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Fat Lady in the Limelight?

Fat Lady in the Limelight?

J.D. Salinger was famous for saying (in Catcher in the Rye) “It’s not over until the fat lady sings.” This posting is about the August 13, 2015 en banc decision from the CAFC in Limelight Networks, Inc. v. Akamai Technologies, Inc. The CAFC heard the court on remand from the Supreme Court.

The remand order itself was covered in an earlier posting.

For those readers that have not been following the case, in the original CAFC en-banc decision of August 31, 2012 that court “…reconsider[ed] and overrule[d] the 2007 decision of this court in which we held that in order for a party to be liable for induced infringement, some other single entity must be liable for direct infringement. BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007). To be clear, we hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity.

The 2012 court ruled: “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 liableas a direct infringer. If a party has knowingly induced others to commit the acts necessary to infringe the plaintiff’s patent and those others commit those acts, there is no reason to immunize the inducer from liability for indirect infringement simply because the parties have structured their conduct so that no single defendant has committed all the acts necessary to give rise to liability for direct infringement.”

On June 12, 2014 the Supreme Court remanded the Case to the CAFC indicating: “The Federal Circuit seems to have adopted the view that Limelight induced infringement on the theory that the steps that Limelight and its customers perform would infringe the ’703 patent if all the steps were performed by the same person. But we have already rejected the notion that conduct which would be infringing in altered circumstances can form the basis for contributory infringement, and we see no reason to apply a different rule for inducement. In Deepsouth Packing Co. v. Laitram Corp., 406 U. S. 518 (1972), a manufacturer produced components of a patented machine and then exported those components overseas to be assembled by its foreign customers. (Theassembly by the foreign customers did not violate U. S.patent laws.) In both Deepsouth and this case, the conduct that the defendant induced or contributed to would have been infringing if committed in altered circumstances: in Deepsouth if the machines had been assembled in the United States, see id., at 526, and in this case if performance of all of the claimed steps had been attributable to the same person. In Deepsouth, we rejected the possibility of contributory infringement because the machines had not been assembled in the United States, and direct infringement had consequently never occurred. See id., at 526–527. Similarly, in this case, performance of all the claimed steps cannot be attributed to a single person, so direct infringement never occurred. Limelight cannot be liable for inducing infringement that never came to pass.

On May 13, 2015 a CAFC panel comprising Chief Judge Prost and Judhes Linn and Moor delivered an opinion in which the court held:

In enacting § 271(b) and (c), Congress cleared away the morass of multi-actor infringement theories that were the unpredictable creature of common law in favor of two infringement theories that it defined by statute…. to the extent that tort law’s contributory liability principles are applicable at all, § 271(b) and (c) embody the application of contributory liability principles to patent law…. The fact that Congress chose to impose some forms of secondary liability, but not others, indicates a deliberate congressional choice with which the courts should not interfere…. Furthermore, Akamai’s broad theory of attribution— in which a defendant would be liable for “causing and intending an act or result,” Akamai’s Letter Br. at 4 (citations omitted)—would render § 271(b) redundant. Subsection (b) states: “Whoever actively induces infringement of a patent shall be liable as an infringer…. As this court correctly recognized inBMC, “[t]he concerns over a party avoiding infringement by arms-length cooperation can usually be offset by proper claim drafting. A patentee can usually structure a claim to capture infringement by a single party… guilt of direct infringement of a method claim under § 271(a) requires performance by the accused of all steps recited in the claim… Thus, contrary to Akamai’s and the dissent’s positions, actors whose innocent actions coordinate to cause harm generally are not subject to liability at common law. Here, there is no evidence that Lime- light’s customers knew what steps Limelight was taking, much less evidence that they coordinated further. Thus, there was no concert of action.”

The May 2015 panel concluded , of course, that the district Court’s JMOL of non-infringement was proper.

That brings us to the August 13, 2015 en-banc decision of the CAFC. The decision is short and to the point (9 pages). It opens with a statement that “This case was returned to us by the United States Supreme Court, noting “the possibility that [we] erred by too narrowly circumscribing the scope of § 271(a)” and suggesting that we “will have the opportunity to revisit the § 271(a) question . . . .”

The 2015 en banc Court states: We will hold an entity responsible for others’ performance of method steps in two sets of circumstances:

(1) where that entity directs or controls others’ performance, and

(2) where the actors form a joint enterprise.

The court then defines joint enterprise:

A joint enterprise requires proof of four elements:

(1) an agreement, express or implied, among the members of the group;

(2) a common purpose to be carried out by the group;

(3) a community of pecuniary interest in that purpose, among the members; and

(4) an equal right to a voice in the direction of the enterprise, which gives an equal right of control.

The bulk of the opinion goes to establishing that Limelight “directs or controls” that its customers perform the tagging and serving steps of the method claim at issue. The conclusion is that “At trial, Akamai presented substantial evidence from which a jury could find that Limelight directly infringed the ’703 patent. Therefore, we reverse the district court’s grant of judgment of noninfringement as a matter of law. Because issues in the original appeal and cross-appeal remain, we return the case to the panel for resolution of all residual issues consistent with this opinion.”

So the fat lady has sung only the rules for infringement. Final decision in this case will (apparently) come from a future CAFC panel. Time will tell whether the Supreme Court approves of the new rules they invited the CAFC to suggest.

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