Divided Infringement and Problems of Multiple Parties

Rovi Guides, Inc v Videotron Ltd 2022 FC 981 Brown J

            2967187 / 2635571 / 2775674 / 2553922

Rovi Guides, Inc v BCE Inc 2022 FC 979 Brown J

2753243 / 2631957 / 2952467 / 2691719

These companion decisions raise the difficult issue of divided infringement, which arises when a patented invention is jointly put into effect by two different entities, so it is difficult to identify a single infringer. The problem is particularly important in method claims, including personalized medicine and internet-related inventions, where one party practises some element of the method and a different party practises the remaining elements. An example is the invention at issue in the leading US decision, Akamai v Limelight 797 F3d 1020 (Fed Cir 2015) (en banc)*. Akamai involved a method claim relating to methods for delivering content over the internet. The defendant, Limelight, operated a content delivery network. Limelight carried out several steps of the claimed method, but Limelight’s customers, not Limelight itself, performed the remaining steps of the claimed method, namely ‘tagging’ and ‘serving’ (1024). Between them, Limelight and its customers put the claimed invention into practice, but neither individually practised all the steps. The question was whether Limelight is liable for infringement.

These companion decisions appear to raise similar issues. The patented inventions relate to “interactive television program guides” [IPG]—the familiar interactive menus used to select current and upcoming programs. The nature of the technology is not discussed in detail, since the motion to strike turned on the law, but it is clear enough that it raised problems of infringement involving multiple parties. Brown J, affirming the decision of Aalto CMJ, refused to strike allegations of infringement by common design and infringement by attribution, This does not, of course, mean that these are necessarily good causes of action, but the decision does confirm that the law of infringement involving multiple parties requires further development. Because the facts of this case are not clear, for the purposes of the following discussion I’ll treat Akamai as a paradigmatic example. The reasons are somewhat better developed in the Videotron decision and in this post paragraph numbers will refer to that decision.

In the simplest type of infringement, a single natural person practices all elements of the invention. But practising the invention may, and commonly does, involve multiple parties. This does not necessarily raise doctrinal difficulties. For example, if the alleged infringer subcontracts with another party to make a part for a patented invention, and then takes delivery of the part and incorporates it into the completed invention, the alleged infringer will be directly liable by virtue of having itself made the invention, without any need to attribute the acts of the subcontractor to the primary party. But other contexts involving multiple parties may raise more difficult problems; for example, where one party encourages another to infringe (inducement), or in the context of method or process patents, where one party performs some of the steps of the claimed method or process and another performs the remaining steps (divided infringement).

These scenarios create a tension between two principles. On the purposive definition of infringement, the patent is infringed when the patentee is deprived of the benefit of the invention: Monsanto v Schmeiser 2004 SCC 34 [44]. If the invention is in fact put into effect by someone else, the patentee is deprived of that benefit whether it was put into effect by one person or two people acting together. On the other hand, patent infringement is a strict liability tort—a party will be liable if it performs the acts constituting infringement, whether or not it intended to infringe. Since the patent is a public document, a potential infringer can in principle determine whether it is infringing by comparing its acts to the claimed invention to determine if it is practising the invention. We shouldn’t exaggerate the efficacy of a freedom to operate search; even in simple cases of direct infringement by a single party, the practical difficulty of identifying relevant patents can create uncertainty. But the problem is evidently substantially worse if a party can be made liable even though it is not putting all the elements of the invention into effect. Consequently, the main objection to imposing liability for divided infringement is that making a party liable for performing only one element of an invention introduces uncertainty and a consequent chilling effect: see Limelight v Akamai 572 US 915 (2014) 922; Akamai v Limelight 786 F.3d 899 (Fed Cir 2015) 905. Dealing with the chilling effect is a key issue in infringement involving multiple parties. I’ll suggest that a common thread in the doctrines that extend liability beyond the case in which a single entity which itself directly practices the invention is that the defendant who is made liable for infringement has the same opportunity for knowledge, or at least control, as a natural party who practices all elements of the invention itself.

Inducement

In broad terms, there are three approaches to the problem of multiple parties.

