Direct Infringement Expands: Limelight’s and Customers’ Split Performance of Method Infringes Akamai’s Patent

On August 13, 2015, nine judges of the Federal Circuit sitting en banc (with Judges Taranto, Chen, and Stoll not participating) unanimously held that Limelight directly infringed Akamai’s patent under 35 U.S.C. § 271(a), reversing prior findings of non-infringement by the district court and the Federal Circuit panel. Akamai Technologies v. Limelight Networks, No. 09-1372 (Fed. Cir. Aug 13, 2015). Revisiting the § 271(a) issue, following remand by the Supreme Court, the Federal Circuit found that the scope of the statute had been defined too narrowly, and set forth a more expansive view on the law of direct infringement.

The Federal Circuit clarified that, even where more than one actor is involved in practicing all steps of the claimed invention, direct infringement can still be found if “the acts of one are attributable to the other such that a single entity is responsible for the infringement.” Such direct, but divided, infringement of claimed methods can be found when (1) one entity directs or controls another’s performance, or when (2) the entities form a joint enterprise. Both the direction-or-control test and the joint-enterprise test are questions of fact reviewable for substantial evidence on appeal, noted the Federal Circuit.

Direction-or-Control Test

Regarding the direction-or-control test, the Federal Circuit relied on general tort principles of vicarious liability.  But, in addition to the previously established principal-agent relationships and contractual arrangements that satisfy this test, the Court found an additional ground for direct infringement: where 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,” the third party’s performance becomes attributable to the alleged infringer. This effectively makes the infringer the single entity chargeable with direct infringement.

Joint-Enterprise Test

Alternatively, each entity may be held liable for steps performed by others within a joint enterprise, which requires proof of four elements: “(a) an agreement, express or implied, among the members of the group; (b) a common purpose to be carried out by the group; (c) a community of pecuniary interest in that purpose, among the members; and (d) an equal right to a voice in the direction of the enterprise, which gives an equal right of control.”

Limelight’s Infringement

Akamai’s patent, which it accused Limelight of infringing, claims methods for delivering content over the Internet. Applying the direction-or-control test, the Federal Circuit concluded that the jury heard substantial evidence at trial to find that Limelight directed or controlled its customers’ performance of two method steps of “tagging” and “servicing,” while performing the remaining steps itself. Under a standard contract that Limelight customers were required to sign, the customers’ use of Limelight’s content delivery network was conditioned upon their performance of the tagging and servicing method steps.

Substantial evidence further showed that Limelight established the manner or timing of its customers’ performance because Limelight made its service available to only the customers who performed the precise steps detailed in Limelight’s welcome letter and other instructions. The Federal Circuit therefore concluded that substantial evidence supported the jury’s verdict that all steps of the claimed methods were performed by or attributable to Limelight, and as a result, the Federal Circuit held that Limelight was liable for direct infringement and reinstated the jury’s verdict.  The case now returns to the panel for resolution of certain “residual” issues.