On January 10, 2014, the U.S. Supreme Court granted certiorari in Limelight Networks, Inc. v. Akamai Technologies, Inc. The petitioner in the case, Limelight Networks (Limelight), appealed from the en banc opinion of the U.S. Court of Appeals for the Federal Circuit in Akamai Technologies, Inc. v. Limelight Networks, Inc. and McKesson Technologies, Inc. v. Epic Systems Corporation, (Fed. Cir. Aug. 31, 2012), where the court held that a defendant may be held liable for inducing patent infringement under 35 U.S.C. §271(b) of a claimed method even when the collective performance of the claimed method is split among two or more parties and no single entity would be liable for direct infringement.
The respondent, Akamai Technologies (Akamai), owns a patented method for structuring web sites and servers in a way that delivers web content more efficiently. The first step of the claimed method consists of placing some of a content provider’s content elements on a set of replicated servers and the second step involves modifying the content provider’s web page to instruct web pages to retrieve content from those servers. In 2006, Akamai filed a complaint against Limelight Networks in the U.S. District Court for the District of Massachusetts, alleging direct and induced infringement of its patent. Similar to Akamai’s patent, Limelight also places web content on its servers; however, Limelight instructs its customers about how to modify the web pages instead of modifying the pages itself.
Meanwhile, McKesson Technologies (McKesson) filed an infringement complaint against Epic Systems Corporation (Epic), a software company that licenses software products to healthcare organizations, in the U.S. District Court for the District of Georgia. McKesson alleged that Epic induced infringement of the company’s patent, which covers a method for electronic communication between patients and healthcare providers, by licensing McKesson’s software to healthcare providers who provided access to the software to their patients.
Citing the Federal Circuit’s decision in BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), the district courts in both Akamai and McKesson held that the defendants were not liable for induced infringement because there was no single induced party that had committed all of the steps necessary for direct infringement. In Akamai, Limelight performed the first step of the asserted method and induced its customers to perform the second step. Also, in McKesson, the steps necessary to perform the claimed method were divided between the healthcare providers and the patients.
On appeal, the Federal Circuit overruled its decision in BMC, finding that although induced infringement requires that all of the steps of the claimed method be performed, it is not necessary to prove that all of the steps were committed by a single party. The court explained that it is a well-settled principle that there can be no liability for induced infringement unless the inducement led to actual, or direct, infringement. In BMC, however, the court held that induced infringement requires not only direct infringement but direct infringement by a single entity because liability for direct infringement by itself requires that “a single party commit all the acts necessary for infringement.” In its Akamai opinion, however, the Federal Circuit rejected this conclusion. Particularly, in light of the relevant legislative history and prior case law, including its decision in Fromson v. Advance Offset Plate Inc., 720 F.2d 1565 (Fed. Cir. 1983), the court determined that induced infringement of a method patent can be found even when no single party has performed all of the steps itself or where the infringing conduct is divided among multiple parties. According to the Federal Circuit, “requiring proof that there has been direct infringement as a predicate for induced infringement is not the same as requiring proof that a single party would be liable as a direct infringer.” It thereby reversed and remanded the cases for further proceedings on a theory of induced infringement.
In sum, the Supreme Court is expected to hear oral arguments in the case in April and issue a decision by the end of June.