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Limelight Networks v. Akamai Technologies

Posted in Opinion Commentary by Kristen Fries on June 16, 2014

The Supreme Court of the United States holds a defendant, in a patent infringement suit, is not liable for inducing infringement under 35 U.S.C. § 271(a) when no one has directly infringed under 35 U.S.C. § 271(a) or any other statutory provision.

(Supreme Court 2014, 12-786)

The opinion for a unanimous Court was delivered by Justice Alito.  The decision reversed the Federal Circuit’s decision that essentially made it easier to prove that a company is liable based on the theory of induced infringement

FACTS:

The patent at issue claims a method of delivering electronic data using a “content delivery network.”  The patent is assigned to the Massachusetts Institute of Technology and exclusively licensed to respondant, Akamai Technologies.   One of the steps of the method includes storing certain components of a content provider’s Web site on servers provided by Akamai.  This step is known as “tagging.”  Petitioner Limelight Networks, Inc. performs several steps claimed in the patent.  However, the customers of Limelight Networks (in an arguable assumption) perform their own tagging.

In 2006, Akamai sued Limelight in the United States District Court for District of Massachusetts for infringement.  A jury, finding Limelight infringed the patent, awarded more than $40 million in damages.  In view of the Federal Circuit’s decision in Muniauction v. Thomson Corp., 532 F.3d 1318 (2008), the District Court granted a motion for reconsideration by Limelight and held that Muniauction precluded a finding of direct infringment under § 271(a).  A panel for the Federal Circuit affirmed.  However, on en banc review, the Federal Circuit reversed holding a judgment could be found in favor of Akamai based on induced infringement.  The Federal Circuit explained that liability could be found when a defendant carries out some of the steps and encourages others to carry out the remaining steps of, even if no one is liable for direct infringement.

OPINION:

In the opinion, the Court stated “[t]he Federal Circuit’s analysis fundamentally misunderstands what is means to infringe a method patent.”  The Court concluded that Limelight cannot be liable for inducing infringement that never occurred directly since the steps performed were not attributed to one defendant. The Court warned that the Federal Circuit’s decision would “require the courts to develop two parallel bodies of infringement law: one for liability for direct infringement and one for liability for inducement.”  The Court also found Alkamai’s arguments comparing induced infringement to tort law unpersuasive.  The case was remanded for further proceedings consistent with the Supreme Court’s opinion.  The Court declined to revisit the merits of Muniauction.

Note:  The Federal Circuit may revisit and/or clarify the Muniauction decision on remand.  The Supreme Court acknowledged the concern that infringement could be avoided by dividing performance of method steps among multiple parties without direction or control.  However, the Supreme Court is leaving the opportunity to revisit the Municauction case with the Federal Circuit.

REVERSED AND REMANDED.

Therasense, Inc. v. Becton, Dickinson and Co.

Posted in Opinion Commentary by Jake Ward on May 25, 2011

CAFC Endorses a “But-for” Standard for Materiality, and a “Knowing and Deliberate” Standard for Intent to Deceive, in Establishing Inequitable Conduct as a Defense to Patent Infringement.

(CAFC 2011, Appeal 2008-1511)

The en banc CAFC decision in Therasense v. Becton was rendered today. The 6-1-4 opinion appears to severely limit the activities that rise to the level of “inequitable conduct” for the purpose of invalidating a patent. Specifically, the court endorsed a “but-for” standard for materiality, and a “knowing and deliberate” standard for intent to deceive. The court appears to be moving away from the former “sliding scale” test for inequitable conduct, which provided that a greater showing of materiality permitted a lesser showing of intent to deceive.

The full opinion may be read by clicking the above link.  The holding is reproduced below for the convenience of our readers.

In this case, the district court held the ’551 patent un-enforceable for inequitable conduct because Abbott did not disclose briefs it submitted to the EPO regarding the European counterpart of the ’382 patent. Trial Opinion at 1127. Because the district court found statements made in the EPO briefs material under the PTO’s Rule 56 materiality standard, not under the but-for materiality standard set forth in this opinion, this court vacates the district court’s findings of materiality. Id. at 1113, 1115. On remand, the district court should determine whether the PTO would not have granted the patent but for Ab-bott’s failure to disclose the EPO briefs. In particular, the district court must determine whether the PTO would have found Sanghera’s declaration and Pope’s accompany-ing submission unpersuasive in overcoming the obvious-ness rejection over the ’382 patent if Abbott had disclosed the EPO briefs.

