By Jason Rantanen
Akamai Technologies, Inc. v. Limelight Networks, Inc. (Fed. Cir. 2015) (en banc) Download Opinion
Today, a unanimous Federal Circuit (minus judges Taranto, Chen and Stoll, who did not participate) issued its opinion on remand from the Supreme Court in Limelight Networks v. Akamai Techs. (PatentlyO discussion here.) To the extent there is any question: when considering situations in which the acts are not actually being performed by the alleged direct infringer, the question is “whether all method steps can be attributed to a single entity.” Slip Op. at 6 (emphasis added). The court expanded this class to encompass two new forms of divided activity.
In its Limelight opinion, the Supreme Court held that induced infringement under § 271(b) requires a single direct infringer. Consequently, Limelight could not be liable for indirect infringement absent the existence of that direct infringer. Inducement was not a viable legal theory for situations where the accused party performed some of the steps and the remaining steps were performed by another party.
In its opinion on remand, the Federal Circuit expands the scope of direct infringement under § 271(a) in situations where all the steps of a claimed method are not actually being performed by the accused party. Under the Federal Circuit’s pre-Akamai precedent, a party could be liable for direct infringement if (1) it performs all the steps itself; (2) it acts through an agent (applying traditional agency principles); or (3) it contracts with another to perform one or more steps of a claimed method. The latter two forms of direct infringement are generally described as inquiring into whether “a single entity directs or controls the acts of another,” considering general principles of vicarious liability.
In the new Akamai opinion, the Federal Circuit adds an additional category that falls within the scope of “control or direction.” The key language:
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. Cf. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005) (stating that an actor “infringes vicariously by profiting from direct infringement” if that actor has the right and ability to stop or limit the infringement). In those instances, the third party’s actions are attributed to the alleged infringer such that the alleged infringer becomes the single actor chargeable with direct infringement. Whether a single actor directed or controlled the acts of one or more third parties is a question of fact, reviewable on appeal for substantial evidence, when tried to a jury.
Slip Op. at 5. In addition, the Federal Circuit held participatnts in a joint enterprise can be charged with the acts of the other for purposes of direct infringement.
Alternatively, where two or more actors form a joint enterprise, all can be charged with the acts of the other, rendering each liable for the steps performed by the other as if each is a single actor. See Restatement (Second) of Torts § 491 cmt. b (“The law . . . considers that each is the agent or servant of the others, and that the act of any one within the scope of the enterprise is to be charged vicariously against the rest.”). A joint enterprise requires proof of four elements:
(1) an agreement, express or implied, among the members of the group;
(2) a common purpose to be carried out by the group;
(3) a community of pecuniary interest in that purpose, among the members; and
(4) an equal right to a voice in the direction of the enterprise, which gives an equal right of control.
Id. § 491 cmt. c. As with direction or control, whether actors entered into a joint enterprise is a question of fact, reviewable on appeal for substantial evidence. Id.
(“Whether these elements exist is frequently a question for the jury, under proper direction from the court.”).
Slip Op. at 5-6. The Federal Circuit thus vacated all earlier precedent that limited 271(a) to principal-agent relationships, contractual arrangements, and joint enterprise. “Rather, to determine direct infringement, we consider whether all method steps can be attributed to a single entity.” Id. at 6. Applying this standard to the facts of the case, the court held that there was sufficient evidence to support the jury’s verdict of infringement.
Interestingly, the consequence now seems to be that inducement can apply to situations where one party performs some of the steps and the remaining steps are performed by another. First, under Promega v. Life Tech, a party can be liable for inducing itself. Since Limelight is a direct infringer under the new Akamai opinion, it could be liable for inducement as well (not that this would seem to come up much in situations where the steps are being performed domestically). Second, a party could be liable for inducement where it induced another party who itself performed some of the steps and the remaining steps were attributable to the induced party (even if performed by another).