On Wednesday, May 13, 2015, the U.S. Court of Appeals for the Federal Circuit handed down its most recent decision in the ongoing patent infringement dispute between Akamai Technologies, Inc. and Limelight Networks, Inc., confirming that a single actor must perform all steps of a claimed method to be liable for direct infringement.1 Akamai alleged that Limelight infringed a patented method related to a content delivery network comprised of mirrored servers that provide efficient delivery of tagged content. After a jury trial, Limelight was found liable for infringing the method claim.
However, shortly after the jury returned its verdict, the Federal Circuit decided Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008), holding that "direct infringement requires a single party to perform every step of a claimed method." In view of the Muniauction decision, the federal district judge granted Limelight's motion for judgment of non-infringement as a matter of law, because Limelight did not perform all steps of the patented method. Instead, Limelight performed three steps of the method and its customers performed the fourth step of "tagging" specific content for the content delivery network.
This decision set off a series of appeals on both direct and indirect infringement issues that eventually found its way to the U.S. Supreme Court last year.2 On June 2, 2014, the Supreme Court addressed the indirect infringement component, unanimously holding that if no entity can be held liable for direct infringement, there can be no indirect liability for inducement to infringe. However, the Supreme Court remanded the case back to the Federal Circuit, with an invitation to revisit the Muniauctionrule on direct infringement of method claims.
This week, a divided panel of the Federal Circuit upheld the Muniauction rule. Judge Linn wrote for the majority that "direct infringement liability of a method claim under 35 U.S.C. § 271(a) exists when all of the steps of the claim are performed by or attributed to a single entity—as would be the case, for example, in a principal-agent relationship, in a contractual arrangement, or in a joint enterprise." Judge Linn also recognized that, under Muniauction, where a party acts as a "mastermind and exercises sufficient "direction or control" over another party's actions, those actions can be attributed to the mastermind.
Judge Linn supported this conclusion by analyzing the statutory text, stating that 35 U.S.C. § 271 contemplates liability only for direct infringement, contributory infringement and inducement to infringe. Judge Linn concluded that Congress purposefully removed joint-actor patent infringement liability, and it was not the job of the courts to rewrite the statutes. Finding that Limelight did not perform all steps of the method, and finding that "this case involves neither agency nor contract nor joint enterprise," the majority held that Limelight is not liable for direct infringement.
Judge Moore dissented, arguing that the majority's rule creates a "gaping hole in what for centuries has been recognized as a form of infringement." Judge Moore wrote that Congress intended to and did codify direct infringement liability for joint infringers by using the plural word "whoever" in the direct infringement statute. Judge Moore also argued that the majority's decision created a loophole where a party may avoid all liability by performing some steps of the method itself and then inducing another party to perform the remaining steps of the method. In contrast, the same party would be liable for indirect infringement if it induced another party to perform all steps of the method.
The Federal Circuit declined en banc review when the case first was remanded from the Supreme Court, although it may entertain rehearing en banc now that the panel has rendered its decision. For now, the message to practitioners, patent owners and accused infringers is clear—there is a hole in patent infringement law for joint infringement of method claims. This hole may help you in certain circumstances and hurt you in others, but you must be aware of it at all times so that you do not fall into it. When drafting a method claim, make sure that it is not written in such a way that the method can be performed only by multiple parties. When asserting infringement of a method claim, be sure to analyze joint and divided infringement issues to avoid bringing a weak claim that may give rise to attorneys' fees under the "exceptional case" standard.3 And when defending an allegation of method claim infringement, make sure to analyze as a part of your defense whether any single actor performs all steps of the claimed method.