The district court found intent to deceive based on the absence of a good faith explanation for failing to disclose the EPO briefs. Id. at 1113-16. However, a “patentee need not offer any good faith explanation unless the accused infringer first . . . prove[s] a threshold level of intent to deceive by clear and convincing evidence.” Star, 537 F.3d at 1368. The district court also relied upon the “should have known” negligence standard in reaching its finding of intent. See Trial Opinion at 1113 (“Attorney Pope knew or should have known that the withheld information would have been highly material to the examiner”). Because the district court did not find intent to deceive under the knowing and deliberate standard set forth in this opinion, this court vacates the district court’s findings of intent. Id. at 1113-16. On remand, the dis-trict court should determine whether there is clear and convincing evidence demonstrating that Sanghera or Pope knew of the EPO briefs, knew of their materiality, and made the conscious decision not to disclose them in order to deceive the PTO.

For the foregoing reasons, this court vacates the dis-trict court’s finding of inequitable conduct and remands for further proceedings consistent with this opinion. This court also reinstates Parts I, III, and IV of the panel decision reported at 593 F.3d 1289, affirming the district court’s judgment of obviousness, noninfringement, and anticipation, respectively. The judgment below is

AFFIRMED-IN-PART, VACATED-IN-PART, and REMANDED-IN-PART.

Ex parte James Richard Colthurst.

Posted in Opinion Commentary by Jake Ward on November 12, 2010

 BPAI Reverses an Examiner’s Rejection of a Razor Head for Shaving Invention as Anticipated Over Pizza Cutter Art.

(BPAI 2010, Appeal 2009-013331)

JW Note:  Many thanks to former patent examiner Eric Pico for bringing this BPAI decision to our attention.  Due to the brevity of the decision, we have reproduced the entire decision below for our readers.  The cited pizza cutter art is also shown above.  Enjoy!

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Bilski v. Kappos.

Posted in Opinion Commentary by Jake Ward on July 1, 2010

 The machine-or-transformation test is not the sole test for patent eligibility under §101. 

(Supreme Court 2009, 08-964)

As stated by Justice Kennedy in the opinion of the Court, the question in this case turned on whether a patent can be issued for a claimed invention designed for the business world. The Bilski patent application claimed a procedure for instructing buyers and sellers how to protect against the risk of price fluctuations in a discrete section of the economy.

35 U.S.C. 101 specifies that “[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title”.  Supreme Court precedents provide three specific exceptions to §101’s broad principles, namely that “laws of nature, physical phenomena, and abstract ideas” are not patent-eligible subject matter.

The USPTO Examiner had earlier rejected Bilski’s claims as “not directed to the technological arts”. Upon appeal to the Board of Patent Appeals and Intereferences (BPAI), the BPAI affirmed on the grounds that the application involved only mental steps that do not transform physical matter and was directed to an abstract idea. The Court of Appeals for the Federal Circuit (CAFC) heard the case, and affirmed the decisions of the Examiner and the BPAI. However, the CAFC went further to rule that the “machine-or-transformation test” was the sole test to be used for determining the patentability of a “process” under the Patent Act, 35 U. S. C. §101.

In the opinion, the Supreme Court affirmed the decisions of the USPTO and lower courts, which held that the Bilski invention was not patent-eligible subject matter. In particular, the Court found that the Bilski invention is an unpatentable “abstract idea”.

The Supreme Court disagreed with the CAFC’s adoption of the machine-or-transformation test as the sole test for what constitutes a “process”, however.   The Supreme Court ruled that the machine-or-transformation test is just an important and useful clue in determining whether an invention is patent-eligible subject matter.  Thus, the Court’s guidepost precedents in the patent cases of Benson, Flook, and Diehr , which affirm that “laws of nature, physical phenomena, and abstract ideas” are exceptions to the patentable subject matter requirements of §101, should broadly control any inquiry as to whether an invention is patent-eligible subject matter.

Of particular interest to patent practitioners is that the opinion holds that a business method is simply one kind of “method” that is, at least in some circumstances, eligible for patenting under §101.  Business methods cannot be categorically excluded as patent-eligible subject matter under §101.  This contrasts starkly with the position taken by Justice Stevens in his lengthy concurrence (a dissent of sorts), which would have held that a series of steps for conducting business is not, in itself, patentable subject matter.

