It’s the Summer of Patents at the Supreme Court of the United States of America!  After a number of years when SCOTUS did its level best to ignore all patent matters, the coming into force of the America Invents Act and increased attention to patent issues in general commercial life seems to have created a climate in which the Supremes consider that their guidance on matters of patent law is more frequently needed – there is also a suggestion that the Supreme Court is less than impressed with recent CAFC decisions.  One of the bumper crop of recent cases is Limelight Networks, Inc. v. Akamai Technologies, Inc., available here.  Limelight addresses one of several issues relating to infringement of claims relating to activities involving multiple parties communicating electronically – can there be inducement to infringe a claim if no single party has directly infringed that claim?

This hasn’t been tagged as the main “software patent” case for the Supremes this summer – that would be Alice Corp. v. CLS Bank International, which allows the Supreme Court to visit the issue of whether computer-implemented steps in a financial method can result in a patentable invention – it’s sometimes hard to remember that the explosion of financial software patents after State Street Bank v. Signature Financial Group flowed from a CAFC decision, and not a Supreme Court one (arguably the Supreme Court’s last real pronouncement on the patenting of software was Gottschalk v. Benson– though Bilski v. Kappos is clearly incredibly relevant to this area of practice).  We don’t yet know whether Alice Corp. v. CLS Bank International is going to turn into “Halt State” Street, but there’s a danger that the significance of Limelight will be overlooked.

Limelight provides clear guidance on one specific question highly relevant to infringement of software patents related to distributed activity, such as a client-server system, or a telecommunications network.  Akamai is exclusive licensee to a group of patents relating to delivery of electronic data over a “content delivery network” (CDN).  Akamai contracts with website owners to enable users to access websites more effectively and with less latency – this is done by “tagging” key items of the websites for storage on Akamai servers so that they can be accessed more rapidly by users.  One key patent licensed by Akamai, US 6,108,703, addresses this feature.  In the Akamai arrangement, this tagging is carried out by the CDN owner.  Limelight also provides a CDN that differs in one key respect – Limelight requires tagging to be carried out by website owners, and not by Limelight itself.

Akamai alleged that Limelight infringed a key claim of US 6,108,703, while accepting that Limelight did not itself carry out the tagging step required by this claim.  This requires interpretation of the infringement provisions of the US patent code, in particular 35 USC §271, which reads as follows:

271(a)   Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

271(b)   Whoever actively induces infringement of a patent shall be liable as an infringer.

Akamai’s argument was that Limelight “provides instructions and offers technical assistance” to its customers so that they are able to tag, and that the tagging step was therefore attributable to Akamai as Akamai induced its customers to contribute to infringement.  The District Court found infringement by Akamai initially but this finding was reconsidered after the CAFC decision in Muniauction, Inc. v. Thomson Corp., which related to a bidding system where some steps in a method claim were alleged to be carried out by the defendant and others by other parties – Muniauction interpreted 35 USC §271(a) to find that direct infringement was possible where multiple parties performed steps in a method claim “if a single defendant exercises ‘control or discretion’ over the entire process such that every step is attributable to the controlling party”.  On reconsideration, the District Court held that the Limelight case failed the Muniauction ‘control or discretion’ test and that there was no infringement – this was appealed to the CAFC and was affirmed by a panel, only to be reversed en banc when the CAFC decided (with some notable dissent) that there was infringement following an induced infringement theory following 35 USC §271(b).

The Supremes dealt with this “induced infringement theory” decisively – unanimously (and pretty bluntly) with an opinion from Justice Alito.  There could indeed be induced infringement, but only if direct infringement existed.  The CAFC’s analysis leading to the position that there could be induced infringement without any direct infringement “fundamentally misunderstands what it means to infringe a method patent” and would lead to a chaotic situation in which inducement to infringe and direct infringement would have to be considered quite separately, because an “inducement” to perform a key claim step could be an “induced infringement” even if there was no direct infringement (in particular, because non-infringing embodiments may also use the key claim step).  There was no support in 35 USC §271 for this result – other parts of this section (such as 35 USC §271(f)) appeared to be consistent with the Supreme Court interpretation and inconsistent with the CAFC interpretation, and attempts by Akamai to argue analogies to provisions in tort, in “aiding and abetting”, and in older patent doctrines were misguided.  The Supreme Court agreed with Akamai and the CAFC that the CAFC interpretation of 35 USC §271(a) may leave a loophole open for infringers, but the Supreme Court felt that this was not something that should, or could, change interpretation of 35 USC §271(b).

