Limelight Networks, Inc. v. Akamai Technologies, Inc.

Facts

Akamai Technologies, Inc. (“Akamai”), a content delivery network, owns a patent on a method for delivering web content. The method, in short, is a system for delivering website content to an end user, where that content is hosted on a network of servers that is separate from the content provider’s own server. An object, such as an image or a video, is placed on the network. The corresponding website content is “tagged” such that, when an end user accesses the website, the end user’s browser is directed to retrieve the object from the network rather than the content provider’s own server.

Limelight Networks, Inc. (“Limelight”), another content delivery network, uses a content delivery method that is similar to Akamai’s patented method. However, Limelight does not personally perform every step of the patented method. Specifically, Limelight does not directly “tag” content on a content provider’s website, although it instructs customers on how to correctly tag content.

35 U.S.C. § 271(a) provides that a party infringes a patent if the party “makes, uses, offers to sell, or sells any patented invention” without authority from the patent owner. 35 U.S.C. § 271(b) provides that a party infringes on a patent if the party “induces infringement of a patent.” Generally, to be liable for patent infringement under § 271(a) or § 271(b), a party must have directly performed every step of a patented method or have induced another party to perform every step of the method. If a party does not perform every step of a patented method but still directs or controls another party to perform that step, then the party would still be considered liable for direct infringement under § 271(a).

On June 23, 2006, Akamai filed a lawsuit against Limelight alleging that Akamai infringed its patented for delivering web content. On February 28, 2008, a jury found that Limelight infringed on Akamai’s patent. Although the parties agreed that Limelight did not actually perform every step of the patented method (i.e. Limelight did not personally “tag” objects on a customer’s website), the jury found that Limelight directed its customers to perform the remaining step, and therefore, infringed Akamai’s patent. Limelight moved for judgment as a matter of law on the ground that its actions did not legally constitute “direction” or “control” sufficient for direct liability under § 271(a). On April 24, 2009, the District Court of Massachusetts ruled in favor of Limelight, setting aside the jury’s verdict. On August 31, 2012, the United States Court of Appeals, Federal Circuit reversed, ruling that even if Limelight did not sufficiently direct or control its customer’s activities to liable under § 271(a), the company could still be liable for inducement infringement under § 271(b). Under the Federal Circuit’s rule, even though neither Limelight nor its customers performed every step of Akamai’s patented method, Limelight would still be liable for inducing infringement if it performed all but one step of Akamai’s method and induced its customers to perform the remaining step.

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Discussion

PROTECTING INVENTORS AND INNOVATORS

Eli Lilly and Company (“Eli Lilly”), a pharmaceutical company, argues on behalf of Akamai that the Federal Circuit’s rule is necessary to fully protect the patent rights of inventors and innovators, especially with respect to patents on methods of medical treatment. Eli Lilly argues that because developing new medical treatment methods may require many years and billions of dollars, broadly enforceable patent rights are necessary to protect the investment of innovators. Eli Lilly notes that a method of treatment patent may require many independent actors, such as nurses, doctors, and pharmacists, to perform steps. As such, Eli Lilly contends that a rule recognizing patent infringement liability where multiple actors perform all of the required steps is necessary to fully protect medical innovators.

On the other hand, the Electronic Frontier Foundation (“EFF”) argues on behalf of Limelight that drafting more precise patent claims can resolve gaps in patent protection. EFF notes that Akamai’s patent suffered from this problem, and argues that the patent claim in question could have been drafted in a way that focuses on the acts of one party. Moreover, EFF argues that inadequate patent claim drafting also harms unsuspecting parties because poorly drafted patent claims do not effectively provide notice to the public about what has been patented. Therefore, the EFF contends that the proper resolution is not to fundamentally alter patent infringement liability but to have inventors and innovators draft patent claims that do not require multiple parties to act.

Akamai notes, however, that in some fields, patented methods inherently require the involvement of multiple actors. As such, Akamai argues that inventors should not be required to twist their true claims through clever drafting. Further, Akamai argues that this could actually further obfuscate the true nature of an invention. Akamai also contends that even if a method claim could be framed to involve only a single party, the steps could still be divided to be performed by multiple parties; as long as the steps are easily divvied up, then patent owners of method claims cannot be fully protected.

