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On December 1, 2016, Parker Hannifin Corporation and CLARCOR Inc. announced that the companies have entered into a definitive agreement under which Parker will acquire CLARCOR for approximately $4.3 billion in cash, including the assumption of net debt. The transaction has been unanimously approved by the board of directors of each company. Upon closing of the transaction, expected to be completed by or during the first quarter of Parker’s fiscal year 2018, CLARCOR will be combined with Parker’s Filtration Group to form a leading and diverse global filtration business. Bass, Berry & Sims has served CLARCOR as primary corporate and securities counsel for 10 years and served as lead counsel on this transaction. Read more here.

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Securities Law Exchange BlogSecurities Law Exchange blog offers insight on the latest legal and regulatory developments affecting publicly traded companies. It focuses on a wide variety of topics including regulation and reporting updates, public company advisory topics, IPO readiness and exchange updates including IPO announcements, M&A trends and deal news.

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Federal Circuit Changes Standard for Proving Inducement of Patent Infringement

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September 5, 2012

On Friday, August 31, 2012, the U.S. Court of Appeals for the Federal Circuit issued its long-awaited en banc decision in Akamai Technologies, Inc. v. Limelight Networks, Inc. and McKesson Technologies, Inc. v. Epic Systems Corp., dramatically changing the law of patent infringement in a 6-5 decision.1

The en banc opinion holds that an accused infringer can be held liable for inducement to infringe a claimed method if (1) the accused infringer knew of the patent; (2) the accused infringer induced performance of the steps of the method claimed in the patent, and (3) those steps were performed, even if the patent owner cannot prove direct infringement. In so holding, the Federal Circuit expressly overturned prior precedent 2 requiring proof of direct infringement by a single entity as an element of an inducement claim. Under the new rule, "all the steps of a claimed method must be performed in order to find induced infringement, but . . . it is not necessary to prove that all the steps were committed by a single entity."

As Judge Newman writes in a dissenting opinion, "the court adopts a new theory of patent infringement, based on criminal law, whereby an entity that 'advises, encourages, or otherwise induces,' [o]r 'causes, urges, encourages, or aids the infringing conduct,' is liable for the infringing conduct."

The Akamai decision raises some immediate concerns. First, will the decision give rise to new inducement-only patent infringement litigation where the patent owner cannot prove direct infringement? Second, what remedies are available to address inducement when the ultimate conduct is not actionable? Third, as noted by Judge Newman, "[s]ince the inducer is liable when he breaches the 'duty' not to induce, is the inducer subject to multiplication of damages?" Finally, when or how, does a potential inducer fulfill his or her "duty to exercise due care to determine whether or not he is infringing" 3 owners and users in navigating the complex new landscape carved by the Akamai decision. 

Update: On June 2, 2014, the U.S. Supreme Court reversed the Federal Circuit's decision in this case.  You can read more about the Supreme Court's decision in our June 5, 2014 Alert. On August 13, 2015, the Federal Circuit expanded the test for direct infringement of method claims by multiple actors, and we analyzed that decision in our August 14, 2015 Alert.

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1 The Federal Circuit's 103-page decision is no longer available on their website.
2 BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007). 
3 Newman, J., dissenting, quoting Underwater Devices Inc. v. Morrison-Knudsen Co., Inc., 717 F.2d 1380, 1389 (Fed. Cir. 1983).


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