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Akamai Technologies, Inc. v. Limelight Networks, Inc.

United States Court of Appeals, Federal Circuit

May 13, 2015

AKAMAI TECHNOLOGIES, INC., THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY, Plaintiffs-Appellants
v.
LIMELIGHT NETWORKS, INC., Defendant-Cross-Appellant

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Appeals from the United States District Court for the District of Massachusetts in Nos. 06-CV-11585, 06-CV-11109, Judge Rya W. Zobel.

AFFIRMED.

SETH P. WAXMAN, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, DC, argued for plaintiffs-appellants. Also represented by THOMAS SAUNDERS, THOMAS GREGORY SPRANKLING; MARK CHRISTOPHER FLEMING, ERIC FLETCHER, LAUREN B. FLETCHER, BROOK HOPKINS, Boston, MA; DAVID H. JUDSON, Law Offices of David H. Judson, Dallas, TX; DONALD ROBERT DUNNER, KARA F. STOLL, ELIZABETH D. FERRILL, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Washington, DC; JENNIFER S. SWAN, Palo Alto, CA; ROBERT S. FRANK, JR., G. MARK EDGARTON, CARLOS PEREZ-ALBUERNE, Choate, Hall & Stewart, LLP, Boston, MA.

AARON M. PANNER, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, DC, argued for defendant-cross appellant. Also represented by JOHN CHRISTOPHER ROZENDAAL, MICHAEL E. JOFFRE; ALEXANDER FRASER MACKINNON, Kirkland & Ellis LLP, Los Angeles, CA; YOUNG JIN PARK, New York, NY; DION D. MESSER, Limelight Networks, Inc., Tempe, AZ.

JERRY ROBIN SELINGER, Patterson & Sheridan LLP, Dallas, TX, for amici curiae Altera Corporation, HTC America, Inc., HTC Corporation, Weatherford International, Inc. Also represented by B. TODD PATTERSON, Houston, TX; GERO MCCLELLAN, Greensboro, NC.

WILLIAM G. BARBER, Pirkey Barber LLP, Austin, TX, for amicus curiae American Intellectual Property Law Association.

TIMOTHY TETER, Cooley LLP, Palo Alto, CA, for amicus curiae Apple Inc. Also represented by BENJAMIN G. DAMSTEDT, IAIN R. CUNNINGHAM, LORI R. MASON; PATRICK J. MURPHY, Apple Computer Inc., Cupertino, CA.

MEREDITH MARTIN ADDY, Katten Muchin Rosenman LLP, Chicago, IL, for amici curiae Aristocrat Technologies Australia PTY Limited, Aristocrat Technologies, Inc. Also represented by ANTHONY R. DE ALCUAZ, McDermott, Will & Emery LLP, Menlo Park, CA.

JOHN W. RYAN, Thompson Hine LLP, Washington, DC, for amicus curiae Biotechnology Industry Organization. Also represented by HANSJORG SAUER, Biotechnology Industry Organization, Washington, DC; THOMAS M. HAAS, Sullivan & Worcester, Washington, DC.

JEFFREY E. FRANCIS, Pierce Atwood LLP, Boston, MA, for amicus curiae Boston Patent Law Association.

GREGORY PAUL STONE, Munger, Tolles & Olson LLP, Los Angeles, CA, for amicus curiae CTIA The Wireless Association. Also represented by HEATHER E. TAKAHASHI, ANDREW W. SONG.

RAYMOND PARDO NIRO, I, Niro, Haller & Niro, Chicago, IL, for amici curiae Cascades Ventures, Inc., VNS Corporation. Also represented by JOHN C. JANKA.

EDWARD R. REINES, Weil, Gotshal & Manges LLP, Redwood Shores, CA, for amici curiae Cisco Systems, Inc., Dell Inc., Google Inc., Hewlett-Packard Company, Intel Corporation, Intuit Inc., Micron Technology, Inc., NetApp, Inc., Ringcentral, Inc., SAP America, Inc., Symantec Corporation, Yahoo! Inc., Zynga Inc., Ebay, Inc. Also represented by NATHAN A. GREENBLATT.