The Clearing House and the Financial Services Roundtable (“financial associations”) argue on behalf of Limelight that the Federal Circuit’s rule will ultimately discourage invention and innovation, at least in the financial services fields. The financial associations argue that financial institutions would be uniquely susceptible to a patent infringement rule that makes joint actors liable because they have very little control over how their consumers use their services and technology. Additionally, the financial associations argue that such a rule would result in financial institutions cutting back on services and technological development in fear of exposing themselves to patent infringement liability.

COST AND SCOPE OF PATENT INFRINGEMENT LITIGATION

Google Inc., et al. argue on behalf of Limelight that adopting the Federal Circuit’s rule would be too costly for certain companies as it substantially expands the scope of liability for induced infringement claims. Google claims that, because the acts of multiple parties could be aggregated to find inducement liability, the number of potential claims would increase along with the number of potential defendants. Google argues that such a rule would generate costly and abusive patent litigation and chill technological innovation. Google notes that, especially in the high-tech industries where multiple hardware and software companies may each contribute a component to a complex device like a smartphone, the Federal Circuit’s rule would open each contributor to inducement liability even if some of them provide only a small piece to the overall process.

Akamai counters, arguing that the scope of liability is limited because the rule only applies to a party that intentionally seeks to infringe on a patent and does not apply to an unwitting party. Still, Akamai concedes that the Federal Circuit’s rule may lead to more patent trolling or abusive litigation. Akamai notes, however, that courts already have tools to discourage those kinds of abuses, such as awarding attorney’s fees or granting early summary judgment. Akamai argues that the need to protect legitimate innovators against patent infringement ultimately outweighs any concern over increased litigation.

However, Altera Corporation et. al. argue on behalf of Limelight that the intent requirement does not adequately protect innocent parties. Altera asserts that, under the current case law, an innocent party may still be subject to a valid patent infringement claim if its first notice of a patent is when it is served the complaint. Altera contends that the rule makes it more difficult for innocent businesses to identify patent infringement risks and allows plaintiffs to more easily burden legitimate businesses with frivolous claims. Therefore, Altera argues, the intent requirement is merely an “illusory shield” for the innocent.

In response, the Biotechnology Industry Organization ("BIO") argues on behalf of Akamai that the increased litigation burden on innocent parties is overstated. BIO argues that the cost of discovery with respect to determining the validity and substance of an infringement claim would, even in absence of the Federal Circuit’s rule, still burden third parties. BIO notes that, in any induced infringement claim, a plaintiff will seek discovery regarding the relationship between the defendant and the alleged induced infringers.

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Analysis

This case presents the Supreme Court with an opportunity to clarify the meaning of patent infringement under 35 U.S.C. § 271. More specifically, the Court will be able to determine whether the Federal Circuit erred in making the standard for finding “infringement” for the purposes of inducement liability under § 271(b) less stringent than that of “infringement” under § 271(a). This doctrinal issue is one that seemingly arises in the area of method patents, rather than product patents.

THE FEDERAL CIRCUIT OPINION

In line with its own precedent, the Federal Circuit held that to be liable under § 271(b) for inducing patent infringement, there must be actual infringement. However, one issue for the Court is the potential inconsistency if the meaning of infringement under § 271(b) is different and less stringer than under § 271(b). In this case, where liability under § 271(a) requires a single actor (or a single actor directly controlling others) to perform all steps of the patent method, the Federal Circuit found that this is not necessary for liability under § 271(b). Summarizing the holding, the Federal Circuit stated that Limelight could be held liable for inducement infringement if they induced its content providers to perform (and they did perform) the final step of the patented method.

DIRECT INFRINGEMENT UNDER § 271(a)

Limelight argues that the statute in this case requires direct patent infringement under § 271(a), before there can be a violation of § 271(b). Particularly with method patents, Limelight contends that a method or process is really a sequence of steps, so in order to infringe a method patent the infringer must have performed each step. at 22.

Akamai argues that the Federal Circuit’s opinion has recently created a single-entity rule for patent infringement which Akamai claims is contrary to the language of the statute. Here Akamai contends that a joint-liability standard is more appropriate under the statute. Akamai believes that the answer to whether or not joint liability should be accepted under § 271(a) lies within the word “whoever.”

