The Federal Circuit Convened En Banc to Hear Oral Arguments on Joint Infringement Cases

Eleven judges of the Federal Circuit convened en banc today to hear oral arguments on whether and when, to allow patent owners to pursue remedies for “joint infringement” of their patents. Joint infringement also called “divided infringement” would occur when no single defendant practices all the elements of a patent claim, but different defendants act in a way that does so.

An important open issue is what type of relationship is required between the defendants for joint infringement to occur. In Akamai Technologies v. Limelight Networks, Inc., a Federal Circuit panel held that joint infringement requires “some sort of agency relationship between the parties…or [for one to be] contractually obligated to the other to perform the steps.”

At today’s hearing, Akamai’s counsel argued that the panel’s holding created an “unfair loophole.” Akamai’s pointed out that the patent statute provides remedies against “whoever uses the patented invention,” and Akamai argued that “whoever” can be either a single party or more than one party.

Akamai submitted to the Court three tests for finding joint infringement: exercising direction or control over the other defendant, concerted action, and knowingly combining steps with another’s steps to perform all of the steps of the patent. The Federal Circuit judges seemed most concerned with the latter test. Akamai argued it should be sufficed for the defendants to know that their steps are being combined, without necessarily knowing the result will infringe. But, the judges seemed concerned that this might ensnare innocent parties who had no knowledge of unlawful activity and may have played only a small role in the infringement.

In opposing Akamai, Limelight emphasized that direct infringement has traditionally required the performance of every step of the method by a single party. Therefore, if one party does not perform every step of a claimed method, the claim has not been infringed.

Some of the judges were concerned about possible loopholes created by Limelight’s approach. One judge posed a hypothetical: Suppose a person invents an improved method for building hybrid engines and patents it. Ford tells another party to build incomplete engines and provides a copy of the patent without saying to use the patented design. Ford plans to later add an additional part to complete an engine with all of the patented elements. Would there be joint liability? Limelight responded that the agency relationship standard would still be adequate to cover such a situation, because the trial court would be able to determine whether “a wink and a nod” to the other party was enough to create an agency relationship.

Apple and HTC Corp. are among the companies that have filed briefs supporting the panel decision in Akamai. A number of drug manufacturers oppose that decision because they fear their patents may be evaded via loopholes like the hypothetical posed to Limelight.

The other joint infringement case argued today, McKesson Technology v. Epic Systems, focuses on how traditional indirect liability theories (like contributory and vicarious liability) apply to a joint infringement situation. The Court’s opinion in McKesson is likely to address the extent of contributory and vicarious liability when joint infringement has been found as a basis of direct liability.

Infringement Nation will report the outcome of the Federal Circuit’s decision when it is issued.

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