Federal Circuit to Hear Akamai Appeal on Joint Infringement En Banc

On April 20, 2011, the Federal Circuit ordered an en banc rehearing in Akamai Technologies, Inc. v. Limelight Networks, Inc. (2009-1372, -1380, -1416, -1417). The question posed by the Court is: “If separate entities each perform separate steps of a method claim, under what circumstances would that claim be directly infringed and to what extent would each of the parties be liable?”

Appellants Akamai Technologies, Inc. and the Massachusetts Institute of Technology (collectively, “Akamai”) accused Limelight Networks, Inc. (“Limelight”) of infringing three patents related to a system for allowing a content provider to outsource the storage and delivery of discrete portions of its website content. All three patents include method claims directed to a content delivery service that delivers the base document of a web site from a content provider’s computer while embedded content (e.g., graphics) is stored on an object-by-object basis on mirrored servers called a Content Delivery Network (“CDN”). Limelight performed the majority of the steps of the asserted claims, but at least one of the steps – tagging the object URLs to resolve to the CDN – was performed by its customers, such as Netflix. Akamai therefore asserted joint liability for infringement on the grounds that Limelight controls or directs the activities of its customers. A jury found in Akamai’s favor and awarded over $40 million in lost profits, but the district court granted JMOL of noninfringement in light of the Federal Circuit’s decision inMuniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008) (holding that an accused infringer’s control over its customers’ access to an online system, coupled with instructions on how to use that system, was not enough to establish direct infringement). Akamai appealed, arguing that substantial evidence supported the jury’s infringement finding because Limelight “(1) creates and assigns a unique hostname for the content provider; (2) provides explicit step-by-step instructions to perform the tagging and serving claim steps; (3) offers technical assistance to help content providers with their performance of the claim step; and (4) contractually requires content providers to perform the tagging and serving claim steps if they utilize the Limelight service.”

In its original panel opinion authored by Judge Linn, the Federal Circuit affirmed the district court’s judgment of noninfringement. In doing so, the Court expanded on its previous ruling in BMC Res., Inc. v. Paymentech, L.P., 498 F.3d 1373, 1380 (Fed. Cir. 2007), in which it stated that joint liability may be found when one party “control[s] or direct[s] each step of the patented process.” Specifically, the panel noted that “what is essential is not merely the exercise of control or the providing of instructions, but whether the relationship between the parties is such that acts of one may be attributed to the other.” The panel thus held “as a matter of Federal Circuit law that there can only be joint infringement when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps[,]” neither of which was present because (1) Limelight’s customers do not perform any steps of the claimed method as agents for Limelight, and (2) Limelight’s customers are not contractually obligated to perform the tagging step (rather, a “customer will have to perform the steps if it decides to take advantage of Limelight’s service.”).