No Direct Infringement Unless A 'Single Entity' Performs Each and Every Method Step

Akamai's invention involved storing heavy bandwidth content, such as photographs or videos, on a content delivery network (CDN). They developed a method by which content providers could “tag” content on their website to be delivered by the CDN, rather than their own Web servers. The website would include a link to the CDN and the cumbersome content would not need to be replicated in mirror sites. Using Akamai's invention, a content provider such as ESPN could provide only text on its website, with news articles updated in real-time from its own servers and tag static, band-width-heavy content (such as photos and videos accompanying a news article) to be provided by the CDN. This would reduce the burden on ESPN's server. Akamai at 3 (Moore, J., dissent). “Without the innovative technology protected by the ['703 patent], the Internet as we know it could not exist.” Id. at 2 (Moore, J., dissent).

Limelight is a competitor of Akamai. Id. at 3. Limelight performs every step claimed in the '703 patent, except for the tagging step. Limelight instructs its customers how to tag content, makes Limelight employees available to help its customers with the tagging process and enters into a standard contract with its customers to govern the CDN relationship. One aspect of the contract is that the customers will do their own tagging at their own discretion. Id. at 4 (Moore, J., dissent). “Thus, every time Limelight's service is used, all the claimed steps of Akamai's patents are performed as part of the Limelight CDN service.” Id. Both Limelight and its customers obtain the economic benefits of performing all the steps of Akamai's patent. Id.

Method Claims are Infringed By Single Entities Only

In Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008), the Federal Circuit had held that a method patent is not infringed unless all the steps were performed by a single defendant, unless that single defendant directed or controlled the other entities that performed the remaining steps. Limelight Networks, 134 S. Ct. 2111 at 2117 (emphasis added). Relying on both Muniauction and the Supreme Court's decision above, the majority ruled that direct infringement of a method claim “exists when all of the steps of the claim are performed by or attributed to a single entity” or enterprise. Akamai at 6 (Linn, J., majority). The majority gave examples of this “single entity” as principal-agent relationships, contractual arrangements or joint enterprises. Id. at 6-7. Finding that the arm's length vendor-customer relationship between Limelight and its customers does not involve the formation of a single entity by agency, contract or joint enterprise, the majority held that Limelight was not liable for direct infringement. Id. at 7. The majority reasoned that “divided infringement” is “rooted in traditional principles of vicarious liability.” Id. at 15. Thus, divided infringement only occurs under situations “where the actions of one party can be legally imputed to another, such that a single entity can't be said to have performed each and every element of the claim.” Id. at 16.

Akamai complained that this would permit potential infringers of method patents to contract their way out of patent infringement. However, the majority responded that patentees are protected from situations where a “mastermind” attempts to avoid infringement by contracting out steps to a patented process. Id. Akamai argued that this is exactly what Limelight did. However, the majority distinguished this situation because in the “mastermind” context, the sub-parties are obligated to perform the steps on behalf of the mastermind. In contrast, Limelight's customers can do as much or as little tagging as they want on their own behalf, not to support Limelight's efforts. Moreover, the majority indicated that “concerns over a party avoiding infringement by arms-length cooperation can usually be offset by proper claim drafting.” Id. at 16-17. The majority opined that a patent drafter should be able to write their claims in a manner to “capture infringement by a single party” and cautioned against disrupting what it described as years of existing precedent in order to enforce what it termed “poorly-drafted patents.” Id. at 17.

In coming to its decision, the majority concluded that Limelight's customers were not acting as agents for Limelight, nor were they acting vicariously on behalf of Limelight. According to the majority, the customers, not Limelight, decide what content (if any) will be tagged and thereby delivered by Limelight's CDN. Id . at 26. Accordingly, Limelight is not contracting with the customers for those customers to perform the tagging step on behalf of Limelight, even though Limelight does profit when the customer's contract to perform the tagging step on their own behalf. Id . at 27.

The dissent contended that the majority had misapplied the law “and created a gaping loophole in infringement liability.” Akamai at 7 (Moore, J., dissent). Rather than criticize the patents that are incapable of being infringed under the majority's decision, the Dissent pointed to that large number of such patents as evidence that there has been no “long-standing single entity requirement for direct infringement.” (quoting Akamai at 7 (Linn, J., majority)), Id. at 32 (Moore, J., dissent). The Dissent argued that it should not matter whether the multiple entities combining to infringe a patent act as a single entity:

Congress codified existing commonlaw joint tortfeasor principles in ”271(a), (b), and (c). Section 271(a) covers direct infringement, which occurs when all the steps of the method are performed either by a single entity or multiple entities acting in concert or collaboration, jointly, or under direction or control. This does not extend to arms-length actors who unwittingly perform a single step ' there must be concerted action to achieve a common goal . The plain language of '271(a), and in particular Congress' decision to make liable “whoever ' uses ' any patented invention,” expressly includes joint tortfeasor concerted action. To conclude otherwise renders the statute's use of the word “whoever” internally inconsistent.

Id. at 32-33 (Moore, J., dissent) (emphasis added).

