The U.S. Court of Appeals for the Federal Circuit has now determined that that joint patent infringement only occurs when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps. Akamai Technologies, Inc. v. Limelight Networks, Inc., Case No. 09-1372 (Fed. Cir., Dec. 20, 2010) (Linn, J.).

The issue presented was whether accused infringer Limelight exercised control and direction over an entire patented process. In this case a panel of the Federal Circuit found that the actions of Limelight’s customers, who performed part of the patented process, were not attributable to Limelight. The Court found no evidence to indicate that the customers were performing any of the claimed method steps of the asserted patent as agents of Limelight.

The asserted patents deal with Content Delivery Network (CDN) technology that enables providers like Akamai and Limelight to host their customer’s internet content closer to the customer’s end users, resulting in faster and more reliable web-content delivery. The patents disclose a “tagging” process in which the CDN’s virtual server hostname is used to cause requests for content to be delivered from the CDN’s servers, not the customer’s server. This “tagging” process was explicitly described in Limelight’s standard customer contract.

At the trial, the Court instructed the jury that there could only be infringement if the jury found that the tagging step was performed by customers at the direction or control of Limelight. After the jury found infringement, the Federal Circuit issued its decision in Muniauction (see IP Update, Vol. 11, No. 7); the trial court granted Limelight’s motion for JMOL, finding that the jury’s verdict could not stand as a matter of law. Akamai appealed.

Despite the provisions in the customer contract, the Federal Circuit reasoned that Limelight’s customers are not obligated to perform any “tagging.” Rather, the customer needs to perform the method steps only if it decides to take advantage of Limelight’s service. Because the customers are not obligated to engage in “tagging,” the Court reasoned Limelight exerted no control over its customers, and thus its customers were not acting as its agents. Furthermore, the Court reasoned that Limelight’s customers were not contractually obligated to do “tagging” and were acting “principally for their own benefit and under their own control.”

Practice Note: It is well-settled under BMC (see IP Update, Vol. 10, No. 10) that direct patent infringement requires a single party to perform every step of a claimed method. Under BMC, if more than one party is required to perform the steps of a claimed method (joint infringement), there can be no infringement unless one party exercises “control or direction” over the entire process. The Akamai opinion interprets these foundational statements of law by applying the law of agency, namely, whether the relationship between the parties is such that acts of one may be attributed to the other. Agency is the fiduciary relationship that arises when one person (a principal) manifests assent to another person (an agent) that the agent shall act on the principal’s behalf and subject to the principal’s control and the agent assents to act.