« Another Club | Main | Double Standard »

September 5, 2012

Inducing Insanity

Last week, in Akamai Technologies v. Limelight Networks (CAFC 2009-1372), a CAFC en banc 6-5 divided court fabricated its own law of induced infringement; which got ignored a few days later, as the court again capriciously followed its bias of the moment.

The majority (in Akamai):

We reconsider and overrule the 2007 decision of this court in which we held that in order for a party to be liable for induced infringement, some other single entity must be liable for direct infringement. BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007). To be clear, we hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity.

A dissenting minority objected to the deceit.

[The majority] 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, telling us that the term "infringement" was not, as was previously thought, defined by Congress in § 271(a), but instead can mean different things in different contexts.

Judge Newman had her own take.

This en banc court has split into two factions, neither of which resolves the issues of divided infringement. A scant majority of the court adopts a new theory of patent infringement, based on criminal law, whereby any entity that "advises, encourages, or otherwise induces," maj. op. 14, or "causes, urges, encourages, or aids the infringing conduct," id. at 15, is liable for the infringing conduct. The majority further 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. In turn, the two cases here on appeal can readily be resolved under existing law, as the majority opinion almost acknowledges in its remand instructions.

In contrast, a significant minority of the en banc court continues to favor the "single-entity rule," whereby divided infringement is not actionable at all unless all of the participants are in a contract or agency relationship that is directed or controlled by a single "mastermind." Although review of the singe-entity rule was the sole reason for this rehearing en banc, and the sole question briefed by the parties and the amici curiae, this aspect is not resolved by the majority, which simply states that it will not review the law of direct infringement, apparently on the theory that the inducement-only rule renders irrelevant whether there is a single mastermind of the direct infringement. Neither faction provides a reasonable answer to the en banc questions concerning divided infringement. However, the issues of liability and remedy arising from interactive methods and collaborative performance are readily resolved by application of existing law. Issues of induced infringement are not new, but this aspect is ill served by the majority's distortion of the inducement statute, 35 U.S.C. §271(b), and has no support in theory or practice. This new rule simply imposes disruption, uncertainty, and disincentive upon the innovation communities.

This week, in Mirror Worlds v. Apple (CAFC 2011-1392), a 2-1 panel ignored last week's ruling on induced infringement.

Inducement of infringement requires that there be a showing of an underlying act of direct infringement. See Linear Tech. Corp. v. Impala Linear Corp., 379 F.3d 1311, 1326 (Fed. Cir. 2004).

But that was small potatoes. The larger spuds were in tossing a jury's evidentiary findings as a matter of law to rule in favor of Apple, now so beloved as America's shining technological jewel. Judge Prost, backed by Newman.

The issue of direct infringement by Apple was submitted to the jury, which found Apple liable for willfully infringing all three asserted patents and awarded $208.5 million in damages.

After the trial, the district court granted Apple's motion for judgment as a matter of law, vacated the jury verdict, and concluded that Mirror Worlds failed to present substantial evidence of direct infringement and damages.

Which the majority affirmed.

In dissent, Judge Lourie was stunned.

Without justification, the majority reads two new limitations into claim 13--one of which is not even urged by either party--and then holds that Mirror Worlds' evidence does not show that those limitations are met.

Mirror Worlds introduced ample evidence to allow a reasonable jury to determine that the required steps were performed.

By its ongoing onslaught of constancy, the CAFC continues to crack statute and precedent like eggs, and capriciously scramble on a case-by-case basis to suit its instant bias. This is not rule of law.

Posted by Patent Hawk at September 5, 2012 12:48 AM | Infringement