On Friday, the Supreme Court announced that it granted certiorari and will hear Limelight Networks, Inc.’s appeal from the Federal Circuit’s fractured en banc decision in Akamai Technologies, Inc. v. Limelight Networks, Inc. (U.S. Supreme Court Case No. 12-786, Federal Circuit Case No. 2009-1372)
Akamai sued Limelight, alleging that it directly infringed and induced others to infringe its patented method for more efficiently delivering content on the internet by placing content elements on replicated servers and modifying a web page to retrieve certain information from those replicated servers, as opposed to the original servers. Limelight maintained a network of servers that replicated content providers’ web pages, but Limelight did not modify the web pages. Instead, it provided instructions for the content providers to do so themselves.
So, the key issue in the Limelight case involves whether a defendant may be held liable for patent infringement if it performed only some of the steps of a claimed method in a patent, another independent party (or parties) performed the remaining steps, and no single individual performed all of the steps. These joint infringement issues have created enforcement issues for patentees in the past, especially where the claims of the patent are written in such a way that more than one party will likely perform the steps in the claim.
It is important to note that the case did not involve the situation where a defendant contracts with or controls the actions of the other individual. The Federal Circuit has long recognized (and continues to recognize) that in those circumstances, the actions of the controlled party are imputed to the controlling party, and the controlling party is liable for direct infringement. Instead, the question presented in Limelight is whether there can be infringement when two independent parties together perform all of the steps in a method claim.
Under prior Federal Circuit precedent, there could not be infringement of a method claim unless a single entity performed all of steps in the claim, either directly or through its control of all the parties performing the steps. This sometimes led to situations where a patentee was left with no recourse when multiple, independent parties performed the steps of the claim. This was the circumstance in Limelight, and the district court entered JMOL in favor of Limelight because no single entity performed all of the steps in the claim.
In a 6-4-1 en banc decision, the Federal Circuit radically disagreed as to what the law should be in these circumstances. The majority (in a per curiam decision), chose to recast the question from one of whether there can be direct infringement when multiple, independent parties perform the steps in the claim to whether there can be liability for induced infringement in these circumstances. First, the majority found that infringement occurs whenever all of the steps are performed, even if there is no direct infringement because no single entity performed all the steps. It then concluded that if one party (the inducer) causes, urges, encourages, or aids another such that this infringement occurs, that party could be liable for inducing infringement. The majority did note that induced infringement is not a strict liability offense, like direct infringement is. Instead, to be liable, a patentee must show that the inducer knew of the patent, that it induced another to perform some (or all) of the steps, and that all of the steps were ultimately performed by either itself or the induced party.
Judge Linn, in a dissent joined by three other judges, strongly disagreed with the majority’s analysis and its decision to recast the question originally presented to the en banc panel. It believed that the prior Supreme Court and Federal Circuit case law correctly required that a single party perform all of the steps in a method claim for there to be infringement and that the majority’s decision was improper policy making. In particular, the dissent noted that this approach has been the law for a long time and that Congress has had numerous opportunities to fix any “mistakes” by the courts, but has chosen not to. In particular, the dissent noted that Congress expanded what constitutes patent infringement on other occasions to address ANDA applications and extra-territorial infringement, without changing the law of joint infringement.
Finally, Judge Newman, writing only for herself, took an entirely different approach and advocated abolishing the single-entity rule entirely. She would hold that all parties involved in performing any of the steps in a method claim could be liable as direct infringers.
Having lost at the Federal Circuit, Limelight petitioned for a writ a certiorari, which the Supreme Court granted. The Supreme Court invited the US Solicitor General to file an amicus brief before deciding whether to grant the writ. The Solicit General sided with Limelight, urging that the Supreme Court reverse the Federal Circuit and affirm the prior approach, as advocated in Judge Linn’s dissent.
Joint infringement can be a difficult problem for patentees, especially when they have written their claims in a way that requires or allows multiple parties to perform the steps in a method claim. The Federal Circuit’s complete change in direction has the potential to create greatly expanded liability for defendants, so the Supreme Court’s decision potentially will have broad implications for both patentees and defendants.