Akamai v. Limelight: Defendant may directly infringe where steps performed by a third party

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Federal Circuit Review – Issue No. 64-01
Akamai v. Limelight: Defendant May Directly Infringe a Method Claim Where Steps are Performed By A Third Party In The Absence of A Principal-Agent or Joint Venture Relationship

Akamai Tech., Inc. v. Limelight Networks, Inc., No. 2009-1372, -1380, -1416, -1417, 2015 U.S. App. LEXIS 14175 (Fed. Cir. Aug. 13, 2015) ) (En banc, Before Prost, C.J.; Newman, Lourie, Linn, Dyk, Moore, O’Malley, Reyna, Wallach, and Hughes, J.) (Per Curiam).  Click Here for a copy of the opinion.

Akamai Technologies sued Limelight for infringement of a patent related to content distribution on the internet. Limelight performed each step of the asserted method claim, except for a “tagging” step that was performed by Limelight’s customers. A jury found Limelight liable for infringement. In a previous appeal, the Supreme Court held that Limelight could not be held liable for inducing infringement under §271(b) unless someone, induced by Limelight, had directly infringed the method claim.  However, the Supreme Court did not decide whether either Limelight or their customers directly infringed Akamai’s patent, and remanded the case to the Federal Circuit on that issue. A panel of the Federal Circuit held that neither Limelight, nor its customers, had directly infringed the Akamai patented method. The Federal Circuit took the case en banc to review the panel decision.

In the previous appeal, the Court held that a method claim is only directly infringed when all method steps are performed by a single entity. This “single entity” can include more than one party only where there is a principal-agent relationship, a contractual arrangement, or a joint enterprise. That is, one entity must act as a “mastermind,” with sufficient control over others, as by an agency relationship, such that their acts are attributable to the mastermind. The previous panel held that the link between Limelight and its customers, without an agency relationship, did not make Limelight a culpable “mastermind” and was not sufficient to find that either party performed all the steps of the method claim. Thus, neither party directly infringed the patent.

The en banc Court reversed the previous panel, and expanded the circumstances under which an alleged infringer may be liable under §271(a). In addition to circumstances identified by the panel, liability may arise if “an alleged infringer conditions participation in an activity or the receipt of a benefit upon performance of a step or steps of the patented method, and establishes the manner or timing of that performance.” When that standard is satisfied, the actions of a third party may be attributed to the alleged infringer, who thereby directly infringes under §271(a), even though there was no “mastermind” acting though a formal agent.

The Court reinstated the jury verdict, holding that the jury heard substantial evidence from which it could conclude that Limelight directed or controlled its customer’s performance of the method steps it did not itself perform. Specifically, Limelight’s contract with its customers conditioned used of Limelight’s content delivery network on the customer’s “tagging” certain content on the customer’s websites. Further, upon signing of the contract, a “Technical Account Manager” from Limelight would lead the implementation of Limelight’s services on the customer’s websites, including overseeing the “tagging” process.  Based on those facts, a jury could conclude that Limelight had conditioned the receipt of their services upon performance of the “tagging” steps of the patented method, and had established both the manner and timing of that performance. Thus, Limelight is liable for direct infringement under §271(a).

Judges Taranto, Chen, and Stoll did not participate in the decision.