In indirect infringement, the question is as to the liability of a party, A, who in some manner facilitates infringement by a direct infringer, B, typically by supply of a product which is itself non-infringing, but which is used for an infringing purpose by the direct infringer. In the paradigmatic case, there is a single direct infringer which practices all elements of the invention. Inducement is a well-established form of indirect infringement in Canadian law. (It was pleaded in this case, but was not subject of the motion to strike: [6]–[7].) It is well established that the indirect party must know that its influence would result in the acts constituting infringement, thus addressing the chilling effect problem; for example, a party who supplies a commercial staple will not be held liable even if the purchaser used it for an infringing purpose, since there are many non-infringing uses for a staple product and the vendor would not normally be aware of what the purchaser will do with the product.

Another form of indirect infringement (albeit not formally recognized in Canadian law) is contributory infringement, in which liability is imposed for supply of a product especially adapted to infringe. Because the product only has one use, the vendor must be taken to know what it will be used for, and consequently is in as good a position as the direct infringer to verify whether the use is indeed infringing.

Attribution

Second, some doctrines attribute the acts of one party, B, to another party, A, so that A may be held to have directly infringed even though neither A nor B carried out all the elements of the invention. This type of infringement was pleaded in this case, specifically “direct infringement as a result of attribution of [third party] actions” [6]. Aalto CMJ remarked that the concept of attribution is novel in patent law [62], [65], but he and Brown J accepted that the principle is well-accepted in tort law [62], [68] and given that patent infringement is generally considered to be a form of tort, it would be an “incremental development in the law” to import the concept into patent law [66]. Consequently, Brown J, affirming Aalto CMJ, allowed it to proceed, while expressly noting that he was not saying that it was a good cause of action, but only that it should be allowed to proceed [68].

The main authority relied on by Brown J and Aalto CMJ was the 2015 decision of the en banc US Fed Cir decision in Akamai v Limelight 797 F3d 1020 (Fed Cir 2015) (en banc); as noted above, the defendant, Limelight, performed some steps of the claimed method and its customers performed the remaining steps, namely ‘tagging’ and ‘serving’ (1024). The Fed Cir had previously recognized that infringement involving multiple parties could be attributed to one of the parties, so as to constitute direct infringement, solely in three circumstances: principal-agent relationships, contractual arrangements, and joint enterprises (1023). In Akamai the Fed Cir held that this was unduly restrictive. On the facts, Limelight required its customers to perform the tagging and serving steps, both by contract and technically (1024–25). Consequently, there was substantial evidence that Limelight “directed or controlled its customers’ performance of each remaining method step” (1025). The Fed Cir held that this allowed the customers’ acts to be attributed to Limelight so as to make Limelight a direct infringer.

So far as I can tell, there isn’t a unified doctrine of attribution as such in US law; rather, the Fed Cir used the term as a label for a variety of circumstances where the acts of one legal entity are imputed to another. The court also noted that the categories are not closed: “[i]n the future, other factual scenarios may arise which warrant attributing others’ performance of method steps to a single actor” (1023).

To my mind, the facts in Akamai illustrate why it was sound to allow the plea of attribution to proceed. It is clear on the facts in Akamai that the problem that the defendant might not know that it was infringing does not arise. Limelight specifically instructed all the steps of the claimed method, even though it did not carry them out itself. The knowledge requirement of the well-established inducement test would clearly be satisfied. The encouragement and instructions would also satisfy the second step of the inducement test. Thus the chilling effect problem is avoided: a party who encourages another to carry out certain known acts is in as good a position as the other to determine whether those acts constitute infringement. The only reason this might not constitute inducement relates to the first step, the requirement of direct infringement. In Limelight v Akamai 572 US 915 (2014) the US Supreme Court held that there could be no inducement unless a single party was directly liable for the entire act of direct infringement. Whether this is true in Canadian law is a separate question, which I’ll turn to next; for now it suffices to say that if a trip to the US Supreme Court was warranted on this issue in the US, a trip to trial is warranted in Canada.

Apart from relying on Akamai, Brown J stated that the concept of attribution is well-accepted in tort law. I must admit that I’m not familiar with it in that context, at least not by that name, and no cases were cited. Perhaps he had in mind tort doctrines of vicarious liability, under which an employer is liable for tort of an employee carried out in the course of their duties. Infringement is generally treated as a species of tort, and when a corporation practices the invention, all of the various elements of the invention are, in the simplest case, physically put into effect by a single employee of the corporation acting within the scope of their duties. In that case, the employee, a separate legal entity, is a direct infringer, but the infringement of the employee is attributed to the corporation by the doctrine of vicarious liability, with the result that the employer is liable as a direct infringer, not for inducement. (There is a separate question as to whether the employee is liable personally: see Mentmore (1978) 89 DLR(3d) 195 (FCA); Liability of Corporate Officers in Intellectual Property Law, (2020), 63 CBLJ 159.) This is routine, but it nonetheless illustrates the point that the direct infringement of one party may be attributed to another, so as to make the other a direct infringer. In these circumstances it is evidently not unreasonable to task the employer with knowledge of the acts carried out by the employee at the employer’s instructions or at least on its behalf.

