The En Banc Federal Circuit in Akamai v. Limelight Broadens the Scope of Direct Infringement under Section 271(a)
Recently, the Federal Circuit, for a second time this year, evaluated infringement of a method claim.[1] The Court, vacating the recent panel decision in May, outlined the governing framework for direct infringement of a method claim. It held that direct infringement occurs “where all steps of a claimed method are performed by or attributable to a single entity.”[2] This holding is significant because proving direct infringement of a method claim where steps of the method are performed by more than one party no longer requires the parties to be in principal-agent or contractual relationships, or joint enterprise, as demanded by the vacated panel decision.
In Akamai, it is undisputed that the accused infringer, Limelight, performed some but not all steps of the asserted method claims and that Limelight’s customers conducted the remaining steps. The previous en banc Federal Circuit found that Limelight was liable for induced infringement under Section 271(b) even though no single entity performed all the steps.[3] That court, to get around the single entity requirement for direct infringement, essentially created an inducement liability under Section 271(b) where all the steps may be performed by more than one entity. The Supreme Court reversed because liability under Section 271(b) “must be predicated on direct infringement” and the Federal Circuit decision did not determine whether Limelight committed direct infringement under Section 271(a).[4]
Under Section 271(a), direct infringement occurs where all steps of a method claim are performed by a single entity. On remand, the vacated panel held that when one party exercises sufficient “direction or control” over the actions of another, i.e. when the parties are in a principal-agent relationship, a contractual arrangement, or a joint enterprise, the “single entity” requirement may be met and the direct infringement may be found.[5] The vacated panel concluded that neither providing a written manual explaining how to operate Limelight’s products, nor contracting out content providers would support a finding of sufficient direction or control.[6] Thus, Limelight’s customers cannot be deemed as Limelight’s agents for direct infringement analysis.
The en banc court disagreed.[7] It held that
Section 271(a) is not limited solely to principal-agent relationships, contractual arrangements, and joint enterprise, as the vacated panel decision held. Rather, to determine direct infringement, we consider whether all method steps can be attributed to a single entity.[8]
(emphasis added). A third party’s actions can be attributed to an alleged infringer if the “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.”[9]
Applying the new framework to the facts, the en banc court found that the contract Limelight required its customers to sign “delineates the steps customers must perform” to use Limelight’s service.[10] Thus, substantial evidence supports a finding that “Limelight conditions customers’ use of its [service] upon its customers’ performance of the [steps claimed in the patent.]”[11] Further, Limelight provides step-by-step instructions to its customers that they must follow to receive Limelight’s service and Limelight’s engineers provide technical support to customers.[12] Therefore, “Limelight establishes the manner and timing of its customers’ performance so that customers can only avail themselves of the service upon their performance of the method steps.”[13] Accordingly, “substantial evidence supports the jury’s verdict that all steps of the claimed methods were performed or attributable to Limelight.”[14] Thus, the en banc decision creates a new, expanded standard of direct infringement of a method claim – e.g., where all steps of a claimed method are attributed to a single entity.
[1] This is the second time the en banc Federal Circuit considered this case. On the first round, without reaching the issue of direct infringement, the en banc court found Limelight liable for induced infringement under Section 271(b) even though there was no direct infringer. SeeAkamai Technologies, Inc. v. Limelight Networks, Inc., 692 F.3d 1301, 1306 (Fed. Cir. 2012) rev’d, 134 S. Ct. 2111 (2014), (“Akamai I”). After remanding from the Supreme Court, which directed the lower court to revisit the issue of direct infringement under Section 271(a), the three-judge panel found that Limelight did not directly infringe the asserted claims because it only performed some but not all steps and its customers were not under its “direction or control.” Akamai Technologies, Inc v. Limelight Networks, Inc., 786 F.3d 899, 904 (Fed. Cir. 2015), vacateden bancAkamai Technologies, Inc. v. Limelight Networks, Inc., __ F. 3d. __, 2015 WL 4760450 (Fed. Cir. 2015), (“Akamai II”). That panel found that sufficient direction or control may occur in a principal-agent relationship, a contractual arrangement, or a joint enterprise. Id. at *1. On the second round, the en banc court again found Limelight liable, but for direct infringement under Section 271(a). See infra.
[2]Akamai Technologies, Inc. v. Limelight Networks, Inc., __ F. 3d. __, 2015 WL 4760450, at *1 (Fed. Cir. 2015) (emphasis added) (“Akamai III”).
[3]Akamai I, at 1306.
[4]Limelight Networks, Inc. v. Akamai Technologies, Inc., 134 S. Ct. 2111, 2120 (2014). The high court refused to review the merits of the Federal Circuit’s single entity rule for direct infringement set forth in Muniauction because that issue was not the ground for certiorari. Id.
[5]Akamai II, at 904.
[6]Id. at 914-915.
[7]Akamai III, at 2. The court also overruled all earlier precedent that limited direct infringement to principal-agent relationships, contractual arrangements, and joint enterprise. Id.
[8]Id.
[9]Id. at 1.
[10]Id. at 3.
[11]Id.
[12]Id.
[13]Id.
[14]Id. at 4.