The Importance Of Contracts For Joint Infringement In Patent Cases

It has been about a year since the Supreme Court rendered its decision in Limelight v. Akamai regarding induced infringement for methods performed by two or more actors. "At that time, commentators predicted that attention would shift to contract analysis for determining direct, rather than induced, infringement in these multi-actor method situations, known as joint or divided infringement." The recent decision by the Federal Circuit in Akamai v. Limelight on remand, as well as a search of recent district court cases, shows that those predictions have now come true. In view of the importance of contract analysis for determining joint infringement, practitioners would do well to obtain contracts early in discovery to determine the strength of their positions, and practitioners drafting contracts should be mindful of potential joint infringement implications.

In Limelight Networks, Inc. v. Akamai Techs., Inc., 134 S. Ct. 2111 (2014), the Supreme Court held that there can be no liability for induced infringement of a patented method when there is no direct infringer in a case where the steps of the method are carried out by separate actors. The Supreme Court, however, left untouched the existing law that liability for direct infringement can be found if the defendant exercises "direction or control" over the other actors. See Muniauction, Inc. v. Thompson Corp., 532 F.3d 1318, 1328-29 (Fed. Cir. 2008); Aristocrat Techs. Austl. PTY Ltd. v. Int'l Game Tech., 709 F.3d 1348, 1362 (Fed. Cir. 2013); BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007). The Federal Circuit recently issued its opinion following remand in Akamai Techs., Inc. v. Limelight Networks, Inc., No. 2009-1372, 2015 U.S. App. LEXIS 7856 (Fed. Cir. May 13, 2015). The opinion explains that the prior decisions in BMC Resources and Muniauction directly applied to the facts in the case, and led to the conclusion that because Limelight did not perform all of the steps of the asserted method claims and because the record contained no basis on which to impose liability on Limelight for the actions of its customers who carried out the other steps, Limelight had not directly infringed the asserted patent.

A contract analysis was central to the Federal Circuit's conclusion in Akamai. Akamai had argued that Limelight's standard form contract obligated content providers to perform steps of the claimed methods. The Federal Circuit disagreed and reasoned that the form...