Supreme Court Leads the Way in Patent Litigation Reform

On June 2, the United States Supreme Court issued a pair of unanimous decisions in closely watched patent cases, both of which will make it harder to maintain a claim for patent infringement. In Nautilus, Inc. v. Biosig Instruments, Inc., the Court held that a patent is invalid for indefiniteness if it fails to inform, with reasonable certainty, those skilled in the art about the scope of the invention. In Limelight Networks, Inc. v. Akamai Technologies, Inc., the Court held that a party is not liable for inducing infringement unless there is one single party that directly infringes the patent.

In Nautilus, the Court interpreted the requirement of 35 U.S.C. §112 that a claim particularly points out and distinctly claims the subject matter which the inventor regards as the invention. According to the Court of Appeals for the Federal Circuit, a patent claim met this standard so long as the claim is “amenable to construction” and the claim, as construed, is not “insolubly ambiguous.” Justice Ginsburg, writing for a unanimous Court, determined that the Federal Circuit standard tolerates some ambiguities and not others and does not satisfy the statute’s definiteness requirement. In its place, Justice Ginsburg ruled that “a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.” Recognizing that the definiteness requirement mandates clarity, while recognizing that absolute precision is unattainable, Justice Ginsburg added that the standard which the Court has here adopted “accords with opinions of this Court stating that ‘the certainty which the law requires in patents is not greater than is reasonable, having regard to their subject-matter.’”

In Limelight Networks, the Court addressed the requirements to show that a party induced infringement under 35 U.S.C. §271(b). Under prior Federal Circuit rulings, notably Muniauction Inc. v. Thomson Corp., in order for direct infringement to occur, a single party must perform all of the steps of a patent claim or otherwise exercise control or direction over the steps it does not personally perform. Justice Alito, writing for a unanimous Court, ruled that liability for inducement must be predicated on direct infringement. Because direct infringement requires that a single party perform all of the steps of a patent claim, there likewise can be no liability for inducement unless a single party performs all of the steps of a patent claim. The Court declined to address the merits of the Muniauction standard as that question was not before it, although it did state that the Federal Circuit could take up that issue on remand if it so desires.

Coupled on the heels of the Court’s decisions earlier this term in Highmark, Inc. v. Allcare Health Management Systems, Inc. and Octane Fitness v. Icon Health and Fitness, which loosened the standard required for a successful accused infringer to recover its attorney fees in litigation, the Court this term has taken the lead in addressing the proliferation of litigation by non-practicing entities that frequently assert indefinite patent claims, often on the basis of an inducement to infringe. While Congress has been unable to address this matter with suitable legislation, the Court is addressing it through their judicial rulings.

Next in line for the Supreme Court is the case of Alice Corporation v CLS Bank International, in which the Court will address whether claims to computer-implemented inventions – including claims to systems and machines, processes, and items of manufacture – are directed to patent-eligible subject matter. A decision in Alice Corp., is expected later this month.