Two interesting patent cases are before the United States Supreme Court. The first is Akamai Technologies, Inc. v. Limelight Networks, Inc. 692 F.3d 1301 (Fed. Cir. 2012). The second is Medtronic Inc. v. Boston Scientific Corp., 695 F.3d 1266 (Fed. Cir. 2012).
Does Inducing Infringement Require that a Single Party has Performed All of the Steps of a Method Claim?
In Akamai, the issue is whether a plaintiff suing a defendant for inducing infringement of a method patent must show that a single party performed all of the steps of the method.
Inducing infringement exists if a defendant instructs or causes another party to infringe a patent. With respect to a method patent, a defendant has induced infringement if it has instructed another party to perform all of the steps of the claimed method. The party who has induced infringement is an indirect infringer. The party who has performed all of the steps of the method claim is a direct infringer. “Divided infringement” is a phrase used to describe the situation where multiple parties have performed different steps of the claimed method.
The parties are appealing from the Federal Circuit Court of Appeals’ 2012 decision that overruled a prior 2007 Federal Circuit decision, BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007). In BMC, the court had held that there could be no inducing infringement unless the underlying act of direct infringement was committed by a single party. In other words, BMC required that a single party had to have performed all of the steps of the claimed method in order for the inducer to be liable for inducing infringement.
In its 2012 decision, the court held that, while a plaintiff did have to prove that all of the steps of a claimed method were performed for there to be induced infringement, the plaintiff did not need to prove that all of the steps were committed by a single party. The court found that there was no reason to differentiate between an inducer who instructs a single party to perform all of the steps of a claimed method, an inducer who instructs multiple parties to each perform different steps of the claimed method, and an inducer who performs some of the steps itself and instructs others to perform the remaining steps. According to the court, all three types of inducers are liable for inducing infringement if they satisfy the test for inducing infringement. Under the court’s test, a defendant is liable for inducing infringement if: (1) the defendant knew of the plaintiff’s patent; (2) the defendant induced the performance of the steps of the claimed method (by performing one or more steps itself and inducing others to perform the remaining steps or by inducing others to perform all of the steps); and (3) the steps of the claimed method were actually performed.
The Akamai decision was a strongly contested decision – six judges formed the majority and five judges dissented, in an en banc panel. The dissent accused the majority of making a “sweeping change” to the existing law that required a single party to have performed all of the steps, such that there was an act of direct infringement committed by a single party, before an inducer could be held liable. They argued that the majority was rewriting the statute and should instead defer to Congress for revision.
Both the plaintiff and defendant in the Akamai case filed cross-petitions for writs of certiorari to the Supreme Court. In considering whether to grant the petitions, the Supreme Court has asked for briefing from the United States Solicitor General. At this time, the petitions have not yet been granted.
Must a Declaratory Judgment Plaintiff Prove That it Does Not Infringe?
In Medtronic, the issue before the Supreme Court is whether a patent licensee has the burden of proof to show that it does not infringe the patent when it files a declaratory judgment action against the patent owner/licensor. The Federal Circuit had held that an alleged infringer in a declaratory judgment action (the plaintiff) was required to prove noninfringement of the patent.
The patents in question pertained to cardiac resynchronization therapy (CRT) devices. Medtronic had licensed the patents from a licensee of the owner, MFV. The license permitted Medtronic to challenge the patents’ validity through a declaratory judgment action, a process provided for by the United States Supreme Court’s decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007). Medtronicsued MFVfor a declaratory judgment of noninfringement, while continuing to pay royalties to MFV under the license. MFV could not counterclaim against Medtronic for infringement as Medtronic was performing the license and was therefore not infringing the patent. The district court found that the patents were valid and that Medtronic did not infringe.
On appeal, however, the Federal Circuit reversed and remanded. The court held that the district court had not properly allocated the burden of proof. The court found that Medtronic, as the plaintiff, had the burden of proving that it did not infringe the patents. The court’s rationale was that the plaintiff bore the burden of proof because, as in any case, it was the plaintiff who was the party seeking relief.
Medtronic filed a petition for writ of certiorari to the Supreme Court. The Court granted Medtronic’s petition, and briefing on the case has begun.
In its petition, Medtronic asked the Court to decide whether the plaintiff in an action for a declaratory judgment of noninfringement has the burden of proving that it does not infringe the patent. Medtronic argued that infringement cannot be presumed, and that the burden of proof of infringement should remain with the patent owner. According to Medtronic, the Federal Circuit’s holding undermines the Supreme Court’s decision in MedImmune. Under the Federal Circuit’s rule, if a licensee wants to challenge a patent (such that the burden of proof of infringement is on the patent owner), it must repudiate the license and force the patent owner to sue for infringement, risking treble damages and attorneys’ fees if it loses. As Medtronic explained, this is exactly the problem the Supreme Court had intended to solve in MedImmune.