In Akamai v. Limelight (Fed. Cir. Aug. 13, 2015), the Federal Circuit sitting en banc provided a comprehensive definition of direct patent infringement under 35 U.S.C. §271(a) for a method claim when the steps of the method claim are performed by two or more actors, or also known as divided patent infringement.
For a discussion of the litigation history of Akamai v. Limelight, click here and here. Briefly, the prior appeal defined the type of direct patent infringement to hold the alleged infringer liable for indirect patent infringement. In Akamai, the Federal Circuit shifted the discussion away from indirect patent infringement to direct patent infringement. The opinion is solely directed to the standard for holding an alleged infringer liable for direct patent infringement when there are two or more actors. Since direct patent infringement requires a single entity to perform all of the steps of a method claim to constitute infringement, Akamai provides the standard of infringement when the method steps of a claim of a patent are divided between two or more actors and one of the actors should be counted as being the single entity liable for patent infringement.
Under Akamai, indirect patent infringement under §271(a) occurs when all of the steps of a claimed method are attributable to a single entity. The Federal Circuit defines the standard for direct patent infringement where the steps of the claimed method are divided between two or more actors to be attribution. An entity is responsible for the performance of a method step by another if such entity directs or controls the other entity’s performance or where the two actors form a joint enterprise.
To determine whether an entity directs or controls the acts of another entity, the Federal Court instructed the courts to look to general principles of vicarious liability. The Federal Circuit noted that vicarious liability is not a perfect analog to divided direct patent infringement since vicarious liability determines when an entity is liable for the acts of another. In the divided direct patent infringement cases, vicarious liability is not determining when an entity is liable for the acts of another. Rather, the principles of vicarious liability are being used to determine when the acts of another should be attributed to the alleged infringer even though that other entity is not liable for patent infringement.
Previously, the Federal Circuit held that the acts of another are attributed to the alleged infringer if the other entity is an agent of the alleged infringer or the alleged infringer has contracted with the other entity to perform one or more steps of a claim method.
The court further concludes that if the alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of the patented method and establishes the manner and timing of that performance then the acts of the other entity are attributable to the alleged infringer. The alleged infringer would be deemed to have performed all of the steps since the steps performed by the other entity are attributed to the alleged infringer.
The standard for determining whether the alleged infringer can be held liable for direct patent infringement even though the alleged infringer does not perform all of the method steps recited in the claim of the patent is attribution. If the method steps which the alleged infringer does not perform were performed by another entity and such performance by the other entity of the method steps can be attributed to the alleged infringer, then the alleged infringer is liable for direct patent infringement even though the steps were divided and performed by two different entities.
The court now provides three different ways of showing attribution, namely, (1) principal-agent relationships, (2) contractual relationship, and (3) where the alleged infringer conditions participation and establishes the manner and timing of performing the steps by another entity.
The Federal Circuit also explained that each party of a joint venture can be charged with direct patent infringement even though neither one performed all of the method steps in the claim of a patent if collectively the parties to the joint venture performed all of the method steps in the claim of the patent. The court provided various factors to determine when a joint venture is formed (see pages 5 and 6 of the attached Akamai v. Limelight (Fed. Cir. August 13, 2015) opinion).
In Akamai v. Limelight, Limelight provided content distribution network (CDN) services for various websites. However, to take advantage of the content distribution network services of Limelight, Limelight offloaded certain steps to the customer. In order to take advantage of Limelight’s content distribution network services, Limelight conditioned the customer’s use of its content delivery network services upon performance of various steps as dictated by Limelight. Limelight also established the manner and timing of the customer’s performance. For example, upon establishing the contract between Limelight and customers, Limelight sent customers a welcome letter instructing the customer on how to use Limelight’s service. Limelight assigned a technical account manager to lead the customer in the implementation of Limelight’s services. If Limelight’s customers did not follow the precise steps dictated by Limelight, then they would not be able to take advantage of Limelight content distribution network.
The Federal Circuit described Limelight’s actions as:
“In sum, Limelight customers do not merely take Limelight guidance and act independently on their own. Rather, Limelight establishes the manner and timing of its customer’s performance so that customers can only avail themselves of the service upon their performance of the method steps.”
In the above paragraph, the Federal Circuit distinguishes between providing guidance and allowing the customer to act independently on their own versus the comprehensive extent that Limelight was involved in the customer’s performance of the steps in order to take advantage of Limelight’s CDN services.
More litigation would be necessary to understand what it means to merely provide guidance and allow the customers to act independently on their own so as to avoid liability for divided direct patent infringement. Hence, although the Federal Circuit has broaden liability for divided direct patent infringement with Akamai, the Federal Circuit has indicated that not all steps that are offloaded to customers can be attributed to the alleged infringer or provider and thus, mitigating the potential exposure to liability for divided direct patent infringement.
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