STEVEN C. SEREBOFF, SoCal IP Law Group LLP, Westlake Village, CA, for amicus curiae Conejo Valley Bar Association. Also represented by MEENAKSHI KALA SARVAIYA, MARK ANDREW GOLDSTEIN.

JULIE P. SAMUELS, Electronic Frontier Foundation, San Francisco, CA, for amicus curiae Electronic Frontier Foundation. Also represented by MICHAEL BARCLAY.

MATTHEW D. MCGILL, Gibson, Dunn & Crutcher LLP, for amici curiae Facebook, Inc., LinkedIn Corporation, Also represented by WILLIAM G. JENKS, Jenks IP Law, Washington, DC.

JOHN STEVEN GARDNER, Kilpatrick Townsend & Stockton LLP, Winston-Salem, NC, for amicus curiae The Financial Services Roundtable. Also represented by ALTON LUTHER ABSHER; GIA L. CINCONE, San Francisco, CA.

PETER J. BRANN, Brann & Isaacson, Lewiston, ME, for amicus curiae Internet Retailers. Also represented by STACY O. STITHAM, DAVID SWETNAM-BURLAND.

GARRETH A. SAROSI, Winstead Attorneys, Dallas, TX, for amicus curiae MetroPCS Wireless, Inc. Also represented by MARK ATKERSON STACHIW, Metro PCS Communications Inc., Richardson, TX.

BENJAMIN JACKSON, Myriad Genetics, Salt Lake City, UT, for amicus curiae Myriad Genetics, Inc. Also represented by JAY Z. ZHANG.

CHARLES A. WEISS, Kenyon & Kenyon LLP, New York, NY, for amicus curiae New York Intellectual Property Law Association. Also represented by THERESA M. GILLIS, Mayer Brown, LLP, New York, NY.

ROBERT P. TAYLOR, Arnold & Porter, LLP, San Francisco, CA, for amicus curiae Pharmaceutical Research and Manufacturers of America. Also represented by MONTY AGARWAL; LISA A. ADELSON, DAVID R. MARSH, Washington, DC; DAVID EVAN KORN, Pharmaceutical Research and Manufacturers Association of America, Washington, DC.

VICKI GEE NORTON, Duane Morris LLP, San Diego, CA, for amicus curiae The San Diego Intellectual Property Law Association.

ERIC LAURENCE ABBOTT, Abbott Law Chartered, Las Vegas, NV, for amicus curiae Shuffle Master, Inc.

CALVIN L. LITSEY, Faegre Baker Daniels LLP, Minneapolis, MN, for amicus curiae Thomson Reuters Corporation. Also represented by TIMOTHY M. SULLIVAN, AARON D. VAN OORT, CHRISTOPHER J. BURRELL.

MICHAEL K. KIRSCHNER, Hillis, Clark, Martin & Peterson P.S., Seattle, WA, for amicus curiae Washingon State Patent Law Association. Also represented by ALEXANDER M. WU.

CHARLES R. MACEDO, Amster Rothstein & Ebenstein LLP, New York, NY, for amici curiae Double Rock Corporation, Island Intellectual Property, LLC, Broadband ITV, Inc. Also represented by JESSICA A. CAPASSO.

Before PROST, Chief Judge, LINN, and MOORE,[*] Circuit Judges. Dissenting opinion filed by Circuit Judge MOORE.

OPINION

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Linn, Circuit Judge.

