Re: Very interesting recent court of appeals ruling - Benefit for EDIG portfolio ?
posted on
Oct 30, 2012 02:56PM
Doni , This expanded version of article has better explanation . I believe this recent
court of appeals ruling willl be extremely beneficial for implication of e.DIGITAL Flash patent
portfolio infringers list and its outcome.
There are several practical points to take note of in the two dissents. First, Judge Newman takes great issue with the majority's finding, calling it a "spontaneous judicial creation [that] is wrong." Akamai, slip op. at 7 (Newman, J., dissenting). But it is not clear that Judge Newman's strong feelings stem from the actual holding. Judge Newman articulates several times that it is wrong for the majority to hold "that only inducement to infringe is actionable when the claim is practiced by two or more entities, and that there can be no liability for direct infringement." Id. at 17. She goes on to say that "[a]ccording to the court's new ruling, it appears that the patentee cannot sue the direct infringers of the patent, when more than one entity participates in the infringement." Id. at 25. But the majority's holding does not specifically preclude charges of direct infringement when multiple parties participate in the infringement. The majority explicitly leaves alone the body of divided infringement precedent allowing plaintiffs to bring such charges. What the majority has done is allow a plaintiff to sue for liability under inducement even if no direct infringement exists.
In a more clear-cut disagreement, Judge Linn states, "[t]he majority opinion is rooted in its conception of what Congress ought to have done rather than what it did." Akamai, slip op. at 3 (Linn, J., dissenting). He goes on to lay out the previous understanding of the operation of 35 U.S.C. § 271(a)–(c) prior to this opinion: namely, that Congress defined what it meant to "infringe" in 35 U.S.C. § 271(a), and then added two additional forms of liability for those who did not directly infringe (indirect infringers) in 35 U.S.C. § 271(b) and (c). Judge Linn concludes with the same point as Judge Newman, that the majority's opinion violates the "'generally recognized' principle that 'there can be no conviction for aiding and abetting someone to do an innocent act.'" Id. at 18 (quoting Shuttlesworth v. City of Birmingham, 373 U.S. 262, 265 (1963)). All five dissenters take great issue with the idea that someone can be liable for inducing actions that by themselves do not infringe a patentee's rights.
Implications
Divided infringement remains a viable defense to accusations of direct infringement, especially with respect to method claims. The August 31 opinion leaves in place the jurisprudence on this issue. However, for method claims where showing "direction or control" is either problematic or simply very expensive to prove, plaintiffs may now forgo even trying. This may result in new patent infringement complaints that do not even allege direct infringement. Operators of e-commerce portals should be particularly cognizant of this. Many of the patents currently being asserted by plaintiffs have some action required by the customers or users of the websites in question. Under this expanded theory of induced infringement, plaintiffs may simply skip trying to prove that a defendant "controls" its customers and focus instead on whether a defendant induced the customers' actions. This may come at the expense of recovering pre-suit or pre-notice damages, which—in turn—may motivate patentees to send out notice letters or file suit earlier than they might otherwise choose to.