What is all the fuss about Joint Direct Infringement? The Saga of Akamai/McKesson

Akamai & McKesson: A New Induced Infringement Standard | 2 Skadden, Arps, Slate, Meagher & Flom LLP David P. Ruschke – Chief Patent Counsel, Medtronic CardioVascular Nicky Espinosa – Assistant General Counsel, Intuitive Surgical Brian J. Love – Assistant Professor of Law, Santa Clara Law James J. Elacqua – Partner and Chair of the Patent and Technology Litigation Group, Skadden, Arps, Slate, Meagher & Flom LLP Presented By:

Akamai & McKesson: A New Induced Infringement Standard | 3 Skadden, Arps, Slate, Meagher & Flom LLP Overview Summary of procedural history and en Banc holding Effect on Litigation in medical devices and computer software fields Effect on patent prosecution Discussion of dissents: Will this case be taken up by the Supreme Court?

Akamai & McKesson: A New Induced Infringement Standard | 4 Skadden, Arps, Slate, Meagher & Flom LLP Procedural History Akamai v. Limelight Limelight performed some method steps; customers performed others Granted JMOL; held contract didn’t constitute sufficient direction or control for direct infringement liability Akamai did not argue indirect infringement Fed. Cir. affirmed McKesson v. Epic Doctors & patients performed method steps (Epic did not perform any) SJ of noninfringement; held insufficient direction or control for direct infringement by one actor, therefore no indirect infringement Fed. Cir. affirmed

Akamai & McKesson: A New Induced Infringement Standard | 5 Skadden, Arps, Slate, Meagher & Flom LLP Issues Briefed for En Banc Rehearing Rehearings en Banc granted, cases consolidated; Fed. Cir. directed parties to brief two issues: If separate entities each perform separate steps of a method claim, under what circumstances, if any, would either entity or any third party be liable for inducing infringement or for contributory infringement? Does the nature of the relationship between the relevant actors—e.g., service provider/user; doctor/patient—affect the question of direct or indirect infringement liability?

Akamai & McKesson: A New Induced Infringement Standard | 6 Skadden, Arps, Slate, Meagher & Flom LLP Federal Circuit Holding “[W]e hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity.” Explicitly overruled BMC Resources Declined to address issue of direct infringement where no single actor controls. (“[W]e find that these cases and cases like them can be resolved through an application of the doctrine of induced infringement.”) Reversed & remanded both cases for “further proceedings on the theory of induced infringement”

Akamai & McKesson: A New Induced Infringement Standard | 7 Skadden, Arps, Slate, Meagher & Flom LLP Instructions for Remand McKesson can prevail on inducement theory if it can show that: –Epic knew of McKesson's patent –Epic induced the performance of the claimed method steps –The method steps were performed Akamai had relied on direct infringement argument –Fed. Cir. agreed with D. Ct. holding of no direction or control –“While we do not hold that Akamai is entitled to prevail on its theory of direct infringement, the evidence could support a judgment in its favor on a theory of induced infringement. For that reason, we conclude that Akamai should be given the benefit of this court's ruling disapproving the line of divided infringement cases that the district court felt compelled to follow.”

Akamai/McKesson: Effect on Litigation & Counseling David P. Ruschke Chief Patent Counsel, Medtronic CardioVascular

Akamai/McKesson: Effect on Litigation & Counseling Potential impact on wide range of industries –Medical devices –Diagnostics –E-commerce/internet –Financial –Telecommunications/cellular communications Method patents sometimes written in format that require multiple actors –E.g., providing medical device and applying to human body i.e., manufacturer and doctor | MDT Confidential 9

Akamai/McKesson: Effect on Litigation Who benefitted? –Patentees, defendants, both, neither? Pleadings impact? –Direct, indirect, both? Proof/Evidence impact? –Discovery Damages impact? –Knowledge –Parties Extraterritorial impact? –Is territorial restriction of § 271(a) still applicable to § 271(b)? E.g., Manufacturing of medical device often involves multiple steps performed by multiple actors in multiple countries –Effect on § 271(g)? | MDT Confidential 10

Akamai/McKesson: Effect on Counseling Presuit Litigation Activities by Inhouse Counsel –Knowledge of patent Yours Third parties –Opinions Defeat specific intent? Toll damages? Commercial Activities –Location of manufacturing, assembly, packaging, etc. –Other considerations Tax consequences Specialized work force | MDT Confidential 11

