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Liability for Patent Infringement Under 35 U.S.C. §271(B)

AlertLimelight Networks, Inc. v. Akami Technologies, Inc.
06.11.2014
By Colin W. Turner

Issue: May a defendant be held liable for inducing another to infringe a patent under 35 U.S.C. §271(b) even though no single entity has directly infringed the patent under 35 U.S.C. §271(a)?

Background: 35 U.S.C. §271 provides in pertinent part:

(a) …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

(b) Whoever actively induces infringement of a patent shall be liable as an infringer

Case History: Limelight operated a content delivery network for delivering electronic data to its customers. Akami owned a  patent that it alleged was infringed by Limelight's delivery method. Limelight carried out some, but not all, of the steps set forth in the claims of the Akami patent. One step in particular was performed by Limelight's customers pursuant to instructions and guidance provided by Limelight.

Akami sued Limelight for patent infringement pursuant to 35 U.S.C. §271(a) and was awarded $40 million in damages at trial. Shortly thereafter, the Federal Circuit decided Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (2008). In Muniauction, the Federal Circuit held that "direct infringement requires a single party to perform every step of a claimed method." The Muniauction court held that this requirement could be satisfied even where multiple parties are carrying out the steps if a single entity "exercises 'control or direction' over the entire process such that every step is attributable to the controlling party."

In light of Muniauction, the District Court granted Limelight's motion for reconsideration of an earlier-filed motion for judgment as a matter of law. The District Court held that Limelight did not "control or direct" the step performed by Limelight's customers. A Federal Circuit panel affirmed the District Court, holding that direct infringement liability could only exist for a defendant that performs some but not all steps of a patent claim where an agency or contractual relationship exists between the defendant and the party that performs the remaining steps.

The Federal Circuit sitting en banc reversed the panel, concluding that it was possible for Akami to be liable under "a theory of induced infringement" pursuant to 35 U.S.C. 271(b), and that this was true even where no single entity could be liable for direct infringement under 35 U.S.C. §271(a).

Supreme Court Holding: A unanimous Court held that a defendant may not be held liable for inducing infringement under §271(b) where no single entity has directly infringed the patent under §271(a) or any other statutory provision. Inducement infringement may only be found where there has been direct infringement.

"Assuming without deciding the Federal Circuit's holding in Muniauction is correct, there has simply been no infringement of the method in which respondents have staked out an interest, because the performance of all the patent's steps is not attributable to any one person." (emphasis added). To hold otherwise would make it impossible for "a court to asses when a patent holder's rights have been invaded" and would require two separate types of infringement: 1) direct infringement
liability and 2) inducement liability.

The Court declined Akami's request to review the merits of the test for direct infringement under §271(a) as set out in Muniauction, but hinted at disagreement with such ruling.

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