But there is a puzzle even in this seemingly straightforward example. Suppose that the patent claims a method. In the case where a single employee carries out all the steps of method and so is a direct infringer, it is clear that vicarious liability allows the wrong of the employee to be attributed to the employer. But what if the same invention is put into effect by two different employees, one of whom carries out some of the steps, and another who carries out the remaining steps, so that neither of the employees is a direct infringer. It would seem absurd to say that the employer is not liable simply because it directed two employees to carry out the method instead of one. But neither employee commits a wrong which can be attributed to the employer; the employer will only be liable if we attribute the acts of the employees to the employer.

Does the doctrine of vicarious liability attribute the wrongs of the employee to the employer, or their acts? It appears that it is the former in US law: so, in Akamai v Limelight 786 F3d 899 (Fed Cir 2015) 909 the Court stated that “Under the principles of vicarious liability, direct infringement does not occur unless all steps of a method claim are performed by or attributable to a single entity.” Similarly, in the en banc Akamai decision, the Fed Cir stated that to determine attribution, they would consider “general principles of vicarious liability” (1022), not vicarious liability as such, explaining in a footnote that “previous cases' use of the term ‘vicarious liability’ is a misnomer. . . . In the context of joint patent infringement, an alleged infringer is not liable for a third party's commission of infringement—rather, an alleged infringer is responsible for method steps performed by a third party. Accordingly, we recognize that vicarious liability is not a perfect analog” (1022 fn2). For that reason, the Court held that the acts of the customers should be attributed to Limelight, not on the basis of vicarious liability as such, but rather in light of a “direction or control” standard derived from the “general principles” of vicarious liability (1022).

To my surprise, I have not been able to find a ready answer to this question in Anglo-Canadian law. The standard way of describing it is to say that the law of vicarious liability holds the employer liable for the “misconduct” of the employee (see eg Sagaz 2001 SCC 59 ¶ 2; London Drugs [1992] 3 SCR 299, 334; Bazley v Curry [1999] 2 SCR 534 ¶ 19), which implies that the employee’s conduct is itself wrongful. But we shouldn’t place too much weight on an isolated phrase. Read holistically, the cases on vicarious liability generally refer to acts and wrongs more or less interchangeably, as does Glanville Williams, Joint Torts and Contributory Negligence (London: Stevens & Sons, 1951). Presumably this is because in the great majority of cases it is a single employee who acts wrongfully, so that it makes no difference whether the acts or the wrongs are attributed to the employer. There is some parallel with cases of concurrent liability, as when two rioters combine to overturn a car which neither could have overturned if acting alone; but in that case, each commits an independent tort of trespass to chattels.

I have no doubt that if a method claim were put into effect by two employees of the same employer, both acting in the course of their duties, the courts would attribute their acts to the employer. Vicarious liability has its basis in “a combination of policy considerations” (Bazley v Curry [1999] 2 SCR 534 ¶ 26) and whether one or two employees put the invention into effect clearly doesn’t matter from a policy perspective; the employer has the same control and knowledge whether the acts which jointly constitute the wrong are performed by one employee or two. This doctrinal difficulty illustrates that divided infringement of method claims really does raise some unique issues; even in a simple case of divided infringement by two employees of the same employer, some extension, or at least clarification, of standard vicarious liability law is required. Then the question is where to draw the line. What if the alleged infringer carries out some steps of the method and contracts with a third party to carry out the rest? What if it induces its customers to carry out the rest? In any of those cases the alleged infringer would have the same ability to determine whether its acts infringe as would a single direct infringer. Thus, it seems clear that the cause of action should be allowed to proceed to develop a fuller factual matrix in which to determine whether there is a principled line to be drawn.

I’ll end this section by noting that the general concept of attribution is not entirely novel in Canadian patent law. In Bauer v Easton 2010 FC 361 the action was based on inducement, which Gauthier J held to have been established. But she suggested in obiter at ¶ 190 that the defendant’s involvement in making the infringing product was so substantial as to amount to direct infringement, even though it had not itself carried into effect every element of the invention.

