The Divided Infringement Defense in a Post-Akamai World: Still a Threat to Pharmaceutical Patent Holders?

However, divided infringement has also proven to be a thorny issue of patent law to the pharmaceutical and biotechnology sectors. Many pharmaceutical and biotechnology patents include “method of treatment” claims. While often each and every step of these claims can be performed by a patient or a treating physician, in some cases alleged infringers maintain that steps such as “administering,” “applying,” or “treating” must be performed by the patient whereas the remaining steps must be performed by the treating physician (or vice versa).⁶ These defenses are often defeated by a claim construction that allows either the treating physician or the patient to perform every claimed step.⁷ However, the divided infringement defense remains a threat to pharmaceutical patent owners in cases of sloppy claim drafting or an unfavorable claim construction ruling.

Divided infringement is also likely to become a prominent issue in pharmaceutical and biotechnology patent litigations concerning personalized medicine. Personalized medicine generally utilizes tests for biomarkers present in a particular patient and uses those test results to guide a treatment regime. Patent claims that include both biomarker testing and the treatment of patients are subject to attack on the grounds that the claimed steps are performed by multiple actors, opening those claims up to divided infringement defenses.

Fortunately for the pharmaceutical and biotechnology industries, the most recent word in the Akamai litigation from the Federal Circuit⁸ should make it significantly more difficult to escape infringement of method of treatment claims via a divided infringement defense. As discussed below, this is demonstrated by the first post-Akamai pharmaceutical case to be decided, Eli Lilly & Co. v. Teva Parenteral Medicines, Inc.⁹

Akamai I and II Decisions

The nearly 10-year-long litigation for Akamai Technologies Inc. and Limelight Networks Inc. has proceeded twice to the Federal Circuit, through one Supreme Court decision, and perhaps another is yet to come. The case which began in district court in 2006 concerned U.S. Patent No. 6,108,703 (’703 patent), of which Akamai is the exclusive licensee.¹⁰ The ’703 patent provides for the designation of certain large files of a content provider’s website to be stored on remote servers and accessed from those servers by Internet users who visit the content provider’s website.¹¹ The key step in the claim for purposes of the litigation concerned the “tagging” step: designating what content from the content provider’s website would be stored on remote servers. While Limelight stored content from the content provider’s website, the “tagging” step was performed by the content provider. Limelight also provided instructions and technical advice to the content provider regarding the tagging process, but ultimately the steps of the ’703 method claims were performed by two different entities.¹²

In the first Federal Circuit en banc decision (Akamai I), the court held that while direct infringement under 35 U.S.C. § 271(a) may require that all steps of a method claim be performed by a single party (the court chose not to revisit the issue), all that is required to establish the direct infringement required for inducement under § 271(b) is that all of the steps be carried out—even if those steps are carried out by multiple parties.¹³ Based on the differences in the statutory language of § 271(a) and (b), the court reasoned that “[r]equiring proof that there has been direct infringement as a predicate for induced infringement is not the same as requiring proof that a single party would be liable as a direct infringer.”¹⁴

The Supreme Court disagreed with the Federal Circuit’s conclusion. Writing for a unanimous Court (Akamai II), Justice Alito explained that the “Federal Circuit’s analysis fundamentally misunderstands what it means to infringe a method patent.”¹⁵ The Supreme Court found that under its Muniauction precedent, all the steps of a method claim must be attributed to a single actor. Nevertheless, the Supreme Court agreed with the Federal Circuit’s observation that “[i]t would be a bizarre result to hold someone liable for inducing another to perform all of the steps of a method claim but to hold harmless one who goes further by actually performing some of the steps himself.”¹⁶ Rather than create a separate infringement standard for inducement, the Supreme Court invited the Federal Circuit to reconsider on remand the rule of Muniauction regarding when the actions of multiple parties could be attributed to, or under the “direction and control” of, a single entity.¹⁷

Post-Akamai II Rulings on “Direction or Control”

Following Akamai II, several district courts addressed the issue of whether one entity sufficiently directed or controlled another so that performance of all the claimed method steps could be attributed to a single actor for purposes of direct infringement. Relying on Muniauction, these cases often turned on issues concerning the contractual/agency relationship between the parties.

