En Banc Federal Circuit Clarifies Divided Infringement Rules

Last week, the Court of Appeals for the Federal Circuit vacated the May 13, 2015 panel opinion in Akamai Technologies, Inc. et al. v. Limelight Networks, Inc. (Fed. Cir., Slip Opinion Case No. 2019-1372, -1380, -1416, -1417) and issued a new en banc opinion.  A copy of the en banc opinion can be found here. We discussed the panel decision in a May 26, 2015 blog post which can be found here.

The en banc Court further clarified the rules for divided infringement and, in contrast to the panel, affirmed the jury’s verdict that Limelight directly infringed Akamai’s U.S. Patent No. 6,108,703.

The patent-in-suit in Akamai concerns methods for providing “content delivery networks” (“CDNs”), which provide a faster and more efficient way of delivering content such as web pages at global locations across the Internet. The accused infringer (Limelight) performed all of the steps of the claimed method, except for “tagging” and “serving” steps in the asserted method claims.  The “tagging” and “serving” steps were carried out by Limelight’s customers.

In both the panel decision and the en banc decision, the Court held that a method claim could be directly infringed by the collective activities of multiple actors if (a) the actors have a principal-agent relationship to one another, (b) one actor contracts with the other to perform one or more steps of the claimed method, or (c) if the actors form a joint enterprise.

However, the en banc decision went a step further, holding that direct infringement by multiple actors may also be found when one actor 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 and timing of that performance.  Slip Op. at 5.  

We conclude, on the facts of this case, that liability under § 271(a) can also be found when 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.

Id. Applying this standard, the en banc Court held that the jury correctly found that Limelight was liable for directly infringing Akamai’s claims because in Limelight’s customer agreements, the customer could only avail itself of Limelight’s content delivery network by performing the “tagging” and “serving” steps. In addition, Limelight’s account managers led the customers’ implementation of Limelight’s services, and Limelight’s engineers assisted customers with installation and quality assurance testing.  Id. at 9.

The en banc decision was unanimous. The panel decision was not because Judge Moore dissented. The panel majority (Judges Linn and Prost) concluded that Limelight’s standard customer contracts did not constitute one actor contracting with another to perform steps of the claimed method. May 13, 2015 Slip Op. at 7.  The panel majority held that contracting parties are liable for directly infringing a method claim when the “contract mandates the performance of all steps of a claimed method.”  May 13, 2015 Slip Op. at 19. The panel held that was not the case:

The form contract does not obligate Limelight’s customers to perform any of the method steps. It merely explains that customers will have to perform the steps if they decide to take advantage of Limelight’s service. Because the customers were acting for their own benefit, Limelight is not vicariously liable for the customers’ actions.

May 13, 2015 Slip Op. at 27-28.  This is the key limitation on multi-actor direct infringement liability with which the en banc Court disagreed.  The en banc Court did not hold that Limelight “contract[ed] with another to perform one or more steps of the claimed method.”  Slip Op. at 5.  However, the en banc Court held that Limelight could be liable for direct infringement because Limelight’s standard contract conditioned the customers’ ability to “take advantage of Limelight’s service” on the customer’s performance of certain steps of Akamai’s claimed methods.  Thus, unlike the panel majority, the en banc Court held that direct infringement liability may be found where “customers will have to perform the [claimed] steps if they decide to take advantage of [the accused infringer’s] service.”

This decision is likely a victory for many patent holders whose patents involve computer network implemented inventions because in some cases, novel and non-obvious claims to such inventions can only be drafted by implicating multiple actors. To the extent possible, it remains advisable to draft patent claims to require only one actor. However, where that is not possible, the en banc decision in Akamai may provide increased patent protection for patent holders, as it did for Akamai itself.