Unanimous, en banc Federal Circuit extends law on "divided infringement" of method claims under 35 U.S.C. § 271(a), and vacates its earlier, May 13 decision.
In a unanimous, en banc decision (of the 10 participating judges), the Federal Circuit expanded the circumstances in which an accused infringer may be liable for direct infringement under 35 U.S.C. § 271(a), if a third party performs one of more steps of a claimed method. The 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. Going beyond its vacated panel decision and BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), the court stated that direction or control may 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," even if there is no principal-agent or contractual relationship.
In applying this interpretation of § 271(a), the court noted that in Limelight’s operation of the accused "content delivery network," Limelight’s customers performed the claimed "tagging" and "serving" steps, and that Limelight conditioned its customers’ use of the network upon the customer performing such steps. Under these circumstances, Akamai had presented substantial evidence that Limelight directed or controlled its customers’ use of the network, and the court therefore vacated the district court’s grant of judgment as a matter of law, and reinstated the jury verdict of infringement.
The Federal Circuit had issued an earlier en banc decision in this case, addressing inducement of infringement, Akamai Technologies, Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012) (en banc), and that decision was reversed by the Supreme Court, 134 S. Ct. 2111 (2014), on the basis that the court had incorrectly determined that a party may be liable for inducement of infringement even if no single entity is liable for direct infringement. The Supreme Court suggested that, on remand the Federal Circuit could “revisit” the issue of divided infringement under § 271(a), and the en banc court therefore followed the Court’s suggestion.
This decision expands the circumstances under which a defendant may be liable for infringement of a method claim, and should be carefully considered by both patentees and those who may be accused of infringing a method claim. The decision also highlights the importance of considering the identity and activities of potential infringers when drafting and prosecuting method claims before the U.S. Patent and Trademark Office.