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IP Alert
IP Alert: Supreme Court Holds Inducement of Infringement Requires a Direct Infringer

June 3, 2014

On June 2, 2014, the U.S. Supreme Court issued a unanimous opinion in Limelight Networks, Inc. v. Akamai Technologies, reversing the Court of Appeals for the Federal Circuit’s divided en banc decision in Akamai Technologies v. Limelight Networks, Inc. regarding “multiple actor” infringement. The case is significant not only for parties actively engaged in patent litigation, but also for clients prosecuting patents and reviewing third-party patents.

The Federal Circuit had held that to prove inducement of infringement of a claimed method, it is not always necessary to show that a single actor performed all of the claimed method steps. Instead, an accused infringer would be liable for inducement of infringement by inducing one or more actors to collectively perform the steps of a patented method. 

In the underlying litigation, defendant Limelight was accused of performing all but one of the steps of Akamai’s claimed method of delivering web content. The missing step required “tagging” or designating components, e.g., video or music files, to be stored on Limelight’s servers. This step was performed by Limelight’s customers, pursuant to Limelight’s instructions. Following an earlier Federal Circuit case on joint infringement, Muniauction, Inc. v. Thomson Corp., the district court held that Limelight could not be liable for direct infringement because Limelight did not perform all of the claimed method steps, nor did it control or direct its customers’ performance of the tagging step. 

A Federal Circuit panel affirmed initially, but the Federal Circuit subsequently granted en banc review and reversed on August 31, 2012. See our IP alert here for discussion of the en banc opinion. The Supreme Court then granted a writ of certiorari.

Justice Alito, writing for a unanimous court, reasoned there was no inducement of infringement because there was no direct infringement, that “the performance of all the patent’s steps is not attributable to any one person.” The Court found that the Federal Circuit’s holding in Akamai was erroneous because inducement of infringement under §271(b) could occur without direct infringement under §271(a). The Court reasoned that the Federal Circuit’s rule “would deprive §271(b) of ascertainable standards,” would require development of “two parallel bodies of infringement law,” and was contrary to apparent Congressional intent. 

Additionally, the Court found Akamai’s arguments analogizing tort law, criminal law, and pre-1952 Patent Act case law in support of the Federal Circuit’s holding in Akamai to be unpersuasive. In casting aside these arguments, the Court repeatedly relied on the Muniauction rule that direct infringement under §271(a) requires performance of all steps be attributable to a single controlling party. Notably, though, the Court expressly declined to weigh in on the propriety of the Muniauction rule, stating that the question was not squarely before them, and invited the Federal Circuit to revisit the Muniauction rule on remand “if it so chooses.” 

The Limelight decision has far-reaching consequences in that it controls cases that raise issues of induced infringement, but also serves as guidance for clients who prosecute patent applications. The decision is also of relevance to Fitch Even’s clients who are engaged in patent clearance work.

For questions about the Limelight case, please contact Fitch Even attorney Paul B. Henkelmann, the author of this alert. 

 

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