AFFIRMED.

JW Note: There are many other Bilski summaries available at your local patent blogs, which delve more into the analysis of this important case. However, the take-home from my reading is fairly simple: 1) business methods are patentable; 2) laws of nature, physical phenomena, and abstract ideas are not patentable (duh); and 3) the machine-or-transformation test can still be used, but only as a “guide” for determining patent-eligibility of an invention.

In fact, 3) appears to already have been implemented into USPTO practices, as evidenced by this memo promulgated to the Examining Corps shortly after the Bilski decision issued.    The memo acknowledges that even if the machine-or-transformation is satisfied, it can be rebutted by establishing that the invention does not fall into one of the excluded categories of 2).  In my opinion, this was a good decision by the Supreme Court, and certainly a workable outcome for applicants and patent practitioners!

Bilski Decision Issued by SCOTUS Today – June 28, 2010.

Posted in Opinion Commentary by Jake Ward on June 28, 2010

JMW Note: Currently delayed at Reagan National, on the way back to Ohio after a long day of examiner interviews. Analysis and thoughts on Bilski to follow this week!

Wyeth v. Kappos.

Posted in Opinion Commentary by Jake Ward on January 18, 2010

Section 154(b)’s language is clear, unambiguous, and intolerant of the PTO’s suggested interpretation.  

(Fed. Cir. 2010, 09-1120)

 The CAFC affirmed summary judgment for Wyeth, holding that the USPTO has been calculating patent term adjustments (PTA) under 35 U.S.C. § 154 incorrectly.  

Prior to June 8, 1995, patents were enforceable for 17 years from the date of issuance. As of June 8, 1995, the patent term was changed to 20 years from the filing date.  To mitigate any negative impact on patentees, Congress formulated a number of patent term “guarantees” that results in PTA.  The guarantees are codified as 35 U.S.C. 154(b)(1)(A-C), namely: 

(A) Guarantee of prompt Patent and Trademark Office responses;

(B) Guarantee of no more than 3-year application pendency; and

(C) Gurantee or adjustments for delays due to interferences, secrecy orders, and appeals.

Under its interpretation of the PTA rules, the USPTO had been calculating PTA such that the patentee received the longer of the (A) adjustment or the (B) adjustment under the statute.  Wyeth contended, and the CAFC agreed, that an applicant deserves both the (A) adjustment and the (B) adjustment, minus any time that the adjustments overlap.  In view of the PTA rules, as clarified by the CAFC, Wyeth is entitled to an extra 294 days adjustment for U.S. Pat. No. 7,179,892, and an extra 386 days adjustment for U.S. Pat. No. 7,189,819.

In response to the CAFC decision, the USPTO has issued the following announcement.

On January 7, 2010, the Federal Circuit issued a decision in Wyeth v. Kappos, No. 2009-1120, regarding the calculation of patent term adjustments under 35 U.S.C. 154(b). The Federal Circuit’s decision rejects the USPTO’s interpretation of the “overlap” limitation in Section 154(b)(2)(A). The Solicitor General will determine whether to seek further review of this decision. Pending that determination, the USPTO is in the process of changing the manner it will calculate patent term adjustments under Section 154(b) to conform with the Federal Circuit’s decision.

Applicants and Patent Owners dissatisfied with a patent term adjustment determination by the agency are reminded of the requirement to seek review of that determination within 180 days of patent issuance and the time periods set in the implementing regulations. See 35 USC 154(b)(4) and 37 CFR 1.705.

JW Note:  All applicants with allowed applications that have been pending more than three years, as well as any patentee  whose patent has issued in the last six months, should carefully check any PTA identified by the USPTO against the rules clarified by this decision.  Pertinent PTA calculation rules, and the regulations identified by the USPTO in the above announcement for seeking review of PTA, follow for our readers’ convenience. 

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Forest Group v. Bon Tool.

Posted in Opinion Commentary by Jake Ward on January 6, 2010

The plain language of 35 U.S.C. § 292 requires courts to impose penalties for false marking on a per article basis.

