On August 13, 2015, the Federal Circuit, sitting en banc, issued a per curiam decision setting forth new law on when performance by multiple parties of a method claim constitutes direct infringement under 35 U.S.C. § 271(a).

Background

Akamai owns a patent covering a method for delivering web content efficiently by performing the steps of, inter alia, placing some content on a set of replicated servers; and modifying the provider’s web page to instruct web browsers to retrieve content from those servers.  Limelight maintains a network of servers and similarly allows for efficient content delivery by placing some content elements on its servers and instructing its customers to modify their web pages, rather than Limelight itself modifying the content provider’s web pages.  Thus, neither Limelight nor its customers individually performed all of the steps of the patented method.

The case has involved extended proceedings.  Akamai first sued Limelight on September 5, 2006.  In 2008, a jury trial found Limelight liable for infringement, but the United States District Court for the District of Massachusetts entered judgment post-verdict holding that Limelight did not infringe.  Akamai Technologies, Inc. v. Limelight Networks, Inc., 614 F. Supp.2d 90 (D. Mass. 2009).  On appeal to the Federal Circuit, a panel first affirmed the trial court, holding that there can only be joint infringement when there is an agency relationship between the parties who perform the method steps or when there is a contractual relationship between the parties.  Akamai Technologies, 629 F.3d 1311 (Fed. Cir. 2010).  But on August 31, 2012, the Federal Circuit reheard the case en banc and reversed the prior panel decision, holding that there could be liability for inducing infringement under 35 U.S.C. § 271(b) without need to show direct infringement under Section 271(a) as a predicate.  Akamai Technologies, 692 F.3d 1301 (Fed. Cir. 2012) (en banc).

Then on June 2, 2014, the Supreme Court reversed the en banc decision, and held that Limelight’s conduct did not amount to inducing infringement because there was no finding of direct infringement, as required by binding precedent.  Limelight Networks, Inc. v. Akamai Technologies, Inc., 134 S.Ct. 2111 (2014).   In so holding, the Supreme Court declined to review the merits of the Federal Circuit’s prior decision in Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008)—that there could be no direct infringement unless one defendant actually performed all the claimed method steps, or directed or controlled others who performed them—noting that that on remand, “the Federal Circuit will have the opportunity to revisit the Section 271(a) question if it so chooses.”

Following remand back to the Federal Circuit, a divided panel issued a decision on May 13, 2015, holding that there was no direct infringement by Limelight under 35 U.S.C. § 271(a).    Akamai Technologies, Inc. v. Limelight Networks, Inc., No. 2009-1372, slip op. (Fed. Cir. May 13, 2015).  The basis of the decision was that Limelight did not perform all the steps of the claimed method, and the practice of all steps of the claimed method could not be attributed to Limelight because the case did not involve agency, contract or joint enterprise.

Akamai petitioned for rehearing en banc of that decision.  The Federal Circuit granted that petition, and on August 13, 2015, issued its en banc opinion.

The Court’s August 13, 2015 En Banc Opinion

The full Court vacated the panel decision, reversed the district court judgment and reinstated the jury verdict, holding that an entity will be responsible for others’ performance of method steps where: (1) that entity directs or controls others’ performance, and (2) the actors form a joint enterprise.  The full Court noted in this regard that to the extent that the prior decision in Golden Hour Data Systems, Inc. v. emsCharts, Inc., 614 F.3d 1367 (Fed. Cir. 2010) was inconsistent with this holding, “that aspect of Golden Hour is overruled.”

Regarding (1), the full Court expressly stated that “Section 271(a) is not limited solely to principal-agent relationships, contractual arrangements, and joint enterprise, as the vacated panel decision held.”  Rather, the full Court held that an actor is also liable for direct infringement if (a) the “alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method” and (b) “establishes the manner or timing of that performance.”  The full Court further added that insofar as its prior cases “formed the predicate for the vacated panel decision, those decisions are also overruled.”

Applying these principles to the facts of the case, the Court held that there was substantial evidence from which a jury could find that Limelight directed or controlled its customers’ performance of each method step performed by them, such that all steps of the method were attributable to Limelight, and that Limelight directly infringed Akamai’s patent.  Specifically, the Court found that Limelight conditioned its customers’ use of its content delivery network upon its customers’ performance of certain tagging and serving steps, and established the manner or timing of its customers’ performance.  The Court noted that Limelight had all its customers sign a contract requiring the customer to provide Limelight with all cooperation and information reasonably necessary for Limelight to implement the content delivery service.  Additionally, upon completing a deal with Limelight, Limelight sent a welcome letter to its customers instructing them how to use the service and noting that a “Technical Account Manager” employed by Limelight would lead the implementation of Limelight’s services.  Limelight also instructed users on an integration process that includes the tagging step, and provided engineers if the customer experienced any problems.  If customers did not follow these steps, Limelight’s service would not be available.

On these facts, the en banc Court concluded that Akamai presented substantial evidence from which a jury could find that Limelight directly infringed.

Comment

Apart from the full Court remanding to the three-member appellate panel for resolution of remaining issues in the case, it will be interesting to see whether this en banc decision is the conclusive appellate word on the case.  It will also be interesting to see the ramifications of the case as its holding is applied to other fact patterns in the future.