Federal Circuit Report

• Publication year: 2018
• Author: Rex Hwang

Federal Circuit Report

Rex Hwang

Glaser Weil Fink Howard Avchen & Shapiro LLP

Dan Liu

Glaser Weil Fink Howard Avchen & Shapiro LLP

Infringement of a patented method claim requires performance of all claimed method steps. In some instances, the claimed steps are carried out by multiple actors. When that occurs, one of the actors may be liable for the conduct of others under the doctrine of divided or joint infringement. Courts, however, have struggled for many years to try and define the exact scope of this doctrine.

In 2015, the Federal Circuit, sitting en banc, issued its decision in Akamai Tech., Inc. v. Limelight Networks, Inc. ("Akamai V") in which the Federal Circuit attempted to clarify the law as to joint patent infringement.¹ Specifically, in Akamai V, the Federal Circuit held that direct infringement under 35 U.S.C. § 271(a) occurs where all steps of a claimed method are performed by or attributable to a single entity. Where more than one actor is involved in practicing the steps, a court must determine whether the acts of one are attributable to the other such that a single entity is responsible for the infringement. An entity will be held 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.²

Despite the Federal Circuit's additional guidance in Akamai V, courts have continued to struggle apportioning liability in multi-party actions. And in Travel Sentry v. Tropp,³ issued in December 2017, the Federal Circuit arguably expanded the scope ofjoint infringement liability to include a broader range of scenarios. This article examines the Travel Sentry decision, and provides some relevant takeaways from that case.

THE CURRENT TEST FOR JOINT INFRINGEMENT UNDER AKAMAI V

The present state of the law surrounding joint infringement has a convoluted history—a sign of just how much courts have struggled to clearly define the doctrine. And the Akamai cases demonstrate this struggle quite well.

In 2006, Akamai sued Limelight for infringing a patent which claimed methods for delivering content over the Internet. It was undisputed that Limelight's customers performed the "tagging" and "serving" steps in the claimed methods of Akamai's patent, while Limelight performed the remaining steps. At trial, the judge instructed the jury that Limelight was responsible for its customers' performance of the tagging and serving steps if it directed or controlled its customers' activities. Under that instruction, the jury found infringement. During post-trial motions, the Federal Circuit issued its opinion in Muniauction, Inc. v. Thomson Corp. holding that a method's steps have not all been performed as claimed by the patent unless they are all attributable to the same party.⁴ Accordingly, the district court granted JMOL in Limelight's favor.

The original Federal Circuit panel, following Muniauction, affirmed the district court's decision.⁵ (Akamai I). However, the Federal Circuit granted en banc review and reversed.⁶ (Akamai II). The en banc court found that the relevant evidence could support a theory of induced infringement without deciding the issue of direct infringement. That decision was appealed to the Supreme Court. The Supreme Court granted certiorari and reversed the Federal Circuit's decision, in an opinion primarily dealing with induced infringement.⁷ (Akamai III). In particular, the Supreme Court held that the Federal Circuit erred in holding that a defendant may be liable for inducing infringement under § 271(b) even though there is no direct infringer under § 271(a). On remand, a Federal Circuit panel held that direct infringement "exists when all of the steps of the claim are performed by or attributed to a single entity...for example, in a principal-agent relationship, in a contractual arrangement, or in a joint enterprise."⁸ (Akamai IV).

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The Federal Circuit granted en banc review and again reversed. (Akamai V). This time, the Federal Circuit held that "Section 271(a) is not limited solely to principal-agent relationships, contractual arrangements, and joint enterprise, as the vacated panel decision held."⁹ Rather, an entity is responsible for another's performance of method steps in two sets of circumstances: "(1) where [an] entity directs or controls [the other actors'] performance, and (2) where the actors form a joint enterprise."¹⁰ "To determine if a single entity directs or controls the acts of another," the Federal Circuit adopted the general principles of vicarious liability where a single entity is liable if "it acts through an agent.or contracts with another to perform one or more steps of a claimed method."¹¹ In addition, "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."¹²

The Federal Circuit found that substantial evidence supported a finding that Limelight directed and controlled its customers in performing the tagging and serving steps.¹³ First, Limelight required all its customers to sign a contract, which delineated the steps customers must perform to receive Limelight's service.¹⁴ This indicated "that Limelight conditions...