(Fed. Cir. 2009, 09-1044)

William Armstrong and Joe Lin are the named inventors on U.S. Patent No. 5,645,515 (the ’515 patent), which claims an improved spring-loaded parallelogram stilt of the type commonly used in construction. Mr. Lin and Mr. Armstrong each formed a company for selling stilts covered by the ’515 patent. Mr. Lin created Forest, and Mr. Armstrong created Southland Supply Company (Southland). Southland sold stilts to Bon Tool, a tool reseller. Bon Tool later stopped purchasing from Southland and started purchasing stilts from a foreign supplier, Shanghai Honest Tool Co., Ltd. (Honest Tool), which manufactured identical replicas of Southland’s stilts without a license from Forest.

In December 2005, Forest sued Bon Tool for infringement of the ’515 patent. Bon Tool counterclaimed alleging false marking pursuant to 35 U.S.C. § 292, among other claims. The district court found that Forest falsely marked its S2 stilts with its ’515 patent number after November 15, 2007, because the stilts did not have a separate lining as required by the court’s claim construction, and assessed Forest a $500 fine for a single offense of false marking. Bon Tool appealed to the CAFC, arguing that the district court erred in its interpretation of the false marking statute, 35 U.S.C. § 292, when it determined that the statute provided for a penalty based on each decision to mark rather than on a per article basis.

The two elements of a § 292 false marking claim are (1) marking an unpatented article and (2) intent to deceive the public. See Clontech Labs. Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352 (Fed. Cir. 2005). “Intent to deceive is a state of mind arising when a party acts with sufficient knowledge that what it is saying is not so and consequently that the recipient of its saying will be misled into thinking that the statement is true.” ld. (citing Seven Cases of Eckman’s Alterative v. United States, 239 U.S. 510, 517–18 (1916)). A party asserting false marking must show by a preponderance of the evidence that the accused party did not have a reasonable belief that the articles were properly marked. Id. at 1352–53.  An assertion by a party that it did not intend to deceive, standing alone, “is worthless as proof of no intent to deceive where there is knowledge of falsehood.” Id. at 1352.

Section 292 provides a civil penalty for false marking of goods. It states in relevant part:

Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word “patent” or any word or number importing that the same is patented, for the purpose of deceiving the public . . . Shall be fined not more than $ 500 for every such offense. 35 U.S.C. § 292(a) (2006).

The CAFC held that  plain language of the statute did not support the district court’s penalty of $500 for a decision to mark multiple articles. Instead, the statute’s plain language requires the penalty to be imposed on a per article basis. The statute prohibits false marking of “any unpatented article,” and it imposes a fine for “every such offense.” The statute requires a fine to be imposed for every offense of marking any unpatented article. The act of false marking is the offense punished by the statute. The phrase “for the purpose of deceiving the public” creates an additional requirement of intent but does not change the relationship between the act of marking an article and the penalty.

Accordingly, the CAFC concluded that the statute clearly requires that each article that is falsely marked with intent to deceive constitutes an offense under 35 U.S.C. § 292, and vacated the $500 fine imposed by the district court. The case was remanded to the district court for a determination of the number of articles falsely marked and recalculation of the fines.

Tafas v. Doll.

Posted in Opinion Commentary by Jake Ward on March 21, 2009

CAFC Finds the USPTO Final Rules Limiting Continuations to Conflict With 35 USC 120, But Final Rules Limiting Claims, RCEs, and ESDs are Within USPTO’s Rulemaking Authority.

(Fed. Cir. 2009, 08-1352)

Triantafyllos Tafas, SmithKline Beecham Corporation, and Glaxo Group Limited (collectively “Appellees”) originally filed suit against the USPTO in relation to Final Rules published by the USPTO that placed new limits on the claims and continuations.  On October 31, 2007, the district court preliminarily enjoined enforcement of the Final Rules.  Appellees then moved for summary judgment that the Final Rules are invalid and sought a permanent injunction against their enforcement.  Appellees’ summary judgment motions alleged that the Final Rules were impermissibly substantive, inconsistent with law, arbitrary and capricious, incomprehensibly vague, impermissibly retroactive, and procedurally defective.  The district court agreed with Appellees that the Final Rules were substantive rules that change existing law and alter the rights of applicants under the Patent Act.   Accordingly, the district court granted Appellees’ motion for summary judgment that the Final Rules are invalid and granted a permanent injunction.  The USPTO appealed to the CAFC. 

