USPTO SealThe past several years have seen a concerted attack on the patent system, waged by a curious coalition of interests from the information technology industry and foreign governments and corporations.  This attack, waged in Law Journals, in the Congress, and in the courts, has whittled away at the value of patents, making it more difficult for patent owners to obtain injunctions against infringers, making it easier for infringers to start declaratory judgment law suits in their own home courts, reducing the chances that a case will be found to be exceptional, and thus to obtain treble damages, and making it easier to invalidate patents.  The latest move by the Court of Appeals for the Federal Circuit has opened the door to infringement of method patents by court-approved conspiracy.

In the recent case of Akamai Technologies, Inc. v. Limelight Networks, Inc., No. 19-1372, __ F.3d __ (Fed. Cir. Dec. 20, 2010), the Court put the final nail in the coffin of so-called “divided infringement”, where two or more parties carry out different steps of a claimed method, acting together to carry out the patented invention.  The Court determined that holding these parties liable for infringement now requires the patent owner to prove that one of the accused infringers directs or controls the other in an agency relationship (that is, one party has the legal right to require the other to carry out the patent steps, and to control when, how, and where this is done.)  In the Akamai case, customers of the accused infringer, Limelight Networks, were told how to carry out Akamai’s patented method steps using Limelight’s software.  According to the Federal Circuit, since customers were not obligated to carry out the steps, there was no agency relationship between Limelight and its customers, and thus, even though Akamai’s patented method was used, nobody could be held liable for infringement.

In effect, the Court has now condoned the selling of patent infringement kits with instructions that say, “There is a method patent that claims steps A, B and C.  We’ve done step A for you.  Buy this kit, and if you want to achieve the patented method’s results (but remember, you’re not required to,) do steps B and C…”

One may well imagine that we will now see a rash of “arm’s length” contracts between companies that recite the legal niceties of the independent contractor relationship, and merely allow for the voluntary cooperation between them in carrying out patent infringement.  “The Acme Company, having carried out step A of the Smith Patent, agrees, that should the Zeta Company, in its independent and sole discretion, decide to carry out the remaining steps of that patent in any manner, at any place and at any time of its choice, then Acme and Zeta shall share in revenues as follows…”

Thus, by restricting joint infringement to the narrow confines of agency, the Federal Circuit has created a business opportunity for those wishing to infringe method patents.  The newly pronounced standard is a clear warning to inventors of processes such as computer systems that claims must now be drawn narrowly, and often in an artificial manner that seeks to prevent operation of the claimed method across networks.  This requirement is directly counter to the clear trends in the information technology field that will put more information and processing “in the cloud” and marks yet another departure from the real world of high technology by the courts.

— Lawrence A. Husick, Esq.