Federal Circuit No. 2009-1372

The Federal Circuit has provided substantial guidance as to when  a party can be held liable for direct infringement under a theory of divided infringement.

Akamai Technologies, Inc. is the exclusive licensee of a patent directed to a method of delivering electronic data using a content delivery network ("CDN"). Limelight Networks, Inc., a CDN service provider, performed the claimed method except for two steps that were performed by Limelight's customers.

Following a jury verdict in favor of Akamai, the District of Massachusetts granted judgement as a matter of law in favor of Limelight, citing the then newly issued opinion in Muniauction Inc. v. Thompson Corp., 532 F.3d 1318 (Fed. Cir. 2008).  The court held that Limelight could not be liable for direct infringement because it did not exercise direction or control over its customers.   In a first appeal, the Federal Circuit reversed, holding instead that infringement could be based on a theory of inducement.  The Supreme Court subsequently reversed, holding that inducement required a predicate act of direct infringement.

Forced to address the theory of direct infringement, the Federal Circuit reinstated the jury's original finding, and in doing so, revised the standard for finding a single entity responsible for the infringement partially committed by another.  The en banc court held that "an entity [is] responsible for others' performance of method steps in two sets of circumstances:  (1) where that entity directs or controls others' performance, and (2) where the actors form a joint enterprise."  Furthermore, to determine if a single entity directs or controls the acts of another, the court stated that it will continue to consider general principles of vicarious liability, including whether the alleged infringer "conditioned participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance."

Accordingly, the Federal Circuit has made it clear that divided infringement is not limited to established principal/agent and contractual relationships.   Owners of method claims requiring multiple actors, for instance both merchants and customers, should be particularly pleased with this holding, as it represents an increase in the scope of potential liability under theories of divided infringement.