The dissent argues that this decision should revolve around the interpretation of the word “whoever” in '271(a), which reads: “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States ' during the term of the patent therefor, infringes the patent.” The Dissent argues that the word “whoever” encompasses infringement by multiple parties so long as they are acting in concert. Id. at 10. The Dissent notes that the word “whoever” as used in '101, covers the possibility of joint inventorship by multiple inventors. Id. The Dissent considers it inconceivable that Congress intended “that when one induces another to perform the steps of a patented method, both parties are liable; however, when one performs some of the steps and induces another to perform the remaining steps, nobody is liable.” Id. at 14. “The harm to the patentee is identical in either case ' the entire method has been performed ' and the joint tortfeasors have received the economic benefit of that patented method. Id.

Thus, the dissent would treat Limelight as the mastermind, which directed its customers, with whom it established a contractual relationship for a concerted action, to perform the remaining steps and benefit from the infringement. Id. The dissent suggested that the majority's decision represented a response “to the frenzy over 'trolls'” and essentially requested en banc review. Id. at 30. Whether this issue has been resolved, or will be the subject of en banc review, remains to be seen.

Matthew Siegal is a partner in the Intellectual Property Group of Stroock & Stroock & Lavan LLP. A member of this newsletter's Board of Editors, Mr. Siegal concentrates his practice on extensive patent litigation, prosecution, opinion, licensing and due diligence activities for both large multi-national corporations and smaller start-ups. He can be reached at [email protected].

In Akamai Technologies, the Federal Circuit ruled that there was no direct infringement of a method patent claim where defendant Limelight performed all but one step of the patented method and assisted its contractually bound customers with performing the remaining step. Akamai Techs., Inc. v. Limelight Networks, Inc., No. 2009-1372 (Fed. Cir. May 13, 2015). The court ruled that there is no direct infringement unless a “single entity” performs each and every step of the claimed method. Therefore, it found no direct infringement because Limelight and its customers were not part of a single entity and the customers were performing the missing step for their own benefit, not Limelight's. The U.S. Supreme Court had already ruled that Limelight could not be an infringement inducer until there was an identified direct infringer. Limelight Networks, Inc. v. Akamai Techs., Inc., 134 S. Ct. 2111 (2014). The Federal Circuit had previously ruled that Limelight was an infringement inducer and had not reached the issue of direct infringement. See, Akamai Techns. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010). Accordingly, while Limelight profited from the divided performance of the patented method and its customers obtained the benefits of Akamai's patent, no party was liable for direct or indirect patent infringement. The majority blamed this so-called “gaping hole” on improper claim drafting. Akamai Techs., No. 2009-1372 at 16 (Linn, J., majority). The dissent called for en banc review. Akamai Techs., No. 2009-1372 at 1 (Moore, J., dissent.).

Background

The World Wide Web experience of today is quite different from that of 1998, when MIT Professor F. Thompson Leighton and student Daniel Lewin founded Akamai and filed the provisional application for U.S. Pat. No. 6,108,703 (hereinafter the '703 patent). As discussed in the '703 patent, the Web is the Internet's multimedia information retrieval system. Internet users can use a website to access content, in the form of documents, images or videos stored on a website server. According to the '703 patent, as Internet usage increased, it became necessary “for a Content Provider ' to build copies of its Web site on [multiple Web servers] that are located at Web hosting farms in different locations domestically and internationally. These copies of Web sites are known as mirror sites.” '703 patent, col. 1, lines 35-41. Storing an entire copy of a website on multiple Web servers placed unnecessary economic and operational burdens on the website content provider. Id. at Col. 1, lines 41-50.

Akamai's invention involved storing heavy bandwidth content, such as photographs or videos, on a content delivery network (CDN). They developed a method by which content providers could “tag” content on their website to be delivered by the CDN, rather than their own Web servers. The website would include a link to the CDN and the cumbersome content would not need to be replicated in mirror sites. Using Akamai's invention, a content provider such as ESPN could provide only text on its website, with news articles updated in real-time from its own servers and tag static, band-width-heavy content (such as photos and videos accompanying a news article) to be provided by the CDN. This would reduce the burden on ESPN's server. Akamai at 3 (Moore, J., dissent). “Without the innovative technology protected by the ['703 patent], the Internet as we know it could not exist.” Id. at 2 (Moore, J., dissent).

Limelight is a competitor of Akamai. Id. at 3. Limelight performs every step claimed in the '703 patent, except for the tagging step. Limelight instructs its customers how to tag content, makes Limelight employees available to help its customers with the tagging process and enters into a standard contract with its customers to govern the CDN relationship. One aspect of the contract is that the customers will do their own tagging at their own discretion. Id. at 4 (Moore, J., dissent). “Thus, every time Limelight's service is used, all the claimed steps of Akamai's patents are performed as part of the Limelight CDN service.” Id. Both Limelight and its customers obtain the economic benefits of performing all the steps of Akamai's patent. Id.

