Method Patent Rules Tightened by High Court

(CN) - The Supreme Court voted unanimously Monday to narrow the rules on what constitutes induced infringement of a method patent, in a case that's been closely watched by the tech industry.

The justices overturned a ruling for Akamai Technologies, which exclusively licenses a patent from the Massachusetts Institute of Technology covering a method of delivering electronic data using a content delivery network.

In 2006, Akamai accused Limelight Networks of violating its patent by placing content on its servers and then telling customers how to retrieve that content. Both parties agreed that Limelight never infringed the patent directly.

A jury initially sided with Akamai and awarded the company $40 million in damages. A federal judge promptly reversed the victory in light of a 2008 Federal Circuit holding, in Muniauction v. Thomson Corp., that "direct infringement requires a single party to perform every step of a claimed method."

A three-judge panel of the Federal Circuit upheld the lower court's reversal, but the full court agreed to rehear the case and came to a different conclusion.

The divided 11-judge panel ruled that a company could be held liable for induced patent infringement even if it performed only part of a patented method.

"The Federal Circuit's analysis fundamentally misunderstands what it means to infringe a method patent," Justice Samuel Alito wrote for the court. "A method patent claims a number of steps; under this court's case law, the patent is not infringed unless all the steps are carried out."

"Assuming without deciding that the Federal Circuit's holding in Muniauction is correct, there has simply been no infringement of the method in which respondents have staked out an interest, because the performance of all the patent's steps is not attributable to any one person," Alito added.

"Limelight cannot be liable for inducing infringement that never came to pass."

This case has been closely watched by Google, Symantec, Oracle and other tech companies, which filed a friend-of-the-court brief supporting Limelight's Supreme Court appeal.

They argued that the Federal Circuit's "elimination of the 'all-elements' or 'single-entity' rule for induced infringement will exacerbate the growing problem of high-cost and abusive patent litigation."

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