In Mankes v. Vivid Seats Ltd.,¹⁸ the Eastern District of North Carolina considered a case with somewhat analogous facts to those in Akamai. Mankes owned a patent concerning a reservation system that controlled inventory and alleged that Vivid Seats infringed his patents through the operation of its online ticket selling system.¹⁹ Like in Akamai, Vivid Seats controlled the essential infrastructure necessary to perform much of the claimed method and its customers performed one or more key steps. The court rejected Mankes’s arguments that Vivid Seats met the “direction or control” requirement by enticing its customers to perform the claimed steps “through the use of ‘industry low’ rates.”²⁰ Rather, the court granted Vivid Seats’ motion to dismiss because there was no contractual relationship between Vivid Seats and its customers requiring the customers to perform the claimed steps that could support a finding of direct infringement.²¹

The Northern District of Texas considered similar issues in its ruling granting partial summary judgment of noninfringement in B-50.com, LLC v. InfoSync Services, LLC.²² B-50 owned a patent that claimed “[a] method of generating custom reports based on restaurant point-of-sale data transferred between multiple remote computing devices and a central computing device.”²³ InfoSync hosted a web-based reporting service that permitted customers to create custom reports. B-50 argued that InfoSync met the “direction or control” standard by teaching and instructing its customers how to perform the claimed method and then financially benefiting from the customer’s performance of those steps.²⁴ Again, the court relied on the lack of a contractual or agency relationship between InfoSync and its customers in granting summary judgment of no direct infringement.²⁵

In Ultratec, Inc. v. Sorenson Communications, Inc., the patented technology concerned a service for providing captions for telephone calls.²⁶ Ultratec alleged that Sorenson’s system was automatically initiated and run based on the user’s selection, and by making this selection, the user ultimately “directed and controlled” Sorenson.²⁷ The court rejected this theory under Muniauction. The Western District of Wisconsin found that the patent was drafted in a way such that certain steps had to be performed by the “assisted user” and other steps had to be performed by the company providing the captioning technology.²⁸ The court focused on the fact that even though Sorenson may not have any control over whether to perform the claimed steps after a call was initiated by the “assisted user,” the “assisted user” still did not direct or control Sorenson.²⁹ As the “assisted user” did not have any knowledge of the ultimate process by which Sorenson performed its steps, the “assisted user” therefore could not direct or control. These facts along with the failure to establish any other contractual or agency theories showing direction or control led the court to dismiss Ultratec’s induced infringement claims.³⁰

Akamai III: Federal Circuit on Remand

The Federal Circuit answered the Supreme Court’s call on remand to review its application of Muniauction. Sitting en banc (Akamai III) following a panel review, the court broadened the definition of a single actor for purposes of direct infringement.³¹ The court confirmed the legal principal that multiple entities can be a single actor for purposes of direct infringement in two different circumstances: “(1) where [an] entity directs or controls [the other actors’] performance, and (2) where the actors form a joint enterprise.”³² By this holding, the court broadened the definition of a single actor in the context of determining how one actor can “direct or control” others.

Previously, as can be seen in the post-Akamai II district court cases, the “direction or control” standard was only met if one actor acted through an agent or contracted with other actors to perform one or more steps of the claimed method.³³ This was not broad enough to capture situations like those in Akamai where end users of software follow the directions of the software provider to perform one or more steps of a claimed method. It was also less than clear whether this standard would capture situations presented by many pharmaceutical patents, where a patient is instructed by a treating physician to perform one or more steps of a method of treatment claim.

In light of the facts in Akamai, the court concluded that liability under a “direct or control” single actor theory could “also be found when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.”³⁴ Under this standard, the court found that Limelight directed and controlled content providers’ performance of the “tagging” step.³⁵ Limelight “directed and controlled” its customers by requiring that they sign a contract which stated that they must perform certain steps—including the critical “tagging” step—in order to use Limelight’s system.³⁶ Limelight also provided instructions on use and “an account manager” who would lead the content provider in the implementation of the system.³⁷

Moving forward, courts will have to consider factors such as those noted by the Federal Circuit as being present in Akamai, rather than simple contractual or agency issues, to determine if a single actor directs or controls each and every step of a claimed method. In all likelihood, this will make it much more difficult for alleged infringers to avoid a finding of infringement by having software users perform one step of the claim. Similarly, in the context of pharmaceutical patent litigation, accused infringers will find it more difficult to succeed with arguments that a patient and treating physician perform separate steps of a method of treatment claim. Fortunately, these types of questions will not be hypothetical much longer. In fact, at least one district court has already considered the new “direction or control” standard in a pharmaceutical method of treatment context.

