In Akamai Technologies v. Limelight Networks, Inc., Appeal Nos. 2009-1372, 2009-1380, 2009-1416, 2009-1417, the Federal Circuit held no liability for direct infringement of a method claim exists under 35 U.S.C. § 271(a) where all the steps of the claim are not performed by or attributed to a single entity.
In 2006, Akamai sued Limelight for patent infringement in the District of Massachusetts. A jury found Limelight had committed infringement and awarded damages to Akamai. Shortly after the verdict, the Federal Circuit decided Muniaction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008), which held there is no infringement where a defendant performs some steps of a method claim and its customers perform the rest. In view of Muniaction, the district court reconsidered and granted Limelight’s earlier motion for JMOL of no direct infringement because Limelight did not control or direct its customers’ “tagging,” a step in the asserted method. On appeal, the Federal Circuit affirmed, clarifying a defendant can only be liable for direct infringement under § 271(a) when there is an “agency relationship between the parties who perform the method.” Akamai petitioned for rehearing en banc, which the Federal Circuit granted. The en banc Federal Circuit reversed, holding liability for induced infringement under § 271(b) can exist even though no party would be liable for direct infringement under § 271(a). Limelight petitioned the Supreme Court for certiorari, which was granted. In that appeal, a unanimous Court held inducement liability must be tied to underlying direct infringement by a single entity and remanded the case to the Federal Circuit.
The Federal Circuit affirmed the district court’s noninfringement finding. Under the “single entity” rule for direct infringement, all steps of the claimed method must be performed by a single entity. Nevertheless, the single entity rule contemplates liability for direct infringement where an accused entity exercises sufficient “control or direction” over the actions of another. This standard is satisfied where the law would traditionally hold a direct infringer vicariously liable for the acts of another. The Federal Circuit explained that such vicarious liability can be found, for example, in a principal-agent relationship, in a contractual arrangement, or in a joint enterprise. Here, Limelight merely instructed its customers, which did not give rise to a relationship sufficient to warrant the application of vicarious liability. Akamai argued the common-law principle of joint-tortfeasor liability should apply to § 271(a). The Federal Circuit disagreed and responded that incorporating joint-tortfeasor liability into § 271(a) would render sections §§ 271(b) and 271(c) (codifying induced and contributory infringement) superfluous and would contradict congressional intent. Additionally, the Federal Circuit reasoned applying joint-tortfeasor liability here would impute a knowledge requirement and would therefore contradict the Supreme Court’s holding that knowledge is irrelevant to direct infringement. The Federal Circuit also noted that situations such as the present are better solved by carefully drafting claims to capture infringement by a single party than by expanding the reach of direct infringement liability.