US Approves New Loophole In Patent Protection 08/06/2015 by Steven Seidenberg for Intellectual Property Watch Leave a Comment Share this Story:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Google+ (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) IP-Watch is a non-profit independent news service and depends on subscriptions. To access all of our content, please subscribe here. You may also offer additional support with your subscription, or donate. Steven Seidenberg is a freelance reporter and attorney who has been covering intellectual property developments in the US for more than 20 years. He is based in the greater New York City area and may be reached at email@example.com. The US Federal Circuit Court of Appeals clearly likes patents. Over the years, the court has issued a long string of rulings that greatly strengthened the rights of patent owners. But several weeks ago, in Akamai Technologies v. Limelight Networks, the court reluctantly created a major loophole in patent protection. This loophole arises when one entity practices most of the elements of a patented invention, and another entity performs the remaining elements. In this case, Akamai patented a method of delivering video and other content to clients’ websites. A competitor, Limelight, also delivered content to websites, and the company did so by performing every step of Akamai’s patented method save for the final step. Akamai’s customers performed that step, per Akamai’s instructions and encouragement. This might seem to be a clear case of patent infringement. However, a method patent is directly infringed only if one entity performs every step of the claimed invention, according to the Federal Circuit’s 2008 decision in Muniauction, Inc. v. Thomson Corp [pdf]. Thus Limelight could not be liable for direct infringement, the Federal Circuit concluded [pdf] in 2012. …That court, however, did hold Limelight liable for inducing infringement. This ruling was overturned by the US Supreme Court. The high court declared – in its 2014 decision, Limelight Networks v. Akamai Technologies [pdf] – that inducement exists only when another party commits direct infringement. Since neither Limelight nor its customers committed direct infringement, there could be no liability for inducing infringement, the court unanimously held. The result was anomalous, allowing no liability for split infringements. Whenever infringing steps were performed by different entities, no entity could be liable for direct infringement. And because there was no direct infringement, no entity could be liable for inducing infringement. The Supreme Court, in Limelight, suggested a solution, by explicitly declining to rule on whether Muniauction correctly interpreted the scope of direct infringement. Remanding the case to the Federal Circuit, the high court pointedly stated that the Federal Circuit would have the opportunity to revisit Muniauction. That is what the Federal Circuit did on 13 May, in Akamai Technologies v. Limelight Networks [pdf]. But the three judge panel, by a vote of 2-1, upheld Muniauction, clarifying when liability can arise from split infringement. The court held that “direct infringement liability of a method claim … exists when all of the steps of the claim are performed by or attributed to a single entity – as would be the case, for example, in a principal-agent relationship, in a contractual arrangement, or in a joint enterprise.” Limelight’s customers were not agents of the company, they were not contractually obligated to perform the last step of Akamai’s patent, and they were not part of a joint business enterprise with Limelight – so there was no direct infringement of Akamai’s patent, the panel ruled. Trouble for Patent Owners This decision will enable many businesses to escape liability for copying others’ patented methods, according to many experts. So long as a business doesn’t perform every single step of a patented method – enabling its users to perform at least one of the steps – the business will not be guilty of direct or secondary infringement. The ruling thus provides “a roadmap for parties to get around patents,” said Christopher K. Larus, a partner in the Minneapolis office of the law firm of Robins Kaplan. Many existing method patents will be vulnerable to such workarounds. “A generation of patents will run into serious problems. There will be infringements patent owners will not be able to reach,” said Jordan A. Sigale, director in the Oklahoma law firm of Dunlap Codding. Some patent owners will be harmed more than others. So-called “patent trolls” are facing big trouble, because their method patents often cover online interactions. Companies in several other industries are also at particular risk. “We are likely to see a substantial impact on chemical arts, involving method claims of applying chemicals in different situations. There also will be a big impact on the software and computer systems area, where there is often a high reliance on method claims,” said Larus. While the ruling is likely to undermine many existing patents, it may have far less impact on future patents. According to some experts, patent attorneys will henceforth simply write their patent applications differently, so that a claimed method must be performed by just one party. “With proper drafting, a patentee can avoid multi-actor infringement,” said Sigale. Other experts are less sanguine. “You could have fewer steps in a [method] claim, making it more likely one person would infringe. But the internet makes it easy to divide up steps among people. It seems to me there will be problems figuring out how to draft claims that will cover every possible variation for interactive internet applications,” said Prof. Rochelle C. Dreyfuss of New York University Law School. Sigale sees another problem. Recent Supreme Court decisions have indicated practitioners must provide more details in their method claims if those claims are to be deemed patent-eligible subject matter (per Section 101 of the Patent Act). But the Federal Circuit’s decision in Akamai indicates practitioners should put in less detail, in order to avoid the possibility of split infringement. “Akamai suggests you should write a shorter claim to avoid divided infringement, but the Section 101 cases suggest you must write longer, more specific claims. This creates a Catch-22,” Sigale said. There may be no way for a patent drafter to win. However, the latest Akamai decision may not be the last one. There is a good chance that the Federal Circuit will rehear the case en banc. That could result in a new, broader definition of direct infringement, sufficient to cover instances of split infringement. There is precedent for such a ruling. The courts have in the past relied on common law concepts to expand patent infringement liability. “The whole theory of induced infringement and contributory infringement came out of common law,” said Dreyfuss. “Now the internet created this new possibility of joint infringement, so it wouldn’t be surprising for the common law to deal with this as well.” Share this Story:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Google+ (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Related Steven Seidenberg may be reached at firstname.lastname@example.org."US Approves New Loophole In Patent Protection" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.