Common Design

The second cause of action at issue was infringement by common design, which Aalto CMJ defined as follows [8]:

Infringement by common design arises where one party is found to be a joint tortfeasor when another party commits the tort in furtherance of a common plan. An essential element of the common design is that the parties must agree on a common action and the act of infringement must be in furtherance of that agreement. There must be a common design to do the act that is alleged to infringe.

Aalto CMJ noted that the UK Supreme Court had accepted the concept of infringement by common design in Sea Shepherd [2015] UKSC 10. While Sea Shepherd was not a patent case, the UKSC at [23], [37] endorsed the summary by Mustill LJ in the patent case of Unilever v Gillette [1989] 106 RPC 583 (CA) 608.

Aalto CMJ noted that the FC has considered common design for patent infringement in Packers Plus 2017 FC 1111 [48], noting there was no Canadian authority but adverting to Sea Shepherd before dismissing the argument on the facts; and in Genentech v Celltrion 2019 FC 293 permitting a pleading of “acting in concert,” which was considered equivalent to infringement by common design. Given the authority of the UKSC and the ambiguous state of the law in Canada, it was relatively straightforward for both Aalto CMJ and Brown J to conclude that the pleading of infringement by common design should be allowed to stand and indeed Videotron accepted that it was a viable cause of action on appropriate facts.

Videotron’s main argument was that the doctrine required identification of a “primary tortfeasor” [51]. Brown J did not lay out Videotron’s argument in much detail, but if I understand correctly, Videotron was arguing that the doctrine requires a primary tortfeasor that would itself be liable, in the same manner that inducement requires a direct infringer [51]. Brown J rejected this saying that the term “primary tortfeasor” is used merely “to identify the party to the common design that joins the defendant in the tort (but is not named as a defendant)” [52]. I’m not sure Brown J is right about this—though I’m not sure he’s wrong either. In the cases reviewed by Mustill LJ in Unilever v Gillette, it appears to me that there was always a single direct tortfeasor and the question was whether another could be joined or otherwise also held liable for the same tort. In Unilever v Gillette itself the question was whether the parent of a domestic defendant could be joined, and it is clear that the domestic defendant was an infringer on the facts as pleaded. In Sea Shepherd, it is clear that the primary defendant was itself a tortfeasor, and the question was whether its parent company could be made liable. Brown J also referred to ICBC v Stanley Cup Rioters 2016 BCSC 1108 and Montréal (Ville) v Lonardi 2018 SCC 29. He noted that neither decision required a “primary tortfeasor” who performed all acts necessary to damage any vehicle; that is true, but neither did they say the opposite. In both the question was whether individual rioters should be held liable for all the damage done by riots, and in both the answer was no.

This is not to say that I agree with Videotron’s argument. So far as I can tell, at least from the cases I looked at, the question never directly arose. The cases concerned scenarios in which there was in fact a single direct tortfeasor and the question was whether a second party should also be made liable. The references to a ‘primary tortfeasor’ may have indicated a direct infringer, but only for convenience on the facts. I certainly don’t see any case holding that there must be a single direct tortfeasor. Certain statements by Lord Neuberger in Sea Shepherd at [55], [60] might be seen as suggesting a requirement that there be a single direct tortfeasor, but I think this is merely a reflection of the facts of the cases he is summarizing, and not a considered holding on the issue.

With all that said, as a matter of principle, there is no evident reason why infringement by common design should require a single direct infringer. If two parties agree with each other that one should carry out two elements of the patented method and the other should carry out the remaining elements in coordination, with the intended and actual result that the invention is practiced, both parties are in as good a position to know that the invention would be practised as a single party which put all the elements into effect itself.

As with vicarious liability, the tort cases on infringement by common design are not entirely helpful on the unusual problem raised by divided infringement of method claims, which seem to have no exact parallel in tort law. This is all the more reason to allow these causes of action to stand. I might add that while infringement by common design is clearly established in English law, it does not seem to be very well elaborated; in Sea Shepherd the action was dismissed on the facts with only a brief summary of principles at [21]. While Aalto CMJ’s definition strikes me as a very good summary, I’m not sure it is right, at this point, to treat it as definitive.