Four of the Final Rules 75, 78, 114, and 265 were at issue in the appeal.  Final Rule 75 requires an applicant who submits either more than five independent claims or twenty-five total claims to provide the examiner with information in an examination support document (“ESD”).  Final Rule 78 governs the availability of continuation and continuation-in-part applications.  Under the rule, an applicant is entitled to file two continuation applications as a matter of right.  If an applicant wishes to pursue more than two continuation applications, the applicant must file a petition “showing that the amendment, argument, or evidence sought to be entered could not have been submitted during the prosecution of the prior-filed application.”  If the applicant cannot make the requisite showing, the USPTO will accept the application  for examination but will “refuse to enter, or will delete if present, any specific reference to a prior-filed application.”  Final Rule 114 provides for similar treatment of RCEs, stating that the applicant must file a petition “showing that the amendment, argument, or evidence sought to be entered could not have been submitted prior to the close of prosecution in the application.”  The requirements for ESDs are set forth in Final Rule 265.  To comply with Final Rule 265, an applicant must conduct a preexamination prior art search, provide a list of the most relevant references, identify which limitations are disclosed by each reference, explain how each independent claim is patentable over the references, and show where in the specification each limitation is disclosed.

On appeal, the CAFC (majority of panel including Judges Prost and Bryson, with dissent by Judge Rader) concluded that the following USPTO Final Rules are procedural and within the scope of the USPTO’s rulemaking authority.

  • Final Rule 75 – Claims – requiring an applicant who submits either more than five independent claims or twenty-five total claims to provide the examiner with information in an examination support document (“ESD”);
  • Final Rule 78 – Continuations – requiring a “showing that the amendment, argument, or evidence sought to be entered could not have been submitted during the prosecution of the prior-filed application” for more than two continuations;
  • Final Rule 114 – RCEs – requiring a “showing that the amendment, argument, or evidence sought to be entered could not have been submitted prior to the close of prosecution in the application” for more than one RCE; and 
  • Final Rule 265 – ESDs – this rule setting forth the specific requirements for ESDs.

However, the CAFC further found that Final Rule 78 conflicts with 35 U.S.C. § 120 and is thus invalid.  Section 120 states, in part, that “[a]n application for patent . . . filed by an inventor or inventors named in the previously filed application shall have the same effect, as to such invention, as though filed on the date of the prior application”.  Final Rule 78 would allow the USPTO to accept a continuation application without the requisite showing, but the USPTO would “refuse to enter, or will delete if present, any specific reference to a prior-filed application.”  Accordingly, the effect of Final Rule 78 would be to impermissably remove the application from the scope of 35 U.S.C. § 120, which would otherwise entitle the application to the filing date of the prior-filed application.

The CAFC affirmed the district court’s grant of summary judgment that Final Rule 78 is invalid, vacated the grant of summary judgment with respect to Final Rules 75, 114, and 265, and remanded for further proceedings.

Leaving the door open to further mischief, the CAFC concluded:

Because of the complexity of this case and the numerous arguments presented on appeal and before the district court, we think it is important to expressly summarize what we believe remains for the district court on remand. This opinion does not decide any of the following issues: whether any of the Final Rules, either on their face or as applied in any specific circumstances, are arbitrary and capricious; whether any of the Final Rules conflict with the Patent Act in ways not specifically addressed in this opinion; whether all USPTO rulemaking is subject to notice and comment rulemaking under 5 U.S.C. § 553; whether any of the Final Rules are impermissibly vague; and whether the Final Rules are impermissibly retroactive.

Judge Rader notably dissented, stating:

. . .  I would affirm the district court’s conclusion that the PTO exceeded its statutory rulemaking authority in promulgating these rules. For that reason, I concur in part with this court’s ultimate conclusion regarding Final Rule 78, but dissent in part with respect to Final Rules 114, 75, and 265.

This case presents a threshold question about the nature of these rules—substantive or procedural . . . .  Because the Final Rules drastically change the existing law and alter an inventor’s rights and obligations under the Patent Act, they are substantive and the PTO exceeded its statutory rulemaking authority under 35 U.S.C. § 2(b)(2).

JW Note:  See also our previous posts relating to the USPTO Claims and Continuations Rules here.  The saga continues . . . .

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