On Friday, the Supreme Court announced that it granted certiorari and will hear Limelight Networks, Inc.’s appeal from the Federal Circuit’s fractured en banc decision in Akamai Technologies, Inc. v. Limelight Networks, Inc. (U.S. Supreme Court Case No. 12-786, Federal Circuit Case No. 2009-1372)

Akamai sued Limelight, alleging that it directly infringed and induced others to infringe its patented method for more efficiently delivering content on the internet by placing content elements on replicated servers and modifying a web page to retrieve certain information from those replicated servers, as opposed to the original servers. Limelight maintained a network of servers that replicated content providers’ web pages, but Limelight did not modify the web pages. Instead, it provided instructions for the content providers to do so themselves.

So, the key issue in the Limelight case involves whether a defendant may be held liable for patent infringement if it performed only some of the steps of a claimed method in a patent, another independent party (or parties) performed the remaining steps, and no single individual performed all of the steps. These joint infringement issues have created enforcement issues for patentees in the past, especially where the claims of the patent are written in such a way that more than one party will likely perform the steps in the claim.

It is important to note that the case did not involve the situation where a defendant contracts with or controls the actions of the other individual. The Federal Circuit has long recognized (and continues to recognize) that in those circumstances, the actions of the controlled party are imputed to the controlling party, and the controlling party is liable for direct infringement. Instead, the question presented in Limelight is whether there can be infringement when two independent parties together perform all of the steps in a method claim.

Under prior Federal Circuit precedent, there could not be infringement of a method claim unless a single entity performed all of steps in the claim, either directly or through its control of all the parties performing the steps. This sometimes led to situations where a patentee was left with no recourse when multiple, independent parties performed the steps of the claim. This was the circumstance in Limelight, and the district court entered JMOL in favor of Limelight because no single entity performed all of the steps in the claim.

In a 6-4-1 en banc decision, the Federal Circuit radically disagreed as to what the law should be in these circumstances. The majority (in a per curiam decision), chose to recast the question from one of whether there can be direct infringement when multiple, independent parties perform the steps in the claim to whether there can be liability for induced infringement in these circumstances. First, the majority found that infringement occurs whenever all of the steps are performed, even if there is no direct infringement because no single entity performed all the steps. It then concluded that if one party (the inducer) causes, urges, encourages, or aids another such that this infringement occurs, that party could be liable for inducing infringement. The majority did note that induced infringement is not a strict liability offense, like direct infringement is. Instead, to be liable, a patentee must show that the inducer knew of the patent, that it induced another to perform some (or all) of the steps, and that all of the steps were ultimately performed by either itself or the induced party.

Judge Linn, in a dissent joined by three other judges, strongly disagreed with the majority’s analysis and its decision to recast the question originally presented to the en banc panel. It believed that the prior Supreme Court and Federal Circuit case law correctly required that a single party perform all of the steps in a method claim for there to be infringement and that the majority’s decision was improper policy making. In particular, the dissent noted that this approach has been the law for a long time and that Congress has had numerous opportunities to fix any “mistakes” by the courts, but has chosen not to. In particular, the dissent noted that Congress expanded what constitutes patent infringement on other occasions to address ANDA applications and extra-territorial infringement, without changing the law of joint infringement.

Finally, Judge Newman, writing only for herself, took an entirely different approach and advocated abolishing the single-entity rule entirely. She would hold that all parties involved in performing any of the steps in a method claim could be liable as direct infringers.

Having lost at the Federal Circuit, Limelight petitioned for a writ a certiorari, which the Supreme Court granted. The Supreme Court invited the US Solicitor General to file an amicus brief before deciding whether to grant the writ. The Solicit General sided with Limelight, urging that the Supreme Court reverse the Federal Circuit and affirm the prior approach, as advocated in Judge Linn’s dissent.

Joint infringement can be a difficult problem for patentees, especially when they have written their claims in a way that requires or allows multiple parties to perform the steps in a method claim. The Federal Circuit’s complete change in direction has the potential to create greatly expanded liability for defendants, so the Supreme Court’s decision potentially will have broad implications for both patentees and defendants. 

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In a growing response to concerns about patent “trolls” and the tactics they use in litigation, the President and Congress are calling for changes in the patent laws to assist the targets of these patent assertion entities (PAEs). Currently, there are six bills pending in Congress that address, in some respect, these concerns. In the final part of this series, we are looking at the four remaining pieces of legislation, which are all narrower in focus, and what changes are being proposed in them. (Parts one and two of our series are here and here.)

Patent Abuse Reduction Act of 2013 (S. 1013)
Patent Litigation and Innovation Act of 2013 (H.R. 2639)
Saving High-Tech Innovators from Egregious Legal Disputes Act of 2013 (H.R. 845—SHIELD Act)
End Anonymous Patents Act (H.R. 2024)
Patent Quality Improvement Act of 2013 (S. 866)
Stopping the Offensive Use of Patents Act (H.R. 2766—STOP Act)

The SHIELD Act is designed to shift the costs of litigation to certain kinds of patentees that lose patent infringement lawsuits. Specifically, patentees that (1) are not the original inventor or assignee of the patent, (2) have not made a “substantial investment” to exploit the patent through production or sale of item covered by the patent, or (3) are not a university or a university’s technology transfer organization will be required to pay the full costs and attorneys’ fees of the prevailing party that asserted invalidity or non-infringement, unless the court finds that exceptional circumstances exist.

