By Rachel Sachs
Yesterday, the Court of Appeals for the Federal Circuit issued a unanimous en banc ruling in Akamai v. Limelight, altering the reach of patent liability for induced infringement of a method claim under 35 U.S.C. § 271(b). This is the second time the en banc court has considered Akamai. Three years ago, in a splintered decision, a majority of the court had ruled that liability for induced infringement was possible where no single entity had performed all the steps of a claim, but where those steps were divided between two or more parties, one of whom had induced the other(s) to infringe. In 2014, the Supreme Court reversed, essentially reinstating this single entity rule, and after a panel opinion largely adopting the Supreme Court’s reasoning, a unanimous en banc court has now broadened – at least somewhat – the scope of divided infringement liability, relative to the Supreme Court’s decision.
More specifically, the Federal Circuit concluded that an entity may be held liable for others’ performance of steps of a method claim “in two sets of circumstances: (1) where that entity directs or controls others’ performance, and (2) where the actors form a joint enterprise.” Noting the court’s prior holdings that these circumstances are met where there is an agency relationship between the relevant actors or there are explicit contractual duties to perform the steps of the method claims, the en banc court added another such circumstance in which liability may be found: “when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.” Because this third condition was present in the case under consideration, the Federal Circuit deemed Limelight liable for infringement.
Exactly thirteen months ago, after the Supreme Court’s decision but before the Federal Circuit had considered the case on remand, I had blogged here about the case’s potential implications for diagnostic method patents. (For those interested in this field, I then wrote a longer article about diagnostic technologies more broadly, which features a more detailed explanation of this issue.) Essentially, my argument was that the increasing restrictions the courts have placed on patentable subject matter under 35 U.S.C. § 101 would interact with these new divided infringement rules.
I argued that to the extent that the § 101 case law required would-be method patent holders to now include more, innovative steps in their method claims, at least in some cases, this means that those claims would be written to involve more than one individual in their performance. This is likely to be true in the diagnostic method context, if the step to be added is a “treatment” step typically performed by a physician, when compared to other steps typically performed by laboratory professionals. And if under § 271 case law all those steps must be performed by a single actor in order to assign liability, not only might it suddenly become much more difficult to obtain diagnostic method patents under § 101, but the § 271 developments would have compounded the difficulties companies face in assigning liability for them. (Interested readers should also note Becky Eisenberg’s recent argument that diagnostic methods are now simply not patent-eligible, which would make the § 271 inquiry moot in that context, but it could still be relevant if method-of-treatment claims turn out to be patent-eligible.)
In my view, the logic of the Federal Circuit’s new ruling is unlikely to change this line of argument as it applies to diagnostic method patents. The added possibility of liability in the “condition participation upon performance” situation is unlikely to read on the types of situations that would arise in the medical context, in which diagnostic testing laboratories do not in practice condition physicians’ ordering of a diagnostic test on the physician using that test in a specific manner. Indeed, in many states such conditioning might even be unlawful, as it could run afoul of the corporate practice of medicine doctrine.
But the Federal Circuit’s language did leave the door open to further extensions of divided infringement liability. I cannot rule out the possibility that in a future case, the court would craft an exception (like the new “condition participation upon performance” exception) that would apply to diagnostic method patents. As usual, I await an appropriate test case – but for now, the odds are that any diagnostic method claim the PTO will grant is largely unenforceable.