performed all the steps of the patent. Now, the controller of the host system could be found liable for intentionally encouraging the user to perform steps to take advantage of a known patent. This decision does not create liability for parties who innocently perform one or more steps of a claimed invention (as long as they do not perform all steps and become direct infringers), as the innocent actors would not satisfy the “knew of the patent” requirement for inducement liability.

With this recent change to patent law, we recommend that owners of patents review the activities of their competitors to evaluate whether multiple actors (such as a competitor and the competitor’s customers) collectively infringe the owners’ patented methods. If such a situation arises, the patent owner may wish to contact the competitor and expressly inform it of the owner’s patent rights, therefore ensuring that the competitor would know of the owner’s patent and satisfying one of the requirements for proving liability for inducing infringement. Such action would put the patent owner in a stronger position for proving that the competitor induced infringement.

If you have any questions regarding this or other patent matters, please contact Brian Chellgren or another patent attorney at Bingham Greenebaum Doll LLP.

 

  • Partner

    Brian is an attorney in the firm's Lexington office, a member of the firm's Business Services Department, and Chair of the Intellectual Property Practice Group. A registered patent attorney with degrees in molecular biology (B.S ...

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