Akamai: Demise of Tort-Based Joint-Actor Infringement

The Federal Circuit on May 13, 2015 issued its long-awaited opinion in Akamai Technologies, Inc. v. Limelight Networks, Inc. on remand from the U.S. Supreme Court with respect to the scope of “divided” or “joint-actor” direct infringement under 35 U.S.C. § 271 (a).  Akamai had argued in favor of a broad “joint-tortfeasor” based definition of direct infringement to include the circumstances in the context of a method patent where Limelight contracted with website “content providers” to allow them to perform certain modifications to their website related to a tagging functionality to facilitate the content stored by Limelight to be displayed on the website.  The Federal Circuit was unequivocal in its rejection of this rationale to support direct infringement:

the statutory framework of 35 U.S.C. § 271 does not admit to the sweeping notions of common-law tort liability argued in this case….

In the 1952 Patent Act, Congress removed joint-actor patent infringement liability from the discretion of the courts, defining “infringement” in § 271(a) and expressly outlining in § 271(b) [inducing infringement] and (c) [contributory infringement] the only situations in which a party could be liable for something less than an infringement.

The Federal Circuit holds instead that with respect to method claims, direct infringement is only established where all the steps of a method patent claim are performed by a single entity or “attributed” to a single entity in the traditional context of vicarious liability.  The latter situation arises, according to the Federal Circuit, at least in three situations:  a principal-agent relationship, a contractual relationship, or a “joint enterprise functioning as a form of mutual agency.”  Because the court found that the circumstances presented by the contracts between Limelight and its customers, that did not require the customers to perform the tagging function did not implicate any of these three situations, there was no single entity performing all the method steps and no single entity to which performing the steps could be attributed.  Consequently, no liability for direct infringement attached to Limelight and its customers.  Since there was no direct infringer, there was also no liability possible for inducing infringement or contributing to infringement under section 271(b) or (c).

The dissenting opinion complained that this created a “gaping hole” with respect to liability for patent infringement unfairly leaving Akamai unable to enforce its patent.  The majority opinion countered that it would require ignoring basically principles of tort law leading to the untenable result that a customer of Limelight could have been found liable for merely performing one step of a patent without even knowing about the patent.

While this opinion may still be subject to potential en banc review at the Federal Circuit or an appeal to the Supreme Court for a second time, the current liability standard for direct infringement has now been clarified, and with respect to multiple actors will involve an analysis of the contractual obligations to perform all the steps of the patent including whether there is a “mastermind” asserting direction and control.  The text of section 271(a) requires:

Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

 The takeaway for patent drafters is clear.  Claims of method patent claims should be drafted to ensure that anticipated infringers, as single actors, in the market place may perform all the steps of the claim without relying on an “attribution” of steps pursuant to contractual relationships among multiple actors.  The Federal Circuit suggests this should be both easily done and necessary to avoid “poorly-drafted patents”:

“A patentee can usually structure a claim to capture infringement by a single party.” 498 F.3d at 1381.  Further, many amici have pointed out that the claim drafter is the least cost avoider of the problem of unenforceable patents due to joint infringement. It would thus be unwise to overrule decades of precedent in an attempt to enforce poorly-drafted patents.”

Since servers such as those performing certain of the method steps in the case of Limelight and its customers may be located outside the United States, an additional layer of analysis will also be required as to where these steps may be performed with respect to the borders of the United States of America, its territories and possessions.

 

 

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