On August 13, 2015, the Court of Appeals for the Federal Circuit, sitting en banc, made new law on multi-actor infringement in Akamai Technologies, Inc. v. Limelight Networks, Inc., expanding liability under 35 U.S.C. § 271(a). The opinion is available here.
The Court's ruling reinstates a 2008 jury verdict finding Limelight liable for infringement, awarding Akamai over $45 million in damages. The verdict, which was overturned in a post-trial ruling, has been subject to years of appellate proceedings. In June 2014, the Supreme Court held that Limelight could not be liable for indirect infringement under 35 U.S.C. § 271(b) because there was no finding of direct infringement. Where the accused party performed some of the steps of the method patent, with the remaining steps performed by another party, inducement is not a viable legal theory. The Supreme Court declined to review the scope of direct infringement in multi-actor scenarios, remanding the case and noting that "the Federal Circuit will have the opportunity to revisit the Section 271(a) question if it so chooses."
On remand, a divided Federal Circuit panel held that Limelight did not directly infringe under § 271(a). The panel majority found that Limelight did not perform all the steps of the claimed method, and the practice of all of the steps could not be attributed to Limelight because there existed no agency or contractual relationship, nor a joint enterprise, between Limelight and its customers.
Akamai petitioned for rehearing of the decision by all of the Court's judges. The Court granted rehearing and vacated the panel decision.
In its opinion, the Federal Circuit expanded the scope of direct infringement under § 271(a) in situations where all the steps of a claimed method are not being performed by a single party. The Court found that in multi-party scenarios, direct infringement "is not limited solely to principal-agent relationships, contractual arrangements, and joint enterprise, as the vacated panel decision held." The Court set forth additional acts that may confer liability:
We conclude, on the facts of this case, that liability under § 271(a) can also be found when an alleged infringer conditions 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. Cf. MetroGoldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005) (stating that an actor "infringes vicariously by profiting from direct infringement" if that actor has the right and ability to stop or limit the infringement). In those instances, the third party's actions are attributed to the alleged infringer such that the alleged infringer becomes the single actor chargeable with direct infringement. Whether a single actor directed or controlled the acts of one or more third parties is a question of fact, reviewable on appeal for substantial evidence, when tried to a jury.
Applying this standard to the facts of the case, the Court held that Limelight directed or controlled the method steps performed by its customers, such that all steps of the method claim were attributable to Limelight, rendering it liable for direct infringement. This holding vacated all earlier precedent that limited § 271(a) to principal-agent relationships, contractual arrangements, and joint enterprise, expanding direct infringement liability in multi-actor scenarios.