Yesterday, in Akamai Technologies, Inc. v. Limelight Networks, Inc., the U.S. Court of Appeals for the Federal Circuit handed down a unanimous en banc decision that substantially expands liability for direct patent infringement of method claims.1 As we have discussed in previous Alerts,2 the Akamai case has an extensive history, including a trip to the U.S. Supreme Court last year. Following the Supreme Court's suggestion of "the possibility that the Federal Circuit erred by too narrowly circumscribing" the scope of direct infringement of method claims, the Federal Circuit retreated from previous rulings that all steps of a method must be performed by a single actor. It then expanded direct infringement to include situations where one actor's conduct "can be attributed" to another entity.
For several years, the Federal Circuit has held that multiple actors can come together to infringe a method claim only if (1) an entity directs or controls another's performance of steps in a method claim; or (2) the multiple entities are engaged in a joint enterprise. In yesterday's Akamai decision, the Federal Circuit stated that these two theories should not be limited to principal-agent relationships and contractual arrangements in which another performs acts as an entity's agent or under a contract. Instead, the Federal Circuit stated that district courts should broadly examine objective evidence "which warrant attributing others' performance of method steps to a single actor." Borrowing from inducement principles in copyright law,3 the Federal Circuit held that the "direction or control" prong of multiple-actor method claim infringement can include "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."
In examining the facts of this case under its new, broader analysis, the Federal Circuit upheld the district court's finding of direct infringement. Here, the patent involved method claims for delivering web content over the internet; however, the customer first had to "tag" or identify its own content to be delivered and use its own server to "serve" the content in a specific sequence. Thus, the asserted method claim necessarily required actions by at least two parties. The Federal Circuit found direct infringement liability by noting that the infringer "conditioned[ed] its customers' use of its content delivery network upon its customers' performance of the tagging and serving steps, and that [the infringer] establishes the manner or timing of its customers' performance." In doing so, the court examined evidence from the standard contract executed by the infringer's customers, the infringing company's distribution of materials, as well as its installation guidelines.
In finding direct infringement, the Federal Circuit also found that the infringer "provide[d] step-by-step instructions to its customers telling them how to integrate … its webpages." Thus, in examining the circumstances of direct infringement objectively, the Federal Circuit appears to inject aspects of indirect infringement under a direct infringement theory of liability. As our own Terry Clark mentioned in last night's Law360 article,4 rather than relying on evidence of intent or whether there were substantial noninfringing uses under traditional indirect infringement theories of inducement and contributory infringement, litigants now can focus on objective proof in asserting direct infringement claims under joint infringement theories.
Unfortunately, the Federal Circuit's opinion does not offer a bright line for litigants in determining whether method steps performed by multiple parties can be attributable to a single entity. Not only is the line now blurred between direct infringement and indirect infringement of method claims, it is also more difficult to predict whether a court will find direct infringement by multiple actors. Moreover, the Federal Circuit acknowledged that the law is evolving and allowed for "other factual scenarios [that] may arise which warrant attributing the others' performance of method steps to a single actor," further injecting uncertainty in an analysis of joint infringement.
The upshot of yesterday's ruling is that litigants will once again look to assert method claims in infringement actions involving multiple parties. Patentees in recent history have shied away from alleging such infringements involving several actors due to the tight strictures of joint infringement in then-governing Federal Circuit caselaw. This has limited the infringement theories in cases involving e-commerce, business methods, and transmission of digital information, which typically involve multiple actors and processes. But yesterday's Federal Circuit ruling will now provide additional infringement ammunition for those litigants and create uncertainty for those defending against such claims.
Our Intellectual Property & Technology attorneys have substantial experience in drafting method claims, enforcing method claims through litigation and licensing, and defending allegations of infringement of method claims. Should you have any questions about the content of this Alert, please contact one of the authors listed above or any member of our Intellectual Property & Technology team.
1Akamai Techs., Inc. v. Limelight Networks, Inc., -- F.3d --, 2015 WL 4760450 (Fed. Cir. Aug. 13, 2015), available here.
2See Mind the (Statutory) Gap: Federal Circuit Confirms No Liability for Joint Infringement of Method Claims, available here (May 15, 2015); U.S. Supreme Court Tightens Fundamental Patent Law, available here (June 5, 2014); Federal Circuit Changes Standard for Proving Inducement of Patent Infringement, available here (Sept. 5, 2012).
3 Those copyright-based inducement theories were, in turn, based on the inducement statute in patent law. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005). In other words, the U.S. Supreme Court in Grokster borrowed indirect infringement theories from patent law to create a new indirect infringement theory in copyright law. Yesterday's Akamai decision now takes that indirect infringement theory in copyright law and imports it back into a direct infringement theory in patent law.
4Law360, Limelight Case Widens Scope of Direct Infringement (Aug. 13, 2015), available here.