Thursday, April 21, 2011

Federal Circuit to Decide Joint Liability Issue En Banc

The Federal Circuit has agreed to decide en banc the issue of joint liability of method claims.  In three cases, the court had discussed the issue of when a method claim is directly infringed by the combined actions of multiple parties.  For direct infringement, at least, the court had taken a very narrow view of infringement in these cases:

BMC Resources, Inc. v. Paymentech, LP, 498 F.3d 1373 (Fed. Cir. 2007)
Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008)
Akamai Techs., Inc. v. Limelight Networks, Inc., Nos. 2009-1372, 2009-1380, 2009-1416, 2009-1417 (Fed. Cir. Dec. 20, 2010)

In Muniauction, for example, the court held:
Accordingly, where the actions of multiple parties combine to perform every step of a claimed method, the claim is directly infringed only if one party exercises "control or direction" over the entire process such that every step is attributable to the controlling party, i.e., the "mastermind."

In the Akamai case from last December, the court went further and stated:
In assessing infringement based on the actions of joint parties, it is not enough to determine for whose benefit the actions serve, for in any relationship there may be benefits that inure in some respects to both parties. This court therefore holds as a matter of Federal Circuit law that there can only be joint infringement when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps. Neither is present here.

The court has now decided to rehear Akamai en banc.  Per today's order, the question presented is:
If separate entities each perform separate steps of a method claim, under what circumstances would that claim be directly infringed and to what extent would each of the parties be liable?
(1) Here's Patently-O's post on this order.  That post references a relevant 2004 article by Mark Lemley and others on divided infringement.

(2) I did some more thinking and analysis of what's going on here.  It turns out there are two other cases applying the BMC/Muniauction reasoning:
Golden Hour Data Systems, Inc. v. emsCharts, Inc., 614 F. 3d 1367 (Fed. Cir. 2010)
McKesson Technologies Inc. v. Epic Sys. Corp., No. 2010-1291 (Fed. Cir. April 12, 2011)

Judge Newman dissented briefly in Golden Hour,  and at length in the recent McKesson Technologies case.  Her dissent in McKesson probably acted as an incentive for the court to order a rehearing en banc in Akamai.  Something else that probably helped was Judge Bryson's concurring opinion in McKesson, joining the majority opinion in view of BMC, Muniauction, and Akamai, but suggesting en banc review.  (The mandate has not yet issued in McKesson, so the outcome of Akamai will probably apply to McKesson eventually.)

What's interesting is looking at the lineup of the judges in the 5 cases decided so far (the judge authoring the opinion is listed first; Chief Judge Rader is just referred to as "Judge" for convenience):

BMC:  Judges Rader, Gajarsa, Prost
Muniauction: Judges Gajarsa, Plager, Prost
Akamai:  Judges Linn, Rader, Prost
Golden Hour:  Judges Dyk, Friedman; Judge Newman dissenting
McKesson:  Judge Linn; Judge Bryson concurring; Judge Newman dissenting

Adding up the scorecard suggests that Judges Rader, Linn, Gajarsa and Prost seem to like the BMC/Muniauction rule, having agreed to it in two cases each.  Judges Dyk, Friedman and Plager are also willing to follow it, in one case each.  Judge Bryson might or might not follow it, especially now that he is free to vote to repeal the rule in an en banc setting.  Judge Newman will obviously vote to overturn the rule.  However, since Judges Friedman and Plager are senior Judges, they won't participate in the en banc panel.  Although enough active Judges voted to rehear the case en banc, based on the previous cases it seems that to overrule BMC and Muniauction, Judge Newman (and perhaps Judge Bryson) will have to pick up the votes of nearly all of the remaining judges who have yet to decide this issue.

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