This appeal returns to us following remand from the United States Supreme Court. See Limelight Networks, Inc. v. Akamai Techs., Inc., 134 S.Ct. 2111, 189 L.Ed.2d 52 (2014). Because our prior decisions in BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), and Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008), directly apply to the facts of this case and because the statutory framework of 35 U.S.C. § 271 does not admit to the sweeping notions of common-law tort liability argued in this case, we again conclude that because Limelight Networks, Inc. (" Limelight" ) did not perform all of the steps of the asserted method claims of U.S. Patent No. 6,108,703 (the " '703 patent" ) and because the record contains no basis on which to impose liability on Limelight for the actions of its customers who carried out the other steps, Limelight has not directly infringed the '703 patent under § 271(a). Accordingly, we affirm the district court's finding of noninfringement and do not reach Limelight's cross-appeal regarding damages. We also confirm our previously reinstated affirmance of the district court's judgment of noninfringement of U.S. Patents No. 6,553,413 (the " '413 patent" ) and No. 7,103,645 (the " '645 patent" ). See Akamai, 629 F.3d 1311 (Fed. Cir. 2010), which was vacated, 419 F.App'x 989 (Fed. Cir. 2011)

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( en banc ), and then partially reinstated. Order No. 2009-1372 (Fed. Cir. Sept. 27, 2012) ( en banc ).

I. Background

A detailed description of the history of proceedings, the technology and the claims at issue in this case is set forth in the prior reported opinions of this court and the Supreme Court and will not be repeated except to the extent germane hereto. See Limelight, 134 S.Ct. 2111, 189 L.Ed.2d 52; Akamai, 692 F.3d 1301 (Fed. Cir. 2012) ( en banc ); Akamai, 629 F.3d 1311.

II. Divided Infringement Under § 271(a)

In the court's view, and for the reasons set forth in more detail, infra, direct infringement liability of a method claim under 35 U.S.C. § 271(a) exists when all of the steps of the claim are performed by or attributed to a single entity--as would be the case, for example, in a principal-agent relationship, in a contractual arrangement, or in a joint enterprise.[1] Because this case involves neither agency nor contract nor joint enterprise, we find that Limelight is not liable for direct infringement.

Direct infringement under § 271(a) requires a party to perform or use each and every step or element of a claimed method. Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 29, 117 S.Ct. 1040, 137 L.Ed.2d 146 (1997). For method patent claims, direct infringement only occurs when a single party or a joint enterprise performs all of the steps of the process. See Joy Techs., Inc. v. Flakt, Inc., 6 F.3d 770, 775 (Fed. Cir. 1993) (" A method claim is directly infringed only by one practicing the patented method." (emphasis omitted)); Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565, 1567-68 (Fed. Cir. 1983) (" Because the [method] claims include the application of a diazo coating or other light sensitive layer and because Advance's customers, not Advance, applied the diazo coating, Advance cannot be liable for direct infringement with respect to those plates." ). This holding derives from the statute itself, which states " whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent." § 271(a). Encouraging or instructing others to perform an act is not the same as performing the act oneself and does not result in direct infringement. BMC, 498 F.3d at 1378-79. This is evidenced by the fact that § 271 has separate subsections addressing induced and contributory infringement. When a party participates in or encourages infringement but does not directly infringe a patent, the normal recourse under the law is for the court to apply the standards for liability under indirect infringement. Id. However, indirect infringement requires, as a predicate, a finding that some party is directly liable for the entire act of direct infringement. Limelight, 134 S.Ct. at 2115. In circumstances in which one party, acting as " mastermind" exercises sufficient " direction or control" over the actions of another, such that those actions may be attributed to the mastermind, the combined performance of the steps of a method claim will directly infringe under § 271(a). BMC, 498 F.3d at 1382. " Under BMC Resources, the control or direction standard is satisfied in situations where the law would traditionally

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hold the accused direct infringer vicariously liable for the acts committed by another party that are required to complete performance of a claimed method." Muniauction, 532 F.3d at 1330. This may occur in a principal-agent relationship, a contractual relationship or in circumstances in which parties work together in a joint enterprise functioning as a form of mutual agency.