Application of Akamai III to Pharmaceutical Patents: Eli Lilly v. Teva

The Southern District of Indiana was one of the first courts to apply the new “direction or control” rule of Akamai III. Following Akamai III, in Eli Lilly v. Teva,³⁸ the court held a bench trial on infringement to determine if the defendants induced infringement. The primary issue was whether the claims could be directly infringed by a single actor.³⁹ Given the decision in Akamai III, the court held that a physician could directly infringe the claims through direction and control of the patient who would perform one or more of the steps.⁴⁰

The claims of Eli Lilly’s U.S. Patent No. 7,772,209 (’209 patent) require that physicians co-administer a drug, ALITMA®, with folic acid and vitamin B12 to reduce the incidence of patient toxicity.⁴¹ The label for Teva’s proposed generic version of the drug includes prescribing information and patient information that is identical to the claimed methods. According to both the ’209 patent and Teva’s label, the drug is to be administered by infusion, the B12 by injection, and the folic acid by mouth.⁴² Both experts agreed that the drug and B12 would be administered by the physician, but the physician would merely instruct the patient to take folic acid starting a week before the administration of the drug and B12. The critical issue of infringement at the trial was whether the treating physician directed or controlled the patient’s self-administration of the folic acid.

Hoping to avoid a finding of infringement, the defendants argued that because the treating physician had no way of knowing whether the patient did or did not take the folic acid, the physician lacked direction or control over that portion of the claimed method. The court dismissed this argument out of hand, stating “the Court must assume that all steps of the Asserted Claims of the ’209 patent will be carried out, and the only relevant question is whether the actions of the patient in taking folic acid as instructed may be attributable to the physician as a single actor.”⁴³ The court proceeded to analyze the facts in view of Akamai III to determine if the treating physician directed or controlled the step of administering the folic acid.

The court relied on several key facts in finding direction and control of the patient’s actions by the physician. First, the court found that the administration of the folic acid prior to beginning treatment with ALITMA had “a specific purpose and direct impact on the outcome of the patented method.”⁴⁴ Second, the patient information in the label stated that “[i]t is very important to take folic acid . . . during your treatment with ALITMA to lower your chances of harmful side effects.”⁴⁵ Third, the label, in accordance with the claimed method, not only stressed the importance of taking folic acid but also directed the patient when to begin taking folic acid and at what dosage strengths.⁴⁶ Taken together, these facts showed that the administration of folic acid was required to receive the benefit of the patented method and established the manner or timing of the patient’s administration of the folic acid. Thus, the treating physician directed or controlled the patient for purposes of the folic acid step, and the treating physician could be considered a single actor who directly infringed the patented method.⁴⁷

The Future of Divided Infringement Defenses in Pharmaceutical and Biotechnology Litigation

Eli Lilly v. Teva demonstrates the weakness of a divided infringement defense for method of treatment claims under Akamai III. For most method of treatment claims, performance of each step will likely be required in order to receive the desired benefit of the claims, namely successful treatment of a disease or condition. Any step performed by the patient will likely be performed under instruction from the treating physician, who will control the timing and manner of the patient’s performance. Thus, under Akamai III, the physician will direct or control the patient’s performance of most claim steps that may not be performed by the physician, and thus the physician will be a direct infringer of the method claim.