Akamai/McKesson: Or maybe none of this matters much …. How easily can potential inducers avoid forming the requisite intent? –Knowledge of patent or ignoring a compelling reason to look for one (Global-Tech v. SEB) –No cause of action (or retrospective damages) until potential infringer has notice –Can opinion letters still serve an exculpatory function in light of AIA § 17 (new 35 USC § 298)? Better claim drafting avoids these issues entirely | MDT Confidential 12

Nicky Espinosa Assistant General Counsel Intuitive Surgical Effect of Patent Prosecution

The da Vinci ® Surgical System A multi-component system used by a team of professionals. 14

Schematic of da Vinci System in use 15

Instructions For Use (“IFUs”) for instruments  Every advanced medical device tool will be sold with Instructions For Use teaching users how to use the tool  IFUs teach each step to be performed by the user  Evidence that medical device manufacturers are “inducing” infringement?  Customer is the infringer?  What if device is used in an “off label” manner not consistent with IFUs?  Do IFUs satisfy the inducement itself? 16

When drafting patent method claims  Are the end customers (surgeons) the direct infringers?  What admissible evidence is required for trial?  Draft claims so that they can be asserted against a single actor or inducer of multiple actors  Anticipate how the IFUs will help establish both direct and indirect infringement  Sufficient direction or control established for direct infringement?  Patent marking on IFUs good to establish knowledge of the patent? 17

More patent drafting considerations  Who is the desired defendant?  Patent claims teach “providing” apparatus elements  Is the seller of the device “providing” it?  Is the user (doctor/hospital) of the device “providing” it?  Is there divided infringement?  Are all steps performed by single actor? 18

Brian J. Love Assistant Professor of Law Vigorous Dissents: Foreshadow Cert Grant?

Dissents  Majority is attacked from both sides  Judge Newman –Divided infringement is direct infringement – period.  “Infringement” = any violation of the rights set out in § 154  In § 271(a), “whoever” can be plural –Broadly-applicable tort law principles  All participants directly liable as joint tortfeasors  Judge Linn (with Dyk, Prost, O’Malley) –Maintain the BMC status quo –Legislative history and SCOTUS make clear: § 271(a) defines “infringement” –Broadly-applicable crim law principles  can’t ‘aid and abet’ an innocent act 20

Federal “Circuit Split”  50% of SCOTUS cases address a circuit split  Akamai about as close Fed Cir can come to splitting: –6-vote majority –5 votes in 2 separate dissents, each with very different views  Compare with Warner-Jenkinson (1997) –SCOTUS mentioned  A “deeply divided” and “fractured en banc” Fed Cir  “three separate dissents, commanding a total of 5 of 12 judges” 21

Contrary to SCOTUS Precedent?  On indirect patent infringement – Aro I, at (1961); Deepsouth Packing, at (1972) –Using § 271(a) and “direct infringement” interchangeably –Stating “if there is no direct infringement of a patent there can be no contributory infringement”  On indirect copyright infringement, too? – Sony, at 435 (1984); Grokster, at (2005) –Describing indirect infringement as doctrine that shifts liability –Citing patent precedent as persuasive authority 22

Contrary to Recent SCOTUS Guidance?  Don’t “read into the patent laws … [what] the legislature has not expressed” – Bilski (stressing Act’s “ordinary, contemporary, common meaning”)  Don’t ignore (even really old) SCOTUS precedent – KSR (relying on 6 SCOTUS opinions, dated ) – eBay (relying on 4 SCOTUS opinions, two dated 1908) – Bilski (“nothing in today’s opinion should be read as endorsing interpretations of § 101 that the... Federal Circuit has used in the past”)  Don’t make abrupt doctrinal changes – Mayo (“hesitate before departing from established general legal rules”) – Festo (“be cautious before adopting changes that disrupt the settled expectations of the inventing community”) –eBay (“a major departure from the long tradition of equity practice should not be lightly implied”) 23

Bad Optics  Decision rests on an issue: –Arguably not germane to the appeal or parties/amici’s briefing  Majority: “Much of the briefing... directed to … whether direct infringement can be found when no single entity performs all …steps ”  Newman: “only issue on which briefing was solicited from the parties and amici curiae, was... the single-entity rule of BMC and Muniauction ”  Q Presented in Akamai limited to “direct infringement”  Akamai distances itself from inducement: “Limelight incorrectly characterizes [our] proposed test as a ‘quasi-inducement’ theory.” –Very likely waived in one of the cases:  Majority: “the patentee in Akamai did not press its claim of induced infringement at trial ”  Combined effect looks like legislation from the bench? –Linn: “In its opinion today, this court assumes the mantle of policy maker.” 24