Overlap

In my view, Aalto CMJ and Brown J were unquestionably right in allowing these causes of action to proceed. It is sometimes desirable to deal with a novel question of law on a motion to strike, as in Atlantic Lottery 2020 SCC 19, this is more appropriate when the cause of action itself is well defined. The law on divided infringement is still developing in both the US and the UK, in respect of both apportionment, as was expressly recognized in Akamai, and, in my view, in respect of infringement by common design in the UK. (And see Medgraph v Medtronic (Fed Cir 2016) discussed here, clarifying the Akamai standard.) This means that the matter should be allowed to proceed in order to develop a fuller factual background to provide context.

By the same token, we should not accept these causes of actions exactly as they are established in the US and UK, with the only question being whether to adopt them in Canada. Unlike Canada, the US has codified infringement provisions in 35 USC §271, with separate provisions for direct infringement (§271(1)), inducement (§271(b)) and contributory infringement (§271(c)). The distinction between direct infringement and inducement was central in the Akamai litigation.* In Canada infringement is defined as interference with the exclusive rights conferred on the patentee: Monsanto v Schmeiser 2004 SCC 34 [34]. While we distinguish doctrinally between direct infringement and inducement, these are not distinct torts: McCain Foods 2021 FCA 4 [62]. Therefore, as an early leading case put it, the question is whether the defendant’s act might “with propriety” be termed an infringement: Copeland-Chatterson (1906) 10 Ex CR 224, 247. For that reason alone, the distinctions drawn in US law should be treated with caution.

Moreover, it is not entirely clear whether these causes of action are distinct. It might seem reasonable to distinguish them as follows: in attribution, A is not necessarily a direct infringer, and the question is whether the acts of A should be attributed to D so as to make D a direct infringer; in infringement by common design, neither A nor D is a direct infringer, and the question is whether they might both be considered infringers by virtue of their joint acts; in inducement (or indirect infringement more broadly, ie including contributory infringement), A is a direct infringer (who may be such by virtue of attribution), and the question is whether D should also be considered an infringer by virtue of the aid provided to A.

However, this schema is difficult to reconcile with the cases. The three traditional forms of attribution recognized in the Akamai litigation were principal-agent relationships, contractual arrangements, and joint enterprises (1023). The last of these bears a striking similarity to infringement by common design. At the least, common design and attribution overlap in some cases: if A and D work closely together, it may be difficult to distinguish a case where A’s acts should be attributed to D, and a case where A and D should be considered to work together. Common design and inducement may also overlap, as was pointed out in Unilever v Gillette, 608, where Mustill LJ remarked that there may be doubt “as regards the relationship between indirect infringements by procuring and by participation in a common design. There may still be a question whether these are distinct ways of infringing, or different aspects of a single way. I prefer the former view, although of course a procurement may lead to a common design, and hence qualify under both” (608). Bauer v Easton illustrates the potential overlap between inducement, which was established, and direct infringement, arguably by attribution, which Gauthier J indicated she would have accepted.

It is of course possible that these three doctrines (assuming they were accepted in Canadian law), are in fact distinct and simply happen to overlap on some sets of facts. But the extent of the overlap, and the fact that the Canadian Patent Act does not have an infringement provision as such, suggests that it might be desirable to develop an overarching approach to infringement, perhaps focusing on knowledge and control or influence. This is not to say that the courts should develop and apply an overarching definition in this particular case; a more incremental approach is probably preferable. But we should at least be open to the possibility that a unified test will develop; again, this is a reason to be cautious in drawing a sharp distinction between attribution and infringement, as was done in Akamai.

Other cases

I’ve already noted that Bauer may also be relevant to this debate, and I’ll finish this post by pointing out a couple of other cases that are potentially relevant. In Valmet v Beloit (1988) 20 CPR(3d) 1 (FCA), one question was whether Valmet, the parent of VDI, breached an injunction “because it must, by reason of the circumstances, answer for the acts of V.D.I. (which clearly would have breached the injunction had they been accomplished by Valmet)” (12) and see similarly (16). This sounds like a form of attribution argument, though not under that name. The FCA considered inducement had not been established, and continued by saying “there is, in my view, only one other possible situation in which Valmet would have had to answer for V.D.I.'s conduct, namely, the situation where Valmet's control of V.D.I. would have been so complete that V.D.I. would, in fact, have been only a puppet in Valmet's hands” (16), which was not made out on the facts. This seems like a very stringent test for attribution—perhaps more stringent than the “direction or control” test from Akamai. But on the facts, the real complaint was that the parent had not acted to prevent infringement by the subsidiary, and the FCA held that “[t]he mere fact that Valmet did possess the power to influence the decisions of that board did not render Valmet liable for those decisions if, in effect, it did not influence them” (16), which is entirely consistent with the Akamai approach, and with a less stringent test for attribution generally. It is similarly consistent with Bauer on the facts.

