By Marshall J. Brown, Foley & Lardner LLP
This article is part of our Spring 2011 edition of Legal News: China Quarterly Newsletter, Eye on China.
On December 20, 2010, the U.S. Court of Appeals for the Federal Circuit revisited the issue of "joint infringement" of a method patent claim. Under the theory of joint infringement, parties may be found to infringe a method claim even though no single party performs all of the steps or processes of the claimed method. The impact of this decision should be considered both when enforcing granted patents requiring a joint infringement theory and when pursuing new patent protection in the United States.
Before Akami Technologies, Inc. v. Limelight Networks, Inc., parties generally looked to the Federal Circuit’s 2008 decision in BMC Resources Inc. v. Paymentech, L.P. for an explanation of the rules on joint infringement. In BMC, the Federal Circuit held that one could not find joint infringement of a method claim unless one party controlled or directed each step of the patented process. The court later elaborated on this rule in Muniauction, Inc. v. Thomson Corp. In Muniauction, the court held that an accused infringer’s control over its customers’ access to an online system, coupled with providing instructions to the customers about how to use the system, was not sufficient to find joint infringement. Instead, the court noted that the requisite level of control or direction required circumstances in which "the law would traditionally hold the accused direct infringer vicariously liable for the acts committed by another party."
The court further clarified the rules underlying the joint infringement theory in Akami. Expanding on its holding in Muniauction, the court held that there can be joint infringement only "when there is an agency relationship between the parties who perform the method or when one party is contractually obligated to the other to perform the steps" of the claim. Elaborating, the court noted that, for infringement to be found, "both parties must consent that the agent is acting on the principal’s behalf and subject to the principal control."
In Akami, the accused infringer (Limelight Networks, Inc.) performed all of the steps of the claims at issue except for "tagging" certain embedded objects in a Web page so that requests for the objects would resolve to a different domain. With regard to the tagging step, Limelight provided instructions to its customers (various content providers) as to how to modify their Web pages or address routing information to use its service.
Applying its holding requiring an agency relationship, the court held that Limelight was not liable for infringement under the theory of joint infringement. Noting that "[a]n essential element of agency is the principal’s right to control the agent’s actions," the court held that there was no agency relationship in this case, since it was up to the customer to decide what content, if any, should be delivered by Limelight’s Content Delivery Network. Expanding on this point, the court noted that, although Limelight had entered into contracts with its customers, these contracts did not obligate the customers to perform any of the method steps. Instead, the court found that Limelight’s customers "acted principally for their own benefit and under their own control." Regarding the instructions provided by Limelight to its customers, the court emphasized that "there is no indication that an agency relationship exists when one party simply provides direction, no matter how explicit, to another party."
The Federal Circuit’s clarification on the issue of joint infringement has a number of implications for patent practitioners and their clients when it comes to both patent litigation and patent prosecution. If one is considering pursuing an infringement action where joint infringement may be an issue, it is important to analyze the entire relationship between the party that may be accused of infringement and its customers or other contracting parties. As noted by the Federal Circuit, simply providing instructions or directions to others to perform certain steps of a patent process may not be enough to find joint infringement. Additionally, even if a contractual relationship exists between the parties, it is important to look more closely at the nature of the relationship in order to identify the obligations, if any, being placed on the parties with regard to the processes necessary to find joint infringement.
If a finding of joint infringement may be difficult to obtain in light of the court’s ruling in Akami, a patent holder may consider filing a reissue patent application. A reissue application permits a patentee to alter the claims in order to address potential defects. Therefore, it may be possible in many instances to remove the "joint infringement" issue before litigation is initiated via the reissue process. Because a reissue application may subject the claims to new rejections based upon prior art and other issues, however, one must carefully consider the benefits and pitfalls when deciding whether the reissue process is a worthwhile option.
For parties pursuing method claims in a U.S. patent application, the court’s Akami ruling should serve as a reminder of the importance of drafting claims that can be infringed by a single actor if possible. If all of the limitations in a method claim can be written from the perspective of a single party, one may be able to entirely avoid the joint infringement issue in litigation. This should especially be kept in mind when a foreign-originated application is to be filed in the United States, as addressing the "multiple actor" issue early in prosecution can save an applicant time and money, as well as strengthen one’s infringement arguments against potential infringers after the patent grants.