The Federal Circuit, sitting en banc and in a per curiam opinion, has held a party can be liable as a direct patent infringer under 35 U.S.C. § 271(a) even though it did not make, use, sell, or offer to sell every element of the claimed invention. Akamai Tech., Inc. v. Limelight Networks, Inc., No. 9-1372 (Fed. Cir. August 13, 2015). “Conditioning” a third party to practice a claim element is now apparently enough for direct infringement. One must wonder whether this latest twist in long-running litigation over U.S. Patent No. 6,108,703 will, as might seem to be the case at first blush, make life easier for patent plaintiffs. More fundamentally, one must wonder how a party can be a direct infringer if it does not practice – at least by “direction and control” of a third party – all of the elements of a patent claim. According to the Federal Circuit, direct infringement now encompasses such facts.
The ’703 patent is directed to a content delivery network method that facilitates the logistics of storing and accessing data for web pages. Limelight practiced all of the claim elements save for steps of “tagging” and “serving” data. Because other parties practiced these elements, the Federal Circuit had previously held Limelight liable for inducing infringement under 35 U.S.C. § 271(b) without there being a direct infringer under 35 U.S.C. § 271(a). Limelight, the court had said, created an environment in which its consumers were encouraged to tag and serve the data for web pages, and hence Limelight induced infringement. However, the Supreme Court rejected the Federal Circuit’s prior reasoning and held that there cannot be infringement under 35 U.S.C. § 271(b) if there is not infringement under 35 U.S.C. § 271(a). The Supreme Court then remanded the case back to the Federal Circuit.
The Federal Circuit has now undeniably extended the reach of direct infringement under 35 U.S.C. § 271(a). Previously, a single entity that directs or controls the acts of another according to the general principles of agency law could be held responsible for the acts of the other and the actions of any one member of a joint enterprise. This rule, of course, is in accord with general tort principles of vicarious liability. Now, the Federal Circuit has said that “liability under § 271(a) can also be found when 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.” I do not believe there is any analogue to this new rule in traditional tort law.
According to the Federal Circuit, because the contract between Limelight and its consumers sets forth “the steps customers must perform if they use the Limelight service” and because “Limelight’s customers [who] wish to use Limelight’s product . . . must tag and serve content,” Limelight conditions its customers to practice elements of the asserted claim not practiced directly by Limelight. Additionally, Limelight fixes the “timing of its customers’ performance so that customers can only avail themselves of the service upon their performance of the method steps.” As a result, the court held that because Limelight directs or controls its “customers’ performance of each remaining method step,” it directly infringes the ‘703 patent under 35 U.S.C. § 271(a).
One interpretation of the Federal Circuit’s latest holding is that it fails to follow the Supreme Court’s Akamai decision. The Supreme Court held that there can be no infringement under § 271(b) without direct infringement under § 271(a). Has the Federal Circuit obviated this requirement by expanding the reach of direct infringement under 35 U.S.C. § 271(a)?
In any event, how, in the face not just of the law of patent infringement but traditional notions of vicarious tort liability, can a party be liable for the acts of third parties who are not its agents and are not under its direction and control? Yet further, will litigants be able to predict what conduct falls within the ambit of “conditions participation in an activity or receipt of a benefit . . . and establishes the manner or timing?”
Finally, an obvious patent prosecution patent tip: continue to draft claims to read on activities of a single party. The current decision may stand; even so, patent owners are likely to have more success enforcing claims that clearly read on a single party. No matter what the law, patent owners are better off avoiding debates about indirect infringement, or whether third party activities qualify for indirect infringement.
Thanks to Dan Schaffer for his contributions to this post.