The case of Incandescent Gas Light Co Ltd v New Incandescent Mantle (1898) 15 RPC 81 (QB) (cited in Copeland-Chatterson (1906) 10 Ex CR 224, 243–44) is perhaps an early example of infringement by common design, though not under that name. The invention related to mantles for incandescent gas lighting. The defendant sold fittings for incandescent gas lighting from the ground floor of a building, with another company selling infringing mantles from the first floor. There was a speaking tube between the two and customers knew that fittings were to be supplied on the ground floor and mantles on the second floor. The defendant was held liable for infringement. Another arguable example is American Arch Co v Canuck Supply Co [1924] 3 DLR 567 (QSC) in which the patent at issue was for a locomotive fire-box, consisting of a particular arrangement of fire bricks and other components (570, 573). The court, finding the defendants jointly and severally liable, stated that “[t]he defendants acting in concert, one as a manufacturer and the other as sale agent, have adopted, to the smallest detail, the method employed by the plaintiff in installing its fire arch; . . . in short, they have jointly put in practice the invention covered by the patent in suit, in the only manner in which it could be put in practice and. as such, are infringers.” This could be understood as a case of contributory infringement, except that it is generally thought not to be a good cause of action in Canadian law; an alternative would be to consider this a case of infringement by common design.

*The Akamai litigation has a convoluted history. In Akamai v Limelight 629 F3d 1311 (Fed Cir 2010) a panel of the Fed Cir held that Limelight was not liable for direct infringement under 35 USC §271(a) because Limelight did not perform all of the steps of the asserted method claims and the actions of its customers could not be attributed to Limelight. In a rehearing en banc, the Fed Cir found it unnecessary to address direct infringement, as it held that Limelight was liable for inducement under 35 USC §271(b), even if no one would be liable as a direct infringer—that is, there can be direct infringement for the purposes of inducement without there being a direct infringer: Akamai v Limelight 692 F3d 1301 (Fed Cir 2012) (en banc). That decision was appealed to the US Supreme Court, which reversed and remanded, holding that for there to be direct infringement, all of the steps of a method claim must be attributable to one person: Limelight v Akamai 572 US 915 (2014) 922. At the same time, the Supreme Court noted that the question of direct infringement was not at issue on the appeal. On remand, a panel of the Fed Cir held that there was no direct infringement because the acts of Limelight’s customers could not be attributed to Limelight: Akamai v Limelight 786 F3d 899 (Fed Cir 2015). Finally, in a rehearing en banc, the Fed Cir held that the acts of Limelight’s customers could be attributed to Limelight, so Limelight was directly liable: Akamai v Limelight 692 F3d 1301 (2012) (en banc).

Update 14-Aug: After making some inquiries among tort scholars, I was directed to Credit Lyonnais Nederland [1999] UKHL 9 and Majrowski v Guy's and St Thomas' NHS Trust [2006] UKHL 34 as being the most recent UKHL cases on the question of whether an employer is vicariously liable for the act of its employees or for their wrongs. As I read them, neither case directly addresses the puzzle discussed in this post.

In Credit Lyonnais [1999] UKHL 9, [1999] 1 All ER 929 an employee of the defendant employer was liable on the basis of common design for providing assistance to a third party in a fraud against the plaintiff Credit Lyonnais. The decision turned on the fact that the acts carried out by the employee "only amount to a tort when linked to other acts which were not performed in the course of the employee's employment." It is well-established that the employer is only vicariously liable for activity performed in the course of the employee’s employment, and the aspects of the scheme carried out in the course of the employee’s duties acts of the employee—issue of a guarantee to the plaintiff—had no adverse consequences for the plaintiff, and indeed, was, if anything, beneficial for the plaintiff (933). The employee’s act in the course of his employment was only tortious when combined with other acts, namely writing letters stating that the transactions which were guaranteed were acceptable to the employer. Those other acts were not within the course of the employee’s duties and the employee had neither actual nor ostensible authority to write those letters. On those facts, the UKHL held the employer not to be vicarously liable.

