Federal Circuit Reverses Commission Determination Of Domestic Industry Economic Prong – On May 11, 2015, the Federal Circuit issued an Opinion in Lelo Inc. v. Int’l Trade Comm’n, 2013-1582 (Fed. Cir. 2015), reversing the Commission’s determination that complainant Standard Innovation Corporation satisfied the economic prong of domestic industry in Certain Kinesiotherapy Devices and Components Thereof, Inv. No. 337-TA-823, Comm’n Op. (June 17, 2013). In the underlying investigation, the ALJ rejected complainant’s arguments that it satisfied the economic prong of domestic industry through its U.S. purchase of component parts for its devices assembled in China and imported into the United States. The Commission reversed the ALJ, holding that complainant satisfied the domestic industry because its expenditures on components produced domestically are critical to its devices and that the contribution of the components was significant from a qualitative point. The Federal Circuit rejected the Commission’s holding that domestic purchases were significant based entirely on the qualitative contribution of the devices, without any quantitative analysis. The Federal Circuit held that the plain text of §337 requires a quantitative analysis of complainant’s commercial activity, holding that qualitative significance alone is “insufficient to satisfy the ‘significant investment’ or ‘significant employment of labor or capital’ criteria of §337 where there is an absence of evidence that connects the cost of the components to an increase of investment or employment in the United States.”

Federal Circuit Split Panel Opinion Limits Joint Infringement To Single Entity – In a Federal Circuit split panel Opinion on May 13, 2015 in Akamai v. Limelight, Appeal Nos. 2009-1372, 1380, 1416 and 1417, the Majority held the issue of joint or divided infringement only arises with method claims and “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.” Circuit Judge Lin, author of the Opinion, rejected the assertion that 35 U.S.C. §271(a) incorporates joint tortfeasor liability, stating that “[e]ncouraging or instructing others to perform an act is not the same as performing the act oneself and does not result in direct infringement.” Judge Lin further noted that “[w]hen a party participates in or encourages infringement but does not directly infringe a patent, the normal recourse for the law is for the Court to apply the standards for liability under indirect infringement.” However, indirect infringement also “requires, as a predicate, a finding that some party is directly liable for the entire act of direct infringement.” A strong dissent by Circuit Judge Moore emphasized that the Majority’s rationale therefore leaves a “gaping hole in liability.” For example, under the Majority’s rule, a party A who performs the first step in a claimed method and then induces party B to perform the remaining steps would not be liable as a joint infringer or for inducing infringement. Circuit Judge Moore found that the issue of joint infringement is “first, last, and entirely about statutory construction” and that the plain meaning of “Whoever” as used in Section 271(a) encompasses such joint tortfeasors. This case may come full circle to Federal Circuit “en banc action” recommended by Circuit Judge Moore and previously suggested by the Supreme Court as reported in this Update on August 14, 2014.

Supreme Court Rules That A Good Faith Belief Of Invalidity Is Not A Defense To Induced Infringement – On May 26, 2015, in a 6-2 Opinion written by Justice Anthony Kennedy in Commil USA v. Cisco Systems, 13-896, the Supreme Court ruled that a defendant’s good faith believe that a patent is invalid is not a defense to a claim of induced infringement. The decision vacated a $74 million verdict against Cisco Systems and overturned a Federal Circuit split panel decision that held “evidence of an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement. A divided Federal Circuit denied an en banc rehearing of the split panel decision. The Supreme Court held that “the issue of infringement and validity appear in separate parts of the Patent Act. . . . Were this Court to interpret §271(b) as permitting a defense of belief in invalidity, it would inflate the issues of infringement and validity.” Justice Scalia, joined by Chief Justice Roberts, dissented on this issue.