Akamai asserts that the Supreme Court's Limelight decision " strongly implies that a change in direction on § 271(a) is warranted." Br. for Akamai at 3, Akamai, No. 2009-1372 (Fed. Cir. Aug. 18, 2014) (" Akamai's Letter Br." ). It claims that in lieu of overruling Muniauction, this panel can decline to extend it to the facts of this case. Id. According to Akamai, an accused infringer " directs or controls" a third party if the accused infringer goes beyond loosely providing instructions and specifically tells a third party the step or steps to perform. Id. at 9. In its en banc briefing, Akamai cites joint tortfeasor principles as support. See, e.g., Principal Br. for Pls.-Appellants at 21, Akamai, 692 F.3d 1301 ( available at 2011 WL 2822716) (citing Restatement (Second) of Agency § 212, cmt. a (discussing the tort principle that " one causing and intending an act or result is as responsible as if he had personally performed the act or produced the result" )); id. at 22 (quoting Restatement (Second) of Torts § 877(a) (subjecting a party to liability for " order[ing]" conduct)). Limelight responds that Akamai's expansive attribution theory " would render both Section 271(b) and Section 271(c) meaningless." Br. of Def.-Cross-Appellant Limelight Networks, Inc. on Rehearing En Banc at 41, Akamai, 692 F.3d 1301 ( available at 2011 WL 3796785) (quoting Mark A. Lemley et al., Divided Infringement Claims, 6 Sedona Conf. J. 117, 119-20 (2005) (" Lemley" )).

We begin by considering whether § 271(a) incorporates joint tortfeasor liability, as Akamai and the dissent advocate. Unquestionably, it does not. As codified by Congress, § 271(a) includes only the principles of vicarious liability, as embodied in the single entity rule. Presented with numerous conflicting theories of joint liability that existed in the common law prior to 1952, Congress enacted specific rules for inducement and contributory liability in § 271(b) and (c), respectively. While the dissent believes this leaves a " gaping hole," Dissent at 1, it is not our position to legislate or contravene Congress' choice--right or wrong--by importing other theories of joint liability into § 271(a).

The alternative--stretching § 271(a) to include joint tortfeasor liability--is flawed. To make joint tortfeasor liability consistent with the well-established fact that direct infringement liability under § 271(a) is strict liability, Akamai and the dissent must abandon several core tenets of joint tortfeasor law. This position also leads to untenable results. For example, the dissent advocates holding a customer jointly and severally liable for patent infringement based on its performance of a single step of a claimed method, even when it has no knowledge of the patent.

In the analysis that follows we address, in turn, three subjects: the statutory scheme of § 271, the divided infringement case law, and the errors in importing joint tortfeasor liability into § 271(a).

A. The Statutory Scheme of § 271

Patent infringement is not a creation of common law. It is a tort defined by statute. See Crown Die & Tool Co. v. Nye Tool & Mach. Works, 261 U.S. 24, 40, 43 S.Ct. 254, 67 L.Ed. 516, 1923 Dec. Comm'r Pat. 651 (1923) (" The monopoly [granted to the patentee] did not exist at common law, and the rights, therefore,

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which may be exercised under it cannot be regulated by the rules of the common law." (quoting Gayler v. Wilder, 51 U.S. (10 How.) 477, 494, 13 L.Ed. 504 (1850))); 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1379 (Fed. Cir. 1998) (" Defining the contours of the tort of infringement, which exists solely by virtue of federal statute, entails the construction of the federal statute and not a state's common or statutory law." (citing N. Am. Philips Corp. v. Am. Vending Sales, Inc., 35 F.3d 1576, 1579 (Fed. Cir. 1994)).

35 U.S.C. § 271(a) provides that:

Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

Section 271(a) defines infringement. H.R. Rep. No. 82-1923, at 9 (1952) (" Section 271, paragraph (a), is a declaration of what constitutes infringement." (emphasis added)). Subsections (b) and (c), in turn, codify the doctrines of inducement and contributory infringement respectively.