This result does not help us decide whether vicarious liability make the employer liable for acts or wrongs, as the result would be the same either way. If vicarious liability attributes the acts of the employee to the employer, it is only those acts carried out in the course of employment that are so attributed and those acts were not tortious in themselves, so the employer would not be liable. If vicarious liability attributes the torts of the employee to the employer, it is only torts carried out in the course of employment that are so attributed, and acts carried out by the employee in the course of his employment were not tortious, so the employer would not be liable under that rule either. Lord Woolf MR summarized by stating that “The short answer to [the plaintiff’s ] first argument is that before there can be vicarious liability, all the features of the wrong which are necessary to make the employee liable have to have occurred in the course of the employment.” That is, the entire tort has to be carried out in the course of the employee’s employment. But if the all the acts constituting the tort are carried out in the course of the employment, vicarious liability will arise on both the theory that the act is attributed to the employer, and on the theory that the wrong is attributed to the employer. Put another way, Credit Lyonnais by establishes that when a single employee carries out a tort that is divided between acts carried out in the course of their employment and those which are not, the employer is not vicariously liable. But our problem is a different kind of divided tort: the question is whether the employer will be vicariously liable if two employees carry out acts in the course of their duties, which are tortious only in combination.

Majrowski involved a statutory tort of harassment. (The harassment was carried out in the course of the employee’s duties, so that was not an issue.) The statute imposed a duty on the employee, not the employer, and the acts of the employee were not tortious at common law, so if the only acts of the employee are attributable to the employer, the employer would not be liable. The House of Lords held that the employer was vicariously liable:

An employer's liability is not confined to responsibility for acts done by an employee in the course of his employment. An employer's liability goes further. He is liable for the wrongs of his employee committed in the course of employment.

So, Majrowski clearly establishes that the employer is liable for the wrongs of the employee. This does not address our puzzle regarding divided infringement, in which the individual employees does not commit any wrong. Our question is whether the employer is also liable for the acts of the employee carried out in the course of their employment. If Majrowski had held that the employer is only liable for the wrongs, and not for the acts, that would mean the employer is not vicariously liable for divided infringement; but it clearly did not so hold, as is evident from the passage just quoted. On the contrary, if anything the statement that an employer's liability is “not confined” to responsibility for acts done by an employee in the course of his employment implies that vicarious liability does extend to acts. But I am reluctant to read too much into such a statement when the point was not at issue.

Credit Lyonnais also has some discussion of procuring a tort at 936, discussing Lumley v Gye (1853) 2 E & B 216, and at 937 discussing the unreported decision of Oliver LJ in John Hudson & Co Ltd v Oaten. Procurement seems very similar to inducement in patent law, and that is exactly where the problem arises of whether the party who induces is liable even if there is no single party who is directly liable. Those cases seem to me to be typical, in that there was in fact a single primary tortfeasor who would be directly liable, so our puzzle was not at issue. It is not entirely surprising that the holding is ambiguous on a point that was not at issue. In Lumley v Gye the UKHL quoted Erle J as stating "It is clear that the procurement of the violation of a right is a cause of action in all instances where the violation is an actionable wrong"; this implies a broad test, suggesting that the employer who instructs two separate employs to do acts which together constitute a tort "procures" the tort. But the UKHL summarized by saying "This statement of Erle J is capable of being treated as saying no more than that if you procure the commission of an actionable wrong by another then you are liable for that actionable wrong," which implies the other must have committed a wrong themselves. Turning to Oaten, the UKHL quoted Olivier LJ as saying that "A man who procures the commission by another person of a tortious act becomes liable because he then becomes a principal in the commission of the act," which clearly implies the acts of the other person were tortious. Again, I don’t think it is worth parsing these statements too finely. The question of a 'divided tort' was not at issue in either case and so the statements are unclear as to whether it is the act or the torts that are attributed to the employer.

As noted in the original post, I am quite confident that if the issue were raised directly in a case in which an employer directed two separate employee to carry out acts which are only tortious in combination, the employer would be held vicariously liable. That seems to be to follow directly from the relevant policy considerations which provides the rationale for vicarious liability, as emphasized in both Bazley v Curry [26] and Majrowski [9]. The point remains that this would be an extension of doctrine on policy grounds, rather than an application of established law. So, with the caveat that I am not an expert in tort law or vicarious liability, divided infringement really does seem to raise new issues.