On May 13, 2015, a divided Federal Circuit held that Limelight did not infringe Akamai's asserted method claim because Limelight did not perform all steps of the asserted method claims, and because there was no foundation on which to impose liability on the basis of Limelight's customers who carried out the additional steps of the method. In its ruling, the Federal Circuit rejected Akamai's invitation to extend the scope of direct infringement under 35 U.S.C. §271(a) to include "joint-tortfeasor" liability where parties collectively practice all steps of a claimed method.

Background of the Case

Akamai filed suit in 2006, accusing Limelight of inducing infringement of a claimed method of delivering electronic data using a content delivery network. Limelight carried out several of the steps of the claimed method, but its customers—and not Limelight—carried out the step of the method known as "tagging."

The district court concluded that there was no induced infringement because liability for inducement must be predicated on direct infringement, which was lacking under the facts. Relying on the Federal Circuit's Muniauction opinion, the district court held that there was no underlying direct infringement because all steps of the method were not performed by or attributable to a single entity. On appeal, the en banc Federal Circuit reversed, holding that a party who performed some steps of a method and encouraged others to perform the remaining steps could be liable for induced infringement, regardless of whether no single entity was liable as a direct infringer in such circumstances.

The Supreme Court reversed, holding that Limelight could not be liable for induced infringement when no entity has directly infringed the method claim.¹ The Court, however, left open the question of whether the Federal Circuit's Muniauction decision precluded Limelight's liability for the underlying direct infringement, if any.

Federal Circuit's Analysis of Direct Infringement

In Akamai Technologies, Inc. v. Limelight Networks, Inc., the Federal Circuit held that "direct infringement of a method claim under 35 U.S.C. §271(a) exists when all of the steps of the claim are performed by or attributed to a single entity—as would be the case, for example, in a principal-agent relationship, in a contractual arrangement, or in a joint enterprise."² Because Limelight did not perform all steps of the claimed method, and because the facts of the case involved neither agency, nor contract, nor joint enterprise, the Federal Circuit held that Limelight could not be liable for direct infringement.

This holding reaffirms the Federal Circuit's previous jurisprudence, which noted that for method claims, direct infringement only occurs when a single party or a joint enterprise performs all of the steps of the process. The Federal Circuit noted that finding otherwise would conflate the principles of §§ 271(b) and (c), in which Congress expressly defined the only ways in which individuals not completing an infringing act under §271(a) could nevertheless be liable for infringement.

Akamai, citing joint-tortfeasor principles, nevertheless argued that an accused infringer may directly infringe where it "directs or controls" a third party if the accused infringer goes beyond loosely providing instructions and specifically tells a third party the step or steps to perform. The Federal Circuit rejected this assertion, noting that the court's "divided infringement" case law is based on vicarious liability and not joint-tortfeasor principles.

In looking to the scope of vicarious liability for direct infringement of a method claim, the Federal Circuit noted that §271(a), as codified by Congress, is rooted in traditional principles of vicarious liability. In explaining these principles, the Federal Circuit identified a number of exemplary relationships that could establish direct infringement under a vicarious liability test: (1) in a principal-agent relationship, the actions of an agent are attributed to the principal; (2) when a contract mandates the performance of all steps of a claimed method,³ each party to the contract is responsible for the method steps for which it bargained; and (3) in a joint enterprise, the acts of each participant are, by definition, imputed to every member. The Federal Circuit's BMC opinion previously confirmed that "where the actions of one party can be legally imputed to another, such that a single entity can be said to have performed each and every element of the claim, that single entity is liable as a direct infringer."⁴

Further, the Federal Circuit noted that any concerns of a party avoiding infringement by arms-length cooperation with a third party can usually be avoided by proper claim drafting—i.e., in structuring a claim to capture infringement by a single party. Under the wording of Akamai's method claim, however, the Federal Circuit noted that direct infringement required the actions of both a defendant and its customers.

Relying on its previous Muniauction and BMC opinions, the Federal Circuit found there was nothing in the record to indicate that Limelight's customers performed the claimed "tagging" step as agents for Limelight, or in any other way vicariously on behalf of Limelight. Rather, the Federal Circuit noted that the facts indicated that Limelight's customers direct and control their own use of the content delivery network. Accordingly, Limelight's actions did not constitute direct infringement under 35 U.S.C. §271(a).

Practical Effects

The Federal Circuit's Akamai v. Limelight holding extends the court's previous jurisprudence on the issue of divided infringement, namely that a defendant is not liable where it performs several steps of a patented method and instructs another party to perform the remaining steps. The Federal Circuit, however, was careful to enumerate several types of relationships in which a party could be vicariously liable for the method steps performed by another party.

Further, the Federal Circuit cautioned that the drafting of the particular method claim left Akamai in the position of having to show that the allegedly infringing activities of Limelight's customers were attributable to Limelight. Such drafting may require that activities of both a defendant and its customers are necessary to satisfy the claim, and accordingly, could prevent a finding of direct infringement without the added step of proving vicarious liability. Careful claim drafting, in contrast, could have required only a single entity's actions for a finding of direct infringement, particularly where all steps of a method claim were otherwise present.

¹ Limelight Networks, Inc. v. Akamai Techs., Inc., 134 S. Ct. 2111, 2118 (2014).

² Akamai Techs., Inc. v. Limelight Networks, Inc., Nos. 2009-1372, 2009-1380, 2009-1416, 2009-1417 (Fed. Cir. May 13, 2015).

³ The Federal Circuit noted that this type of arrangement will typically not be present in an arms-length seller-customer relationship.

⁴ See Akamai, No. 2009-1372, slip op. at 16 (citing BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007)).