In Akami Techs., Inc. v. Limelight Networks, Inc., ___ F.3d ___ (Fed. Cir. 2010), the Federal Circuit provided the most extensive elaboration to date on the law of joint infringement (also known as divided infringement). In doing so, the Federal Circuit placed additional hurdles over which a patentee must jump in order to establish that a “mastermind” infringes a multi-step method claim where one of the steps is performed by another entity under the mastermind’s direction or control. Now, the patentee must additionally prove either 1) that the mastermind is vicariously liable for the actions of the other entity under traditional agency principles or 2) that the other entity is contractually obligated to the mastermind to perform the claimed step.
In the context of Akami, the patented method was for an Internet-based content delivery network (CDN) where content would be “tagged” and received by the CDN for later transmission to interested users on the Internet. Akami alleged that Limelight, a CDN, performed all of the steps of the method except for the step of “tagging” the content, which was performed by Limelight’s customers before uploading the content to Limelight’s CDN. Akami asserted that Limelight was liable for joint infringement because the step of tagging was performed by Limelight’s customers under Limelight’s direction or control. As evidence of this direction or control, Akami pointed to 1) Limelight’s customer contract, which states that the customer is responsible for tagging the content; 2) Limelight’s explicit step-by-step instructions to customers on how to tag content; and 3) Limelight’s technical assistance to help customers tag content.
After a verdict finding infringement, the District Court initially denied Limelight’s motion for JMOL of noninfringement but, upon reconsideration, granted the motion for JMOL in light of Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008) (finding no joint infringement where the accused infringer controlled its customers’ access to an online system, coupled with instruction on how to use the system). The court reasoned that there was “no material difference between Limelight’s interaction with its customers and that of Thomson in Muniauction.”
The Federal Circuit
The Federal Circuit held that “control or direction” for the purposes of joint infringement must be considered in “the context of traditional agency law … All the elements of an agency relationship must be present.” The Court observed that while the issues of “direction or control” and “which instructions, if any, may be provided” are a consideration, what is essential is “whether the relationship between the parties is such that acts of one may be attributed to the other.” For such an agency relationship to exist, both the mastermind and the agent must consent to the agent acting on the mastermind’s behalf and subject to the mastermind’s control. It is not enough that there be a showing that the agent’s actions benefit the mastermind, as “in any relationship there may be benefits that inure in some respects to both parties.”
Alternatively, in the absence of an agency relationship, the Federal Circuit held that joint infringement could be established if the mastermind contracted out the step of the process to a third party.
In this case, the record was devoid of any evidence that Limelight’s customers performed the tagging of content as agents of Limelight. The customers decide what content, if any, they would like delivered by Limelight’s CDN and then perform the step of tagging that content. While the test is referred to as “direction or control,” the Court noted that “there is no indication that an agency relationship arises when one party simply provides direction, no matter how explicit, to another party.” Agency requires not only the right to direct or control but also the consent by the mastermind for the agent to act on the mastermind’s behalf and consent by the agent to do so.
The Federal Circuit also found the record lacking under the alternate “contracting out of a claimed step” test for joint infringement. While Limelight’s contract does require customers to tag content that they upload to Limelight’s CDN, the contract does not obligate the customers to perform any claimed step. “It merely explains that the customer will have to perform the steps if it decides to take advantage of Limelight’s service.”
In light of this and other decisions, patent practitioners should be especially mindful to draft method claims in such a way that all of the steps are likely to be performed by a single entity. For recently issued patents that may be vulnerable under this decision, patentees may wish to consider the need for and possibility of modifying the claims in reissuance.
In the context of litigation, claims of joint infringement may be more difficult to prove. Moreover, parties should expect a new focus in discovery on the issue of the elements of agency, including the right to control, what parties are working on behalf of what other parties, and on whether there is evidence of the parties consenting to the agency relationship.
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Jason J. Keener