Contributory/Joint Infringement

In Roche Diagnostics Corp. v. Meso Scale Diagnostics LLC, the court split on whether Roche, accused of infringing several patents to electrochemiluminescence (ECL) technology, in fact owns the patents which it is accused of infringing and whether MSD owns exclusive license to the patents. The court split with J. Newman dissenting from Judges Prost and Taranto.

The majority reversed the district court's ruling that Roche induced infringement both for lacking specific intent and for lacking an inducing act that could support liability during the relevant damages period. The court agreed with Roche that the district judge (J. Stark) misstated the governing intent standard. Under the proper standard, the jury's inducement conclusion is unsupportable. Stated the court:

• News analysis (paywall) (private cache)

October 23, 2020: With regard to four TecSec patents directed to a method of labeling encrypted multimedia objects, and decrypting based on an access authorization based on the label, the Federal Circuit, in TecSec, Inc. v. Adobe, Inc. (1) reversed the trial court's decision to preclude evidence of inducement after a stipulation by the patent owner of non-infringement, and (2) affirmed the district court's ruling that the claims were patent-eligible under §101.

The Federal Circuit held that an accused infringer can be liable for inducement (which requires specific intent) even after the patent owner stipulates to non-infringement based on a district-court claim construction. Stated the court:

• Summary and analysis (“Although this looks like a win for the patentee, on remand I expect that the district court will open the door for a pretrial summary judgment motion regarding whether TecSec can prove subjective-intent to infringe.”)

On August 13, 2015, the Federal Circuit published a unanimous en banc opinion addressing the long and hard fought battle over Inducement. Limelight was accused by Akamai and co-plaintiff MIT of infringing U.S. Patent 6,108,703. In this decision, the jury verdict finding liability for infringement was upheld.

• Consistent with BMC Res., Inc. v. Paymantech, L.P. ²⁾, direct infringement under 35 U.S.C. §271(a) occurs where all the steps of a claimed method are performed by or attributable to a single entity.
• An entity is responsible for others' performance of method steps when (1) the entity directs or controls others' performance, or (2) where the actors form a joint enterprise (overruling Golden Hour Data Systems, Inc. v. emsCharts, Inc. ³⁾ ).
• To determine if the entity directs or controls the acts of another, general principles of vicarious liability are considered.
• Previously, the court has held that liability can be found by traditional agency principles, contracts with another to perform one or more steps of the method.
• With this decision, the court holds that liability under §271(a) can also be found when an alleged infringer conditions participation in an activity or receipt of a benefit on performance of a step or steps of a patented method and establishes the manner or timing of that performance. In those instances, the third party's actions are attributed to the alleged infringer such that the alleged infringer becomes the single actor chargeable with direct infringement.
• Where two or more actors form a joint enterprise, all can be charged with the acts of the other, rendering each liable for the steps performed by the other as if each is a single actor.
  • A joint enterprise requires proof of
    1. an agreement, express or implied, among the members of the group
    2. a common purpose to be carried out by the group
    3. a community of pecuniary interest in that purpose, among the members
    4. an equal right to a voice in the direction of the enterprise, which gives an equal right of control

• 08/2012: En banc Federal Circuit upholds jury verdict of liability, holding that a party that induces another party to perform method steps is liable even though not a direct infringer (and there is no single direct infringer).
• 06/2014: The Supreme Court reversed the Federal Circuit, holding that by plain meaning of the statute, if there was no direct infringement by a single entity, there was no liability for infringement. The Supreme Court held open the door for the Federal Circuit to say that a party could be liable for direct infringement even though they don’t personally perform all the steps. If so, this ruling by the Supreme Court would be moot.
• 05/2015: On remand, a panel Federal Circuit opinion upheld the lower court ruling vacating the jury award because there was no direct infringement.
• 08/2015: En banc Federal Circuit reverses panel decision, upholding jury verdict of liability for reasons stated above.

Posted May 26, 2015: In a 6-2 decision written by Justice Kennedy, the Supreme Court reversed the Federal Circuit in Commil v. Cisco. Specifically, the court held that a good-faith belief of invalidity of a patent is not relevant to an inquiry as to whether that party is guilty of inducement to infringe, notwithstanding the legal requirement that the accused have knowledge of the patent and knowledge of infringement to be found guilty of inducement.