Method Claims are Infringed By Single Entities Only

In Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008), the Federal Circuit had held that a method patent is not infringed unless all the steps were performed by a single defendant, unless that single defendant directed or controlled the other entities that performed the remaining steps. Limelight Networks, 134 S. Ct. 2111 at 2117 (emphasis added). Relying on both Muniauction and the Supreme Court's decision above, the majority ruled that direct infringement of a method claim “exists when all of the steps of the claim are performed by or attributed to a single entity” or enterprise. Akamai at 6 (Linn, J., majority). The majority gave examples of this “single entity” as principal-agent relationships, contractual arrangements or joint enterprises. Id. at 6-7. Finding that the arm's length vendor-customer relationship between Limelight and its customers does not involve the formation of a single entity by agency, contract or joint enterprise, the majority held that Limelight was not liable for direct infringement. Id. at 7. The majority reasoned that “divided infringement” is “rooted in traditional principles of vicarious liability.” Id. at 15. Thus, divided infringement only occurs under situations “where the actions of one party can be legally imputed to another, such that a single entity can't be said to have performed each and every element of the claim.” Id. at 16.

Akamai complained that this would permit potential infringers of method patents to contract their way out of patent infringement. However, the majority responded that patentees are protected from situations where a “mastermind” attempts to avoid infringement by contracting out steps to a patented process. Id. Akamai argued that this is exactly what Limelight did. However, the majority distinguished this situation because in the “mastermind” context, the sub-parties are obligated to perform the steps on behalf of the mastermind. In contrast, Limelight's customers can do as much or as little tagging as they want on their own behalf, not to support Limelight's efforts. Moreover, the majority indicated that “concerns over a party avoiding infringement by arms-length cooperation can usually be offset by proper claim drafting.” Id. at 16-17. The majority opined that a patent drafter should be able to write their claims in a manner to “capture infringement by a single party” and cautioned against disrupting what it described as years of existing precedent in order to enforce what it termed “poorly-drafted patents.” Id. at 17.

In coming to its decision, the majority concluded that Limelight's customers were not acting as agents for Limelight, nor were they acting vicariously on behalf of Limelight. According to the majority, the customers, not Limelight, decide what content (if any) will be tagged and thereby delivered by Limelight's CDN. Id . at 26. Accordingly, Limelight is not contracting with the customers for those customers to perform the tagging step on behalf of Limelight, even though Limelight does profit when the customer's contract to perform the tagging step on their own behalf. Id . at 27.

The dissent contended that the majority had misapplied the law “and created a gaping loophole in infringement liability.” Akamai at 7 (Moore, J., dissent). Rather than criticize the patents that are incapable of being infringed under the majority's decision, the Dissent pointed to that large number of such patents as evidence that there has been no “long-standing single entity requirement for direct infringement.” (quoting Akamai at 7 (Linn, J., majority)), Id. at 32 (Moore, J., dissent). The Dissent argued that it should not matter whether the multiple entities combining to infringe a patent act as a single entity:

Congress codified existing commonlaw joint tortfeasor principles in ”271(a), (b), and (c). Section 271(a) covers direct infringement, which occurs when all the steps of the method are performed either by a single entity or multiple entities acting in concert or collaboration, jointly, or under direction or control. This does not extend to arms-length actors who unwittingly perform a single step ' there must be concerted action to achieve a common goal . The plain language of '271(a), and in particular Congress' decision to make liable “whoever ' uses ' any patented invention,” expressly includes joint tortfeasor concerted action. To conclude otherwise renders the statute's use of the word “whoever” internally inconsistent.

Id. at 32-33 (Moore, J., dissent) (emphasis added).

The dissent argues that this decision should revolve around the interpretation of the word “whoever” in '271(a), which reads: “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States ' during the term of the patent therefor, infringes the patent.” The Dissent argues that the word “whoever” encompasses infringement by multiple parties so long as they are acting in concert. Id. at 10. The Dissent notes that the word “whoever” as used in '101, covers the possibility of joint inventorship by multiple inventors. Id. The Dissent considers it inconceivable that Congress intended “that when one induces another to perform the steps of a patented method, both parties are liable; however, when one performs some of the steps and induces another to perform the remaining steps, nobody is liable.” Id. at 14. “The harm to the patentee is identical in either case ' the entire method has been performed ' and the joint tortfeasors have received the economic benefit of that patented method. Id.

Thus, the dissent would treat Limelight as the mastermind, which directed its customers, with whom it established a contractual relationship for a concerted action, to perform the remaining steps and benefit from the infringement. Id. The dissent suggested that the majority's decision represented a response “to the frenzy over 'trolls'” and essentially requested en banc review. Id. at 30. Whether this issue has been resolved, or will be the subject of en banc review, remains to be seen.

Matthew Siegal is a partner in the Intellectual Property Group of Stroock & Stroock & Lavan LLP. A member of this newsletter's Board of Editors, Mr. Siegal concentrates his practice on extensive patent litigation, prosecution, opinion, licensing and due diligence activities for both large multi-national corporations and smaller start-ups. He can be reached at [email protected].