U.S. Supreme Court Rules on Induced Patent Infringement

June 30, 2014

In the past several months, the U.S. Supreme Court has decided major patent law issues in six cases – a remarkable number that makes up almost 10% of the Court’s current docket. These include a case on what constitutes patentable subject matter case (Alice v. CLS Bank), claim definiteness (Nautilus v. Biosig Instruments), when attorney fees may properly be awarded to a prevailing party (Octane Fitness v. Icon Health, Highmark v. Allcare), the burden of proof in non-infringement declaratory judgment actions (Medtronic v. Mirowski), and multi-actor induced infringement (Limelight v. Akamai).

The doctrine of induced patent infringement is of particular importance to medical device companies, because methods of using medical devices often provide key claims in the companies’ patent portfolios. These methods may be directly infringed by surgeons or other health care providers when these practitioners use a competitor’s device, but it is the competitor’s indirect infringement activity of manufacturing and marketing the devices that the patent holders are most concerned with preventing under an inducement theory. The Supreme Court’s June 2 holding in Limelight v. Akamai has made it easier for some potential infringers to avoid liability for inducing patent infringement.

It is well-settled law that induced infringement cannot occur unless there has been direct infringement. Additionally, the Court of Appeals for the Federal Circuit determined in its 2008 decision of Muniauction v. Thomson that direct infringement requires a single party to perform every step of a claimed method. The Supreme Court therefore reasoned in its Limelight decision that there can be no induced infringement unless a single party has performed each step of a method claim, or has at least exercised “control or direction” over the entire process. Control or direction requires that there be an agency relationship between the parties who perform the method steps, or one party is contractually obligated to another to perform the steps.

What does the Limelight decision mean for medical device companies?

First, medical device companies should review their patent portfolios to determine whether they contain method claims having steps that can be performed by multiple parties, who might thereby avoid infringement under the recent Limelight decision. If so, corrective action may be taken in pending applications by amending the claims. For issued patents, corrective action may be taken by filing revised claims in continuation applications (if the patent families have been “kept alive”), or in some circumstances by filing for a reissue. As an example of corrective action, an existing method claim for providing clear orthodontic aligners to a patient might include steps that could be performed by entities other than the provider of the aligners, including orthodontists, radiologists, manufacturers, and even the patient himself. To prevent competitors from copying the claimed method while avoiding liability for inducement under the Limelight holding, an exemplary method step of “taking an image” showing the positions of a patient’s teeth (presumably performed by an orthodontist, not the aligner company) might be reworded as “obtaining an image”, or the step removed entirely from the method claim if not necessary for patentability.

Second, in any ongoing freedom to operate analyses involving method claims, companies should consider whether the performance of fewer than all of the steps of a particular method might not constitute infringement. However, great care should be taken here since it is believed that this area of the law will continue to evolve as the Federal Circuit takes up the Limelight case on remand.

Inducement will be an important area of patent law to follow as diagnostic methods, personal medicine, telemedicine, mobile medical applications, 3D printing and other medical methods become increasing complex and involve additional actors.

The Court’s Limelight v. Akamai decision may be downloaded from: http://www.supremecourt.gov/opinions/13pdf/12-786_664d.pdf

By Medtech Briefs

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