Federal Circuit Nos. 2009-1372, -1380, -1416, and -1417
In Akamai Technologies v. Limelight Networks, the Federal Circuit upheld the "Single Entity Rule" in relation to method claims, which is that a finding of infringement under 35 U.S.C. §271(a) requires that "all of the steps of the claim are performed by or attributable to a single entity. In this aspect, the Federal Circuit reaffirmed the holdings in BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) and Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (fed. Cir. 2008).
This case had been remanded to the Federal Circuit from the Supreme Court, which had held that "[a] method patent claims a number of steps; under this Court's case law, the patent is not infringed unless all the steps are carried out. . . . [In this case,] there has simply been no infringement of the method . . . because the performance of all the patent's steps is not attributable to any one person." Limelight Networks v. Akamai Technologies, 134 S.Ct. 2111, 2117 (2014). The Supreme Court decision was a reversal of an en banc decision of the Federal Circuit, which had held that "271(b) liability arises when a defendant carries out some steps constituting a method patent and encourages others to carry out the remaining steps – even if no one would be liable as a direct infringer. . . . Requiring proof that there has been direct infringement . . . is not the same as requiring proof that a single party would be liable as a direct infringer." Id. at 2117-2118.
The case involved an interpretation of the statute relating to direct infringement, 35 U.S.C. §271(a), which states: "Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.” Under the Single Entity Rule, direct infringement does not occur unless all steps of a method claim are performed by or attributable to a single entity. Further, indirect infringement (i.e., induced infringement under 35 U.S.C. §271(b) and contributory infringement under 35 U.S.C. §271(c)) requires, as a predicate, a finding that some party is directly liable for the entire act of direct infringement.
In the case at bar, method claim 17 of U.S. Patent No. 6,108,703 recites "tagging an embedded object in a page . . .". Limelight "provides instructions and offers technical assistance" to its customers regarding how to tag, but it is undisputed that Limelight does not perform the step of tagging the components to be stored on its servers. The majority stated that "there is nothing to indicate that Limelight's customers are performing any of the claimed method steps as agents for Limelight, or in any other way vicariously on behalf of Limelight. To the contrary, Limelight's customers direct and control their own use of Limelight's content delivery network (CDN)." As a result, the majority concluded that in accordance with the Single Entity Rule, there is no direct infringement under §271(a), therefore no induced infringement under §271(b).
In a lengthy 33-page dissent, Judge Moore indicated that the Single Entity Rule should be discarded: " 'Whoever,' as used in §271(a), encompasses multiple entities. Dictionaries define 'whoever' in the plural as '[w]hatever person or persons'"[emphasis in original]. "The majority's construction makes no sense and is inconsistent with the statute's use of 'whoever' in 35 U.S.C. §101, §161, and §171, which all undeniably reference joint inventors, meaning multiple parties acting together. . . . 'Whoever' within the context of §271(a) includes joint infringers – multiple entities acting in concert pursuant to a common plan or purpose (joint tortfeasors).
In addition, in response to the majority's contention that discarding the Single Entity Rule would render §271(b) and §271(c) superfluous, Judge Moore disagreed:
"Sections 271(b) and (c) would continue to apply and be the exclusive avenue for liability where the inducer or contributor did not perform any of the steps themselves. . . . Section 271(a) . . . does not apply to any entity that does not perform any step of a patented method, because that party would not be one of the person or persons who jointly 'uses' the method within the meaning of the statute.”
However, the majority countered the philosophical underpinnings of the dissent, indicating that without the Single Entity Rule, "there is no need for a separate tort for induced infringement," and that "Akamai's broad reading of §271(a) would make §271(c) redundant as well."
Further, the majority analyzed the dissent's rationale re vicarious liability as follows: "[T]he vicarious liability test includes, for example, principal-agent relationships, contactual arrangements, and joint enterprises. . . . [but] will typically not be present in an arms-length seller-customer relationship." Still further, regarding the notion of joint tortfeasor liability, the majority cited the Restatement (Second) of Torts as indicating that joint tortfeasor liability "includes only situations in which the defendant has been personally guilty of tortious conduct ," and further, that the requirement re "acting in concert" is a form of "mutual agency," but is not applicable "when parties act independently for their own benefit," and also requires "knowledge of harm." As a result, the majority concluded that joint tortfeasor liability and vicarious liability are not appropriate in the context of patent infringement of method claims.
As a result of this decision and its reaffirmation of the Single Entity Rule, practitioners are again reminded of the importance of drafting method claims with a specific potential single-entity infringer in mind. In particular, claim drafters should take care to avoid the affirmative recitation of steps that would likely be performed by a second entity.