Akamai points to the Dictionary Act, which defines the words “person” and “whoever” to include corporations, companies, associations, firms, partnerships, and societies. Furthermore, Akamai notes that other patent provisions use the word whoever in reference to multiple actors. Therefore, Akamai believes that liability under § 271(a) includes multiples actors because of its use of the term whoever.According to Akamai, the statute encompasses multiple actors acting in concert, not solely through agency or contractual obligation as the Federal Circuit has held.

Although nominally supporting neither party, the ABA agrees that the Supreme Court should reject the Federal Circuit’s interpretation of § 271(b) and instead construe § 271(a) to permit a finding of direct infringement where multiple parties act in concert, not just where multiple actors are controlled by a single entity. The ABA asks that the Court clarify § 271(a) rather than adopt a new rule under § 271(b), and to that extent, include acting in concert. The ABA’s brief then goes on to suggest four new standards that the Court could possibly adopt.

INDUCEMENT INFRINGEMENT UNDER § 271(b)

Akamai believes that the Federal Circuit was correct in its ruling that although there can be no indirect infringement without direct infringement, proof of direct infringement is not a requirement for a finding of indirect infringement. Akamai contends that the Federal Circuit’s ruling is consistent with the policies and principles of the Patent Act as a whole. Therefore, Akamai argues that the Court should look to the harm Akamai suffered as the patentee and whether all steps of the method patent were actually performed, and not concentrate on how many actors performed the steps.

Citing the decision in Aro Mfg. Co. v. Convertible Top Co., Limelight puts forth the argument that there must be direct infringement for a finding under § 271(b). Limelight believes that Aro stands for the proposition that if its own activity is not itself an invasion of the patentee’s rights, there is no direct infringement; therefore, there can be no inducement infringement.

Limelight asserts that it is up to Congress to extend liability in cases where no one party has directly infringed a patent. To lend support to this argument, Limelight points to § 271(f) which creates an analog to the contributory infringement theory which Akamai seeks. Under § 271(f), there is liability for inducing others outside of the United States to perform all or a substantial portion of the components of a patented act. Therefore, Limelight feels that if Congress intended to allow inducement liability under § 271(b) for substantial inducement, it would have said so.

TORT AND CRIMINAL COMPLICITY

Akamai, citing 18 U.S.C. § 2(a) argues that aiding and abetting is within the scope of inducement under § 271(b), as Congress intended, and that Limelight can be liable as an aider and abettor. Furthermore, Akamai cites to a recent Supreme Court case, Rosemond v. United States, which said that under § 2(a) one person does not have to be primarily liable for the completed crime to be liable as a principal.

Limelight counters that criminal law does not help Akamai’s argument because Limelight contends the Federal Circuit misread the Supreme Court opinion Standefer v. United States. Limelight believes the Federal Circuit interpreted Standefer as allowing Section 2 liability where there was no proof of the underlying offense. However, Limelight points out that the Supreme Court expressly stated that the government proved the underlying offense in Standefer, rendering the Federal Circuit’s reading erroneous.

With respect to tort law, Akamai references the Restatement (Second) of Torts stating that a defendant is liable for inducement of conduct that would make himself liable if he were to perform the actions. Therefore, it follows that had Limelight performed the finals steps that its customers did, it would be liable for performing the whole process.

However, Limelight’s contention in respect to tort law is simple: tort principles cannot override the legislation. Limelight states that the Federal Circuit alluded to the ability for tortious conduct to have inducement liability for inducing conduct that would be liable if Limelight performed it, just as Akamai referenced. However, Limelight argues that this would still require the showing of harm and in relation to patents would require the invasion of property rights; because Akamai never proved invasion of property rights (direct infringement) in the first place, tort law is irrelevant.

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Conclusion

If the Supreme Court affirms the Federal Circuit, then the scope of patent liability will be broadened because the acts of multiple parties may, when aggregated, constitute patent infringement. This would more comprehensively protect patent owners, but it may also lead to more costly and abusive patent litigation. If the Supreme Court rejects the Federal Circuit’s rule, then only the acts of a single entity may constitute patent infringement. This would prevent a flood of new patent litigation, but it may also make it more difficult for patent owners to protect their patents against infringement.

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