The Supreme Court has observed that " the 1952 Act did include significant substantive changes, and . . . § 271 was one of them." Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176, 204, 100 S.Ct. 2601, 65 L.Ed.2d 696 (1980). In the 1952 Patent Act, Congress removed joint-actor patent infringement liability from the discretion of the courts, defining " infringement" in § 271(a) and expressly outlining in § 271(b) and (c) the only situations in which a party could be liable for something less than an infringement. This was purposeful. At the time, the courts applied a myriad of approaches to multi-actor infringement: some liberally allowed for multi-actor liability, see, e.g., Peerless Equip. Co. v. W.H. Miner, Inc., 93 F.2d 98, 105 (7th Cir. 1937); Solva Waterproof Glue Co. v. Perkins Glue Co., 251 F. 64, 73-74 (7th Cir. 1918), while others nearly never permitted multiactor liability, see, e.g., Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661, 669, 64 S.Ct. 268, 88 L.Ed. 376, 1944 Dec. Comm'r Pat. 641 (1944) (" [w]hat residuum [of contributory infringement] may be left we need not stop to consider" ); Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680, 684, 64 S.Ct. 278, 88 L.Ed. 396, 1944 Dec. Comm'r Pat. 637 (1944). 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. See Contributory Infringement in Patents--Definition of Invention: Hearings on H.R. 5988, 4061, and 5248 Before the Subcomm. on Patents, Trademarks, and Copyrights of the H. Comm. on the Judiciary, 80th Cong. 12 (1948) (statement of Giles S. Rich on behalf of the New York Patent Law Ass'n) (" contributory infringement is a specific application to patent law of the law of joint tort feasor" ); Hearing on H.R. 3866 Before Subcomm. No. 4 of the H. Comm. on the Judiciary, 81st Cong. 2 (1949) (statement of Giles S. Rich on behalf of the New York Patent Law Ass'n) (" Time out of mind, under the old common law, there has been a doctrine of joint tort feasors to the effect that people who jointly commit a tort are jointly and severally liable. This contributory infringement is nothing but the application of that doctrine to patent law." ); id. at 3, 6-7; Giles S. Rich, Infringement Under Section 271 of the Patent Act of 1952, 35 J. Pat. Off. Soc'y 476, 480 (1953) (" Contributory infringement is an expression of the old common law doctrine of joint tort feasors." (emphases in original)).

Indeed, in this way, Congress carefully crafted subsections (b) and (c) to

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expressly define the only ways in which individuals not completing an infringing act under § 271(a) could nevertheless be liable. See, e.g., Dawson, 448 U.S. at 187-214 (discussing at length the state of contributory infringement prior to the 1952 Patent Act and the legislative history of the 1952 Act). Therefore, 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. See Cent. Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 184, 114 S.Ct. 1439, 128 L.Ed.2d 119 (1994) (" 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." ). We must respect Congress' deliberate choice to enact only certain forms of contributory liability in § 271(b) and (c).[2]

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." The Supreme Court in Global-Tech, quoting Webster's, explained that to induce " means to lead on; to influence; to prevail on; to move by persuasion or influence." Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060, 2065, 179 L.Ed.2d 1167 (2011) (quoting Webster's New International Dictionary 1269 (2d ed. 1945)) (internal citations and brackets omitted). Webster's contains several, somewhat overlapping, definitions for " induce," one of which is " cause." Webster's at 1269; accord Dansereau v. Ulmer, 903 P.2d 555, 564 (Alaska 1995); United States v. McQueen, 670 F.3d 1168, 1170 (11th Cir. 2012). And even the definitions expressly quoted in Global-Tech --namely: to lead on; to influence; to prevail on; to move by persuasion or influence--are all ways to " cause." The Supreme Court in Global-Tech further explained that the adverb " actively" means that " the inducement must involve the taking of affirmative steps to bring about the desired result." 131 S.Ct. ...


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