Federal Circuit Expands Liability for Direct Infringement Under § 271(a)

Last week, en banc, the United States Court of Appeals for the Federal Circuit in Akamai Technologies Inc. v. Limelight Networks, Inc. “unanimously set forth the law of divided infringement under 35 U.S.C. § 271(a),” and expanded direct infringement liability to include instances where, “an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.”

As previously reported, the Federal Circuit took up the Akamai case en banc, and held that a party may be liable for induced infringement under §271(b), even though there was no one person or entity that performed all of the claimed elements and was liable for direct infringement, as required by the Federal Circuit’s holding in Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008). The Supreme Court overturned this holding and reaffirmed the traditional understanding that a party cannot be liable for inducing infringement under 35 U.S.C. §271(b) unless there is direct infringement under 35 U.S.C. §271(a). In response to Akamai’s complaint that overturning Federal Circuit’s en banc opinion would create a loophole that would enable infringing inducers to avoid liability by dividing infringing acts amongst multiple parties, the Supreme Court stated: “the possibility that the Federal Circuit erred by too narrowly circumscribing the scope of §271(a) is no reason for this Court to err a second time by misconstruing §271(b) to impose liability for inducing infringement where no infringement has occurred.” In closing, the Court advised that “the Federal Circuit will have the opportunity to revisit the §271(a) question if it so chooses.”

The Federal Circuit accepted this offer en banc. In its opinion, the Federal Circuit has concluded that, “[d]irect infringement under § 271(a) occurs where all steps of a claimed method are performed by or attributable to a single entity.” Thus, a party can be held liable under § 271(a) for direct infringement, despite that fact that the party did not itself perform every step of a claimed method, so long as every step can be attributed to the party.

Such attribution is more straightforward where a plaintiff can establish that the alleged infringer – although not performing each step itself – maintains an agent-principal relationship with an entity that performs a step or steps. So too where the alleged infringer contractually requires a third-party to complete a step on its behalf. Finally, direct infringement liability can arise in cases where a group forms a joint enterprise. See Restatement (Second) of Torts § 491 cmt. b.

However, in Akamai Technologies, the Court went a step further, concluding “[s]ection 271(a) is not limited solely to principal-agent relationships, contractual arrangements, and joint enterprise, as the vacated panel decision held. Rather, to determine direct infringement, we consider whether all method steps can be attributed to a single entity.” The Court found that all method steps could be attributed to Limelight Networks, Inc. because, “Akamai [Technologies, LLC] presented substantial evidence demonstrating that Limelight conditions its customers’ use of its content delivery network upon its customers’ performance of the tagging and serving steps, and that Limelight establishes the manner or timing of its customers’ performance.”

Acknowledging the fact-sensitive nature of this attribution analysis, the Court warned that, “[i]n the future, other factual scenarios may arise which warrant attributing others’ performance of method steps to a single actor. Going forward, principles of attribution are to be considered in the context of the particular facts presented.”

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