Akamai: Inducement of patent infringement can occur even no single entity performs the entire patented method

[UPDATE:  In June 2014, the United States Supreme Court reversed the Federal Circuit decision discussed below.  For details, see the post linked here.]

The Federal Circuit recently made it easier for patent holders to address what the Court called “the problem of divided infringement,” i.e.,  a situation where a defendant induces several other parties to collectively perform all steps required to infringe a patent, but no single entity performs all of the steps itself.

In  Akamai Technologies, Inc. v. Limelight Networks, Inc. (No. 2010-1291, Fed. Cir. Aug. 31, 2012), an en banc decision of the Court overruled its 2007 decision (BMC Resources, Inc. v. Paymentech) which held that in order for a party to be liable for induced infringement, some other single entity must be liable for direct infringement.

The Akamai case actually consolidated two lower court decisions.  In the first, Akamai owned a patent covering a method of delivering web content.  Akamai accused Limelight of inducing infringement by instructing its customers how to perform certain steps that are covered by the patent.  The second decision involved a claim by McKesson Information Solutions LLC against Epic Systems Corp., in which McKesson asserted that Epic induced infringement by healthcare providers and their patients by providing software that allows the two groups to interact.

Recognizing that it was opening itself to criticism for making a sweeping change to patent policy, the Court asserted that its prior decision in BMC v. Paymentech was the drastic change, and that the new decision actually restored Congress’ original intent under patent law.

The Court noted that its holding was limited to method claims, because in the case of product claims “there is always a direct infringer,” even if that entity is merely “the party that adds the final element” to the claimed product.

The Court’s en banc decision was not unanimous.  Five of the Court’s eleven judges dissented, with Judge Newman asserting that the opinion “imposes disruption, uncertainty and disincentive upon the innovation communities,” and Judge Linn writing that if Congress actually intended the doctrine of inducement to cover multi-party infringement after BMC v. Paymentech, it would have addressed the issue in 2011 when it passed the Leahy-Smith America Invents Act