On May 13, 2015, the Federal Circuit issued the Akamai Technologies, Inc. v. Limelight Networks, Inc.[1] opinion, where it reconsidered multi-actor direct infringement under 35 U.S.C. § 271(a). On remand from the Supreme Court, a divided Federal Circuit panel held Limelight did not infringe because it did not perform all of the steps of the asserted method claims and because the actions of its customers, who carried out the final steps, could not be attributed to Limelight.  

Background

In 2006, Akamai sued its competitor Limelight for both direct and indirect infringement of a patent that claimed a method for delivering electronic data using a content delivery network ("CDN"). There was no dispute that Limelight performed all but one of the steps in the asserted method claim.  The final step of "tagging"—a way to select delivery servers for faster access—was left to Limelight’s customers. A jury in the District of Massachusetts found direct infringement and awarded Akamai damages of $40 million. However, the court vacated the jury verdict, granting judgment as a matter of law of non-infringement in consideration of Muniauction, Inc. v. Thomson Corp. (holding that an accused infringer’s control over its customers' access to an online system, coupled with instructions on how to use that system, was not enough to establish direct infringement).[2]

Following a panel affirmation of the district court’s judgment, the Federal Circuit granted en banc review and reversed, finding the "evidence could support a judgment" in favor of Akamai on a theory of induced infringement under § 271(b).[3]  The en banc majority held that a party can be liable for induced infringement when a defendant carries out some steps constituting a method patent and encourages others to carry out the remaining steps. A unanimous Supreme Court rejected this approach, holding instead that inducement must be tied to an underlying direct infringement by a single actor.[4] The Supreme Court remanded the case to the Federal Circuit with the option to reconsider the multi-actor direct infringement issue under § 271(a).

The Federal Circuit's New Decision

On remand, a divided Federal Circuit panel upheld the District Court’s finding of non-infringement, ruling direct infringement of a method claim under § 271(a) exists only when all steps of an asserted method claim are performed by or attributed to a single entity.  The Federal Circuit instructed that steps of a method claim can be attributed to an entity when the entity acts as "mastermind," exercising sufficient "direction or control" over the action of another. The Federal Circuit also explained that sufficient direction or control exists in a principal-agent relationship, in a contractual agreement, or in a joint enterprise.

Limelight did not directly infringe because all steps of the asserted method claim were not performed by or attributed to Limelight. Rather, the final step, which Limelight’s customers performed, could not be attributed to Limelight because the case did not involve agency, contract, or joint enterprise. The Court found Limelight’s customers were not agents because they directed and controlled their own use of Limelight's content delivery network ("CDN").  For example, Limelight's customers "serve their own web pages, and decide what content, if any, they would like delivered by Limelight's CDN." Similarly, the court found no liability based on contractual agreement, noting that Limelight’s customers were not obligated to perform any method steps and did so only "if they decide to take advantage of Limelight’s service."

A dissent, written by Judge Moore, criticized the majority’s statutory interpretation, opining joint infringement under § 271(a) should include parties who "act in concert to collectively perform the claimed process pursuant to a common plan, design, or purpose." The dissent cautioned that the majority’s narrow interpretation, which allows for direct infringement of a method claim by multiple parties in only three enumerated circumstances, "creates a gaping hole in what for centuries has been recognized as an actionable form of infringement."

Implications

Although it is too early to assess any actual effects of the decision, Akamai may have a significant impact on patent litigation and patent prosecution. A company may now avoid liability from method claims by offloading one or more of the claimed steps to another entity. Once the claims are offloaded, the "mastermind" will only be liable for infringement if it has created a principal-agent or joint-enterprise relationship or if a contract exists that requires the entity to perform the remaining steps.

Patent drafters must also be cognizant of this decision to ensure future enforceability of granted patents. For example, it may be even more important to include system claims or to avoid unnecessary method steps that can be easily offloaded to avoid infringement. However, these precautions may come at a price of weaker validity, since claims with fewer limitations may be more difficult to distinguish from prior art and more susceptible to challenges to patent eligibility.