On June 2, 2014, the United States Supreme Court held in Limelight Networks, Inc. v. Akamai Technologies, Inc., et al., Case No. 12-786, that there must be a single party that directly infringes a method patent for another party to be liable for inducing infringement of that patent. In its unanimous decision, which reversed the Court of Appeals for the Federal Circuit, the Supreme Court was uncharacteristically critical of the Federal Circuit.
In an en banc opinion, the Federal Circuit had found Limelight Networks liable for induced infringement where neither its customers nor Limelight performed all the steps of the asserted method patent. The Supreme Court concluded that resolution of the question presented was simple because it is well recognized that a finding of induced infringement requires direct infringement by a party and neither Limelight nor its customers directly infringed. Accordingly, the Supreme Court held that Limelight could not be liable for induced infringement.
Nevertheless, the Supreme Court acknowledged the Federal Circuit’s concern that a would-be infringer is able to evade liability by dividing the steps of a method patent with another party whom the defendant neither directs nor controls. But the Court found this result to be the necessary corollary of the Federal Circuit’s previous holding in Muniauction Inc. v. Thomson Corp., 532 F.3d 1318 (2008), that direct infringement requires a single party controlling the accused activity. The Supreme Court declined, however, to review that holding, instead remanding the case for further consideration of whether the