• Parties' Briefs
  • Briefs for Commil USA, LLC v. Cisco Systems, Inc.
  • Briefs for Cisco Systems, Inc. v. Commil USA
• Oral Arguments at Supreme Court: Transcript

Stated the Court

• “Global-Tech requires . . . proof [for both contributory infringement and inducement] that the defendant knew the acts were infringing. And the Court's opinion was clear in rejecting any lesser mental state as the standard.”
• The scienter element for induced infringement concerns infringement; that is a different issue from validity. [. . .] . . .because infringement and validity are separate issues under the Act, belief regarding validity cannot negate the scienter required under §271(b).
• To say that an invalid patent cannot be infringed, or that someone cannot be induced to infringe an invalid patent, is in once sense a simple truth, both as a matter of logic and semantics. [. . .] But the questions courts must address when interpreting and implementing the statutory framework requires a determination of the procedures and sequences that the parties must follow to prove the act of wrongful inducement and any related issues of patent validity.“
• ”. . . invalidity is not a defense to infringement, it is a defense to liability. And because of that fact, a belief as to invalidity cannot negate the scienter required for induced infringement.“

Dissent (Scalia, Roberts):

• Saying that infringement cannot exist without a valid patent does not 'conflate the issues of infringement and validity' . . . any more than saying that water cannot exist without oxygen 'conflates' water and oxygen.”

01/05/16: On remand from the Supreme Court, the Federal Circuit, again favoring Cisco, again reversed the jury verdict, finding the jury lacked substantial evidence in support of its conclusion that Comcast infringed the “running” element of the claim.

03/01/16: The Federal Circuit denied a petition for rehearing en banc.

• Article summarizing case history and Commil's arguments in the petition

06/06/16: Commil again petitioned the Supreme Court for writ of certiorari presenting the following questions:

1. Must the Federal Circuit follow this Court’s holding in Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133 (2000), a non-patent case, regarding which evidence must be disregarded and which evidence must be credited when reviewing a decision on judgment as a matter of law regarding patent infringement?
2. Whether, and under what circumstances, the Seventh Amendment permits the Federal Circuit to refuse to credit the technical testimony of qualified expert—unchallenged under Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993)—when overturning a jury’s verdict on the factual issue of direct infringement.
3. Whether, and under what circumstances, the Seventh Amendment permits the Federal Circuit to reject the evidentiary support for a qualified technical expert’s testimony that the Accused Products operate in an infringing manner under the applicable claim construction and overturn a jury’s verdict of infringement supported by that testimony.

• review

~UPDATED~

10/03/16: The Supreme Court rejected Commil's petition for certiorari.

11/29/16: The Supreme Court declined to rehear its decision to declining to review Commil's argument that the Fed. Cir. robbed Commil of a right to a jury trial when it reversed the jury's $74 million award against Cisco. According to Law360, “[a]fter the court denied certiorari in early October, Commil filed a petition for rehearing later that month.”

Prior to the the Supreme Court issuing cert., there were two trials between Cisco and Commil. In the first trial, the jury found the Commil patent to be valid and directly infringed; validity has been upheld by the Federal Circuit. However, after Cisco's representatives in the first trial repeatedly used prejudicial and anti-Semitic language (Commil is based in Israel and the inventors of the subject patent are Israeli) the trial judge ordered a new trial on just the issues of induced infringement and damages. In the second trial, the jury returned a $63.7 million verdict against Cisco, which, in 2013, a divided Federal Circuit panel, in Commil USA LLC v. Cisco Systems, Inc., reversed, because “the district court erred in preventing Cisco from presenting evidence during the second trial of its good-faith belief of invalidity to rebut Commil's allegations of induced infringement.” The Federal Circuit panel held:

J. Newman dissented from the panel decision. Newman's dissent was cited in Judges Rayna's dissent to the denial of a request for an en banc. rehearing (which was joined by Rader, Newman, Laurie, and Wallach). Newman argued:

The Supreme Court granted Commil's petition for cert. but limited to question 1: “[w]hether the Federal Circuit erred in holding that a defendant's belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b).”

The Supreme Court previously denied Cisco's cross-petition seeking review of Circuit's decision to remand for a retrial only on the issue of induced patent infringement and not also on the “related” question of patent invalidity. Cisco argued that the Seventh Amendment requires that all issues be retried “unless it clearly appears that the issue to be retried is so distinct and separable from the others that a trial of it alone mayh be had without injustice.”