Personalized medicine is also likely to benefit from the Akamai III standard. Following recent 35 U.S.C. § 101 decisions, patent claims directed toward the identification and testing of specific biomarkers to determine treatment options were being drafted to include a treatment step in order to avoid a finding of unpatentable subject matter. These types of methods may involve a physician performing the treatment steps while a lab performs the testing for biomarkers. However, under Akamai III, a treating physician who draws the patient’s blood, sends the sample to a lab to be tested for specific biomarkers, and uses those results to direct treatment would likely be a direct infringer of a method of treatment claim that calls for those steps. The performance of the testing step would be necessary to receive the stated benefit of any personalized benefit claim: choosing an appropriate treatment option based on the test results. The physician would also likely control the timing and manner of the lab personnel’s performance by providing the sample and dictating which test to perform. The end result is that a biotechnology or pharmaceutical company would have a claim that covers patentable subject matter that could be infringed by a single actor.

All told, the joint infringement landscape following Akamai III is expected to strengthen the patent portfolios for pharmaceutical and biotechnology companies. Of course, it remains to be seen whether the Supreme Court will entertain an appeal on this important issue of infringement for a second time.

Endnotes

1. 532 F.3d 1318 (Fed. Cir. 2008).

2. Limelight Networks, Inc. v. Akamai Techs., Inc. (Akamai II), 134 S. Ct. 2111, 2117 (2014).

3. BMC Res., Inc. v. Paymentech, L.P., 498 F.3d 1373, 1378–79 (Fed. Cir. 2007).

4. Muniauction, 532 F.3d at 1329.

5. See, e.g., Brief of Defendant-Appellee Paymentech, L.P. at 46–55, BMC Res., 498 F.3d 1373 (No. 2006-1503), 2006 U.S. Fed. Cir. Briefs LEXIS 1196.

6. See, e.g., Eli Lilly & Co. v. Actavis Elizabeth LLC, 676 F. Supp. 2d 352, 377 n.21 (D.N.J. 2009).

7. Acorda Therapeutics Inc. v. Apotex Inc., No. 07-4937 (GEB-MCA), 2011 U.S. Dist. LEXIS 102875, at *79–80 (D.N.J. Sept. 6, 2011).

8. Akamai Techs., Inc. v. Limelight Networks, Inc. (Akamai III), 797 F.3d 1020 (Fed. Cir. 2015).

9. No. 1:10-cv-01376-TWP-DKL, 2015 U.S. Dist. LEXIS 112221 (S.D. Ind. Aug. 25, 2015).

10. Limelight Networks, Inc. v. Akamai Techs., Inc. (Akamai II), 134 S. Ct. 2111, 2115 (2014).

11. Id. at 2117.

12. Id.

13. Akamai Techs., Inc. v. Limelight Networks, Inc. (Akamai I), 692 F.3d 1301, 1308–09 (Fed. Cir. 2012).

14. Id.

15. Akamai II, 134 S. Ct. at 2117.

16. Akamai I, 692 F.3d at 1309.

17. Akamai II, 134 S. Ct. at 2120.

18. 90 F. Supp. 3d 521 (E.D.N.C. 2015).

19. Id. at 522.

20. Id. at 525.

21. Id. at 524.

22. No. 3:10-CV-1994-D, 2014 U.S. Dist. LEXIS 142762 (N.D. Tex. Oct. 7, 2014).

23. Id. at *3 (alteration in original).

24. Id. at *19–20.

25. Id. at *26.

26. No. 13-cv-346-bbc, 2014 U.S. Dist. LEXIS 139776, at *5–6 (W.D. Wis. Oct. 1, 2014).

27. Id. at *10–11.

28. Id. at *5.

29. Id. at *11.

30. Id. at *14, *18–19.

31. Akamai Techs., Inc. v. Limelight Networks, Inc. (Akamai III), 797 F.3d 1020 (Fed. Cir. 2015).

32. Id. at 1022.

33. Id. at 1022–23.

34. Id. at 1023.

35. Id. at 1025.

36. Id. at 1024.

37. Id. at 1024–25.

38. Eli Lilly & Co. v. Teva Parenteral Meds., Inc., No. 1:10-cv-01376-TWP-DKL, 2015 U.S. Dist. LEXIS 112221 (S.D. Ind. Aug. 25, 2015).

39. Id. at *5.

40. Id. at *16.

41. Id. at *4.

42. Id. at *5–6.

43. Id. at *12–13.

44. Id. at *13–14.

45. Id. at *14 (alteration in original) (emphasis omitted).

46. Id.

47. Id. at *15–16.