Why does this matter?  It matters because claims which are performed by multiple parties will be hard to infringe.  The Muniauction test sets a relatively high bar for direct infringement – bear in mind here that Limelight’s system does not deliver any benefit to the customer unless someone does some tagging, and it is established clearly between Limelight and its customer that the customer is expected to perform this step.  Implementations that only achieve a useful result when more than one party is involved are extremely common in computing and in telecommunications.

The standard patent attorney response to all this is to make sage, if smug, pronouncements about the importance of ensuring that all claims are drafted so that one party will infringe them.  Well, yes – as every patent attorney knows, or should know, you want a direct infringer for your claim – but there are some particular difficulties that arise in practical patent prosecution.  One is the pressing need to get your patent granted in the first place.  Personal experience in the US suggests that the US Examiner will be a lot more receptive to your patentability arguments if you have at least one independent claim in which the invention as it has been explained is actually carried out, rather than just relying on a method claim at your client device involving little more series of steps each involving receiving or sending data defined in a particular way.  Client/server systems are particularly problematic, as often pretty much all the “clever” activity is taking place at the server, and the server can generally be anywhere on the planet, often in a country where patent protection will not have been sought (or in exceptional cases, in international waters or in space…).  This territory was explored in the UK in Menashe v. William Hill, where the UK Court of Appeal held that performance of method steps on a server outside the jurisdiction did not preclude infringement if the invention was “used” in the UK – but the law of infringement is somewhat different in the UK and the US , and the Menashe reasoning does not translate easily to the US.   Interestingly, the risk of the Menashe problem (users in the jurisdiction but server outside the jurisdiction, or any useful jurisdiction) is much less great for the technology of Limelight, as web acceleration of the type used by Limelight and Akamai will not work so effectively if the servers holding tagged content are outside the jurisdiction altogether.

An effective solution in the US is to have a practical “teaching” claim to sell the invention to the Examiner, and a number of other independent claims each directed to a separate element of  the overall system – once you’ve convinced the Examiner that the invention is an invention, these will normally get granted as well (normally without restriction issues if all the claims are to different elements of the same implementation – though restriction, much like the Spanish Inquisition, can appear even when most unexpected).  This strategy seems to provide you with additional benefit at a small additional cost – very much the US approach.

The second difficulty, however, is that this strategy doesn’t translate to other jurisdictions, such as the EPO.  The requirement of Article 84 EPC that claims be clear and concise is implemented in Rule 43(2) EPC by establishing that there can only be a single claim in any claim category unless one of the specific exceptions listed in the rule is met.  For “system” inventions, the exception is Rule 43(2)(a), that the independent claims in the same category relate to “a plurality of interrelated products”.  The EPO Guidelines indicate how this is interpreted by the EPO – normally the European Examiner will allow (or can be persuaded) to allow claims designed for each discrete system element and so for each of the potentially infringing parties under Rule 43(2) EPC, but any “teaching claim” will need to be sacrificed.

In practice, the loss of a “teaching claim” in Europe isn’t that great a problem, as European Examiners are far more amenable than US Examiners to argument based on the functional result to be achieved by the invention as claimed.  The main issue for the practitioner is to be aware that significantly different approaches may be needed in the US and Europe to achieve the best results, and in particular to achieve the best granted claims for use in litigation.  While greater harmonisation in prosecution may be nice in theory and sharing work product between patent offices has to be sensible, it is important to remember that patent infringement law varies significantly from one jurisdiction to another, and that these differences may need to be reflected in different prosecution strategies and different granted claims.  This can be a particularly difficult subject to discuss when reviewing aspects of the patent system with national and regional patent offices – in my more jaundiced moments, I have felt that in some patent offices it appears to be considered almost immoral to discuss any issue related to infringement, and I then begin to wonder whether some people have spent their entire careers dealing with patents without having developed any clear notion of what patents are actually for.  At this point, I count to ten, have another cup of coffee, and the feeling passes.

Richard Lawrence  12 June 2014