By Rachel Sachs
Last month, as it wrapped up the 2014 Term, the Supreme Court decided a patent law case that could have a major impact on method patents in the medical arena. No, I’m not talking about Alice Corp. v. CLS Bank, the most Rorschach-like of the Term’s many patent opinions. I’m talking about Limelight Networks v. Akamai Technologies, Inc., in which the Supreme Court unanimously reversed the Federal Circuit’s ruling on the scintillating question of divided infringement under 35 U.S.C. § 271(b).
In Limelight, a splintered en banc decision, a majority of the Federal Circuit had overturned prior case law in ruling that liability for induced infringement of a method claim under § 271(b) was possible where no single entity had performed all the steps of that claim, but where those steps were divided between two or more parties, one of whom had induced the other(s) to infringe. (Previously, various opinions had held that induced infringement under § 271(b) required a single actor, just like direct infringement under current § 271(a) precedent.) In a unanimous opinion by Justice Alito, the Supreme Court reversed, essentially reinstating the single entity rule by holding that direct infringement under § 271(a) is required for inducement liability under § 271(b).
Most of the cases to have considered the question of divided infringement thus far (including Limelight) have confronted the issue in the context of method patents relating to the internet or software, but the doctrine may also have significant ramifications for medical method patents. There are doctrinal and policy considerations unique to this area that may interact with whatever legal rule the courts ultimately select. (The Supreme Court’s opinion, in addition to being criticized elsewhere for being both reflexively and confusingly reasoned, could also be criticized for leaving the Federal Circuit substantial room to maneuver on remand, perhaps a surprise considering the recent track record between the courts.)
In particular, divided infringement case law could interact with several key areas both within and outside patent law to have negative implications for the medical method space. Outside patent law, key actors should pay attention to the way the § 271 rules could interact both with FDA regulations around laboratory-developed tests and with the recent organizational evolution of the health care industry in response to the incentives of the Affordable Care Act. Essentially, because the Supreme Court’s § 271(b) rule says that all steps in a method claim must be done by one person, incentives created by the FDA and ACA might result in a division of labor that makes it more difficult to assign infringement liability for medical method patents. There are complex forces at work in each of these areas, but ultimately these interactions could be critical to continued innovation and access to care in the diagnostic industry. Stay tuned to Bill of Health for my analysis of the Federal Circuit’s eventual actions on remand, and the ways in which their developing case law is likely to interact with these areas.