Today, the United States Supreme Court delivered an opinion that rules that a person cannot induce patent infringement by conducting some of the elements of the patent and then encouraging its customers to complete the rest of the elements of the patent. In Limelight Networks, Inc. v. Akamai Technologies, Inc., et al., the Court held that Limelight did not violate the patent of Massachusetts Institute of Technology (MIT) or its licensee Akamai.

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Both Akamai and Limelight are content delivery networks (CDN) which means that they contract with “content providers” (website owners) to deliver large files, like music or video files, at high speeds to individual internet users. Limelight has contracted with partners such as Microsoft, NBC, CBS to help deliver content such as Microsoft’s Internet Properties, the 2008 Summer Olympics and the 2009 NCAA Men’s Basketball Tournament. Akamai has contracts with companies such as Facebook, Twitter, Hulu and Netflix to help provide their content. The issue in this case is that Akamai licensed a patent from MIT and Limelight uses the same process except for one element which it encourages the individual internet user to do. Akamai licensed from MIT a patent that enables for the delivery of large files by high speeds through a number of steps, including “tagging” which is the designation of certain components of those files to be stored on Akamai’s server. Limelight conducts several of the elements of the MIT patent, except for the “tagging” which it encourages the individual internet user to do on his/her own. Akamai claimed that Limelight’s conduct induces infringement on the patent that it licenses from MIT.

In 2006, Akamai and MIT sued Limelight for patent infringement.  A jury found that Limelight was infringing on MIT’s patent, but the jury’s finding was overturned in light of a new precedent from the Federal Circuit Court. In Muniauction, Inc. v. Thompson Corp., the Federal Circuit ruled that a person cannot infringe on a patent unless a single person conducts all the elements of the patent or exercises “control or direction” over the entire process. The Federal District Court, on a motion for reconsideration from Limelight, found that the jury’s verdict could not be upheld since Muniauction precluded a finding of liability based on Limelight’s conduct. A panel of the Federal Circuit affirmed the District Court’s holding.  Yet on reconsideration by all the judges of the Federal Circuit Court, the Court held that while Limelight’s conduct could not be considered an infringement, it did constitute induced infringement and therefore Limelight could be held liable on that theory. Limelight appealed to the U.S. Supreme Court and the Supreme Court decided to hear the case.

The Supreme Court in today’s decision reversed the holding of the Federal Circuit Court and held that Limelight’s conduct cannot be considered induced infringement. First, the Supreme Court restates the law that a person cannot be held liable for inducing infringement if there was no direct infringement. While the Supreme Court does not affirm Muniauction, which is only a Federal Circuit precedent, the Court does state that neither Limelight nor the individual internet users directly infringed on the patent. Supreme Court precedent requires that a person perform all elements of a patent in order to be liable for directly infringing on the patent. Here, neither Limelight nor the individual internet users carried out all elements of the patent, because Limelight does not “tag” and the individual internet users only “tag.” Akamai argued that Limelight’s conduct under alternative circumstances would constitute infringement, but the Court found that argument unpersuasive. The Court dismisses Akamai’s argument of infringement under alternative circumstances because the Court feels that it would lead to perverse circumstances in which a person is held liable for inducement when not even all the elements of the patent are performed by the person or his/her agent. The Court also rejected attempts to apply legal theories from Tort or Criminal Law to this issue of inducing patent infringement. Therefore, the Court held that a person cannot induce patent infringement unless direct infringement occurs through the induced person performing all the elements of the patent.

The Supreme Court’s decision in Limelight Networks will have far-reaching effects on the use of the internet and beyond.  Most immediately, this decision will allow Limelight to continue its conduct without liability for patent infringement and without paying MIT a license fee. The Limelight Networks precedent will expand the use of internet tools in which one person performs some of the elements of a patented procedure and the consumer performs the other elements. This practice will continue to allow some people to get around patents created by the inventors of these processes unless Congress decides to act to deal with this new situation in Patent Law.

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