In a recent decision likely to significantly impact patent holders reliant on method-type claims, the U.S. Supreme Court unanimously ruled in Limelight Networks, Inc. v. Akamai Technologies, Inc. that induced infringement requires a single entity to perform all claimed steps. The Court’s decision reverses the Federal Circuit’s en banc holding that attempted to expand induced infringement liability to situations where no direct infringement occurred.
The Issues in Limelight
Akamai is the exclusive licensee of U.S. Patent No. 6,108,703 ('703 Patent), which covers Akamai’s content delivery network (CDN). Akamai’s CDN consists of a “cloud” of servers to store and distribute content over the Internet. The claims of the '703 Patent include the step of “tagging” customer files for distribution through the CDN. Limelight provides a similar CDN service, but requires customers to perform the tagging step themselves. Although Limelight provides instructions and technical assistance on the tagging process, Limelight does not exercise control or direction over its customers’ actions.
Since the steps of the patented method are performed by two different, independent entities, both the Supreme Court and Federal Circuit agreed that neither Limelight nor its customers directly infringed the '703 Patent. 572 U.S. ___, slip op. at 6 (2014). Nevertheless, the Federal Circuit held that even in the absence of direct infringement, liability for induced infringement could be imposed, “when a defendant carries out some steps…and encourages others to carry out the remaining steps—even if no one would be liable as a direct infringer.” Id. at 4 (citing Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301, 1319 (Fed. Cir. 2012)).
The Court’s Ruling: Direct Infringement Is Required
The Supreme Court rejected the Federal Circuit’s en banc expansion of inducement liability, noting that it would “require the courts to develop two parallel bodies of infringement law: one for liability for direct infringement, and one for liability for inducement.” Id. at 6. In rejecting the Federal Circuit’s alternative basis for inducement, the Limelight decision reaffirms that “inducement liability may arise ‘if, but only if, [there is]…direct infringement,’” and that direct infringement does not occur “unless all the steps are carried out.” Id. at 5 (alterations in original) (quoting Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 341 (1961)).
The Limelight decision raises the bar for patent owners seeking to establish liability for induced infringement. The Court reaffirmed that induced infringement requires a showing that direct infringement has occurred. Perhaps more importantly, however, Limelight underscores the need for patent applicants to carefully craft their claims in order to ensure infringement by a single entity.