• Petitioner (Commil's) Brief on the merits

In Limelight Networks v. Akamai Technologies (cached), the Supreme Court reversed the Federal Circuit's expansion of the applicability of inducement, which previously held a party can be liable for inducement if no single party performs all the steps in a patented method. The Supreme Court reverses, stating that the “Federal Circuit's analysis fundamentally misunderstands what it means to infringe a method patent. […] …under this court's case law, the patent is not infringed unless all the steps are carried out. This principle follows ineluctably from what a patent is.., and a patentee's rights extend only to the claimed combination of elements, and no further. …there has simply been no infringement of the method in which respondents have staked out an interest, because the performance of all the patent's steps is not attributable to any one person. And as both the Federal Circuit and respondents admit, where there has been no direct infringement, there can be no inducement…under §271(b).”

This ruling presumed that Federal Circuit was correct in it's interpretation of direct infringement under § 271(a) in Muniauction, Inc. v. Thomson Corp., 532 F. 3d 1318 (2008), which states that “the proposition that direct infringement requires a single party to perform every step of the method.” The Supreme Court remanded to the Federal Circuit whether that rule is correct. The Supreme Court held open the door for the Federal Circuit to say that a party could be liable for direct infringement even though they don’t personally perform all the steps. If so, this ruling by the Supreme Court would be moot.

~UPDATED~ 05/14/15 - On remand, the Federal Circuit upheld the lower court ruling vacating the jury award because there was no direct infringement, and therefore there could be no inducement. Judge Moore dissented, stating:

~UPDATED~ 06/16/15 Akamai and MIT requested en banc review of panel decision. Akamai and MIT argue that prior decisions created a loophole that permits infringement by working on concert with another party so long as agency or a contractual relationship is avoided. Judte Moore's dissent, quoted above, is also quoted extensively in the petition.

• Petition for en banc review filed by Akamai and MIT

In Mirror Worlds v. Apple, the Fed. Cir. upheld the District court's JMOL of no-infringement stating that the plaintiffs failed to prove actual infringement (direct) by third parties, i.e., consumers, and therefore there was no inducement. The Fed. Cir. opinion merely criticizes the sufficiency of the evidence presented without significant discussion of the actual claim limitations. Judge Prost's dissent does a good job of dissecting the claim and showing that plaintiff succeeded in presenting sufficient evidence for a jury to make a determination that infringement occurred.

~UPDATED~ Reversed by the Supreme Court. Search this site for “Limelight v. Akamai”

In Akamai Tech. v. Limelight Networks, the Fed. Cir. overruled it's previous holding in BMC that, in order to support a finding of induced infringement, not only must the inducement give rise to direct infringement, but in addition the direct infringement must be committed by a single actor. This holding was a logical conclusion based on the propositions that (1) liability for induced infringement requires proof of direct infringement (see Deepsouth Packing Co. v. Laitram Corp. ⁴⁾; Aro Mfg. Co. v. Convertible Top Replacement Co. ⁵⁾; Henry v. A.B. Dick Co. ⁶⁾ and (2) liability for direct infringement requires that a single party commit all the acts necessary to constitute infringement In re Seagate Tech. LLC ⁷⁾. However, the Fed. Cir. in this ruling holds that, “[r]equiring proof that there has been direct infringement as a predicate for induced infringement is not the same as requiring proof that a single party would be liable as a direct infringer” (emphasis in original). Thus, “a party who knowingly induces others to engage in acts that collectively practice the steps of the patented method–and those others perform those acts–has had precisely the same impact on the patentee as a party who induces the same infringement by a single direct infringer; there is no reason, either in the text of the statute or in the policy underlying it, to treat the two inducers differently.”

Newman's Dissent: The majority . . . holds that only the “inducer” is liable for divided infringement, and that the direct infringers are not liable although the patent rights are “plainly being violated by the actors' joint conduct. These are dramatic changes in the law of infringement. ¶ On this new “inducement-only rule,” the inducing entity is liable on greatly enlarged grounds, such as merely advising or encouraging acts that may constitute direct infringement. This new rule is not in accordance with statute, precedent, and sound policy. It raises new issues unrecognized by the majority, and contains vast potential for abuse.