A party asserting invalidity or non-infringement may move the court for a judgment that the patentee does not fall within one of these three classifications. If the motion is made before initial disclosures are due, the court must stay discovery, except for that necessary to resolve this motion. If the motion is made after the initial disclosures, the court may wait until after entry of final judgment to decide the motion.

There are a couple of interesting points about this proposed litigation. First, there is no good faith or reasonable basis exception explicitly contained in the determination of whether to award fees. Thus, unless courts consider a good-faith basis for filing the suit to be an “exceptional circumstance,” entities that do not fall within one of the three categories must pay a defendant’s costs and fees regardless of the reasonableness of the lawsuit.

Second, the bill does not indicate what happens with mixed verdicts. If a patentee prevails on all but one claim, is a defendant entitled to collect all of its costs and fees, or only some pro-rated amount?

Third, how would this bill affect declaratory judgment actions? The language is not written in terms of plaintiff or defendant, but in terms of the “party asserting invalidity or no infringement.” If a company receives a cease-and-desist letter from an entity that does not fall within one of the three categories and files a declaratory judgment action, is the patentee subject to this rule? Presumably, it would be which means that these kinds of patentees would have to be extremely careful when sending licensing or cease-and-desist letters.

This act is fairly straightforward. It simply requires that a patent owner file a disclosure with the USPTO of the real party in interest of any patent when (1) the patent issues, (2) a maintenance fee is paid, and (3) within 90 days of any transfer of ownership. If a patent owner does not, it cannot collect any damages in a patent infringement lawsuit until it cures its failure to do so.

These two acts are basically mirror images of one another, except one was introduced in the Senate and one in the House. Both remove the sunset provision in 35 U.S.C. § 321 note, subsection (a)(3), which provides for a streamlined post-grant review of financial business method patents, and makes the program permanent. The acts would also expand the scope of review from financial business method patents to all types of business method patents.

The STOP Act also requires the USPTO to work with and support intellectual property law associations with pro bono programs “to assist financially under-resourced re-sellers, users, implementers, distributors, or customers of an allegedly infringing product or process.”

All six pieces of legislation target the patent “troll” problem, but do so in different ways. None of these approaches seem to be the silver bullet to solve this problem, however. In fact, some of them are likely to cause significant issues in the traditional patent litigation context. Also, there are many questions and ambiguities about how these laws would be applied. It will be interesting to see if any of these proposals garner enough support to become law (and whether any changes are made to do so).

This blog was originally posted on the PIT IP Tech Blog on July 25. Click here to read the original entry. 

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Today, the United States Supreme Court unanimously ruled in Association for Molecular Pathology v. Myriad Genetics, Inc., No. 12-398, that a naturally-occurring DNA segment (or gene) is not patent eligible even if it has been isolated from a genome (reversing the Federal Circuit). The Court also ruled that cDNA (complementary DNA) is patent eligible because it is not naturally occurring (affirming the Federal Circuit). Justice Thomas wrote the opinion for the unanimous Court, and Justice Scalia wrote a short concurrence. We have been following this case for some time (see here, here, and here).

The Court began by restating its position that laws of nature, natural phenomena, and abstract ideas are not patentable subject matter under 35 U.S.C. § 101. The question for the Court was whether Myriad’s patents claimed any new and useful composition of matter.

To answer this question, the Court looked at what Myriad claimed. With respect to the DNA claims, Myriad claimed the DNA segment it found in nature, and it did not change or alter any of the genetic information in that segment. Because it claimed something naturally found in nature, it was not patent eligible subject matter.

With respect to the cDNA claims, the Court reached a different result. The cDNA is not found in nature, but is created in the laboratory. This key difference meant that it was patent eligible subject matter. The Court did not address whether these claims met the other requirements of the patent statute, such as §§ 102, 103, and 112.

The Court was also very clear on what it was not deciding in this case. There were no method claims at issue, such as an innovative method for manipulating genes. Similarly, there were no  claims directed to how this new knowledge might be applied to achieve some useful result. The Court suggested (without holding) that those types of claims would be patent eligible. Finally, it noted that the claims were not directed to naturally occurring genetic code that had been altered to create some new and not natural DNA. The Court refused to suggest how it might address claims like those.

In the end, the Court stated that “[w]e merely hold that genes and the information they encode are not patent eligible under § 101 simply because they have been isolated from the surrounding genetic material.”

This blog was originally posted by Robert Wagner on June 13 on the PIT IP Tech Blog, An Intellectual Property and Technology Law Blog from the Pittsburgh Law Firm of Picadio Sneath Miller & Norton, P.C. Click here to see the original post. 

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DRI member, Robert Wagner of Picadio Sneath Miller & Norton, P.C., provides commentary on the recent SCOTUS opinion in Microsoft Corp. v. i4i Limited Partnership on his firm's PIT IP Tech Blog.

Today, the Supreme Court confirmed that parties challenging the validity of a patent have the burden to prove invalidity by clear and convincing evidence. Justice Sotomayor delivered the unanimous opinion for the Court in its decision in Microsoft Corp. v. i4i Limited Partnership (No. 10-290), which affirmed the Federal Circuit. Justice Breyer filed a concurring opinion, and Justice Thomas filed an opinion concurring in judgment. Chief Justice Roberts took no part in the decision.

Read the full post here.


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