In Limelight Networks, Inc. v. Akamai Technologies, Inc., Appeal No. 12-786, the Supreme Court reversed and remanded the Federal Circuit’s decision finding induced infringement under 35 U.S.C. § 271(b).
Akamai is the exclusive licensee of a patent claiming a method of designating content components to be stored on distributed web servers. Limelight performs some of the claimed method steps, but its customers perform the “tagging” step. The jury found Limelight liable for infringement, but the district court granted judgment as a matter of law that there is no direct infringement. Subsequently, a Federal Circuit panel affirmed, holding that,absent an agency relationship or a contractual obligation with its customers, Limelight is not liable when its customers perform one of the steps. After en banc review, however, the Federal Circuit reversed the panel’s decision, holding a defendant who performed some steps and encouraged others to perform the rest could be liable for inducement even if no one was liable for direct infringement.
The Supreme Court reversed and stated that “liability for inducement must be predicated on direct infringement.” The Court explained the Federal Circuit’s analysis “fundamentally misunderstands what it means to infringe a method patent” and would deprive § 271(b) of ascertainable standards. In addition, the Court concluded § 271(f)(1) reinforces the Court’s interpretation of § 271(b) because Congress acted in § 271(f)(1) to impose liability for an activity that does not constitute direct infringement. Relying on this example, the Court stated it “should not create liability . . . where Congress has elected not to extend that concept” for § 271(b).
The Court also rejected Akamai’s arguments based on tort law for imposing liability on a defendant who harms another through a third party. The Court emphasized “no direct infringement was committed” and there is no tort case supporting imposing liability when a plaintiff’s legal rights are not violated. Similarly, the Court rejected Akamai’s analogy of § 271(b) to the aiding and abetting statute, 18 U.S.C. § 2, because the Court does not believe Congress had the aiding and abetting doctrine in mind when it enacted the Patent Act of 1952. The Court acknowledged the concern that a would-be infringer may evade liability by dividing performance of a method patent’s steps, but it concluded this concern does not justify fundamentally altering the rules of inducement liability.