Dissent of Linn, Dyk, Prost, and O'Malley: In its opinion today, this court assumes the mantle of policy maker. It has decided that the plain text of §§ 271(a) and (b) fails to accord patentees certain extended rights that a majority of this court's judges would prefer that the statute covered. To correct this situation, the majority effectively rewrites these sections. . . .

• Opinion, discussion
• Wegner's analysis

• Dec 28 2012 Petition for a writ of certiorari filed. (Response due February 1, 2013)
• Feb 1 2013 Brief amici curiae of Altera Corporation, et al. filed. VIDED.
• Feb 1 2013 Brief amici curiae of Google, Inc., et al. filed. VIDED.
• Feb 1 2013 Brief amici curiae of CTIA - The Wireless Association, et al filed. VIDED.
• Apr 3 2013 Brief of respondents Akamai Technologies, Inc., et al. in opposition filed.
• May 20 2013 Reply of petitioner Limelight Networks, Inc. filed.
• Dec 10 2013 Brief amicus curiae of United States filed. VIDED.
• Dec 23 2013 Supplemental brief of respondents Akamai Technologies, Inc., et al. filed. VIDED.

In Toshiba v. Imation, the Fed. Cir., in regard to U.S. Patent 5,892,751, vacated in part the district court's granting of a motion for summary judgment of non-infringement made by Defendant-Appellees. Specifically, the district court held that recording DVDs without “finalizing” them, so that they are only readable by the device that made the recording, was both non-infringing (as admitted by Toshiba) and substantial. To establish contributory infringement liability, the patent owner must show, among other things, that there are no substantial non-infringing uses. Toshiba failed to make this showing, so the district court did not err in granting summary judgment of no contributory infringement. However, to prove inducement, “the patentee must show direct infringement, and that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement.” The district court erred as a matter of law in holding that “both theories of indirect infringement – that is, contributory and inducing infringement – fail if there are any 'substantial' non-infringing uses.” However, “the existence of a substantial non-infringing use does not preclude a finding of inducement” ⁸⁾.

In BMC Resources v. Paymentech, ⁹⁾ the Fed. Cir. upheld the district court's ruling in favor of a MSJ of non-infringement in a classic joint infringement scenario. The parties agreed that Paymentech did not perform every step in the claimed method. In its ruling, the Fed. Cir. clarified its ruling in On Demand ¹⁰⁾, stating, that ”On Demand primarily addressed the claim construction issue that governed the outcome of that case.“ BMC argues that On Demand adopted a 'participation and combined action' standard as the type of 'connection' a plaintiff must show to prove joint infringement.” The court concluded, “BMC’s interpretation of On Demand goes beyond settled law. On Demand did not change this court’s precedent with regard to joint infringement.” Finally: “Although BMC proffered evidence to establish some relationship between Paymentech and the debit networks . . . this evidence was insufficient to create a genuine issue of material fact as to whether Paymentech controls or directs the activity of the debit networks.

• Brief summary, list of related material/cases

Recently the Eastern District Court of Texas addressed joint infringement. Patently-O used this opportunity to provide a nice synopsis of various cases touching the subject. A Fed. Cir. opinion on this subject is expected to be handed down soon in the case of BMC v. PaymenTech.

• Summary of Opinion and case listing

<box green 40% right| 35 U.S.C. §271(c)> Whoever offers to sell or sells . . . a component of a patented machine, manufacture, combination, or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer. </box>

In PharmaStem Therapeutics, Inc. v. Viacell, Inc., et al., the Fed. Cir. affirmed the district court's finding of infringement and overruled the non-obviousness. With respect to contributory infringement, the district court overruled the jury as to the question of contributory infringement of the '553 patent. In this case, Viacell performed a service of collecting and cryopreserving cord blood owned by the parents of a newborn. At no time did Viacell own the cord blood. Under the district court's interpretation of 35 U.S.C. §271(c), the sale of a service does not fall within the statute, which requires the sale a product. Therefore, the district court granted Viacell's JMOL motion, which was upheld by the Fed. Cir. In her dissent, Judge Newman notes that the jury was fully apprised of the facts, there was no instruction as to legal impossibility of liability as to the '553 patent, and no objection was raised to the verdict questions. She further states that “It is irrelevant whether any steps of a method claim can be viewed as a “service;” infringement requires only that the steps be performed.”

• Patents in suit
• Summary and discussion
• Summary and analysis
• Summary with excerpts - discusses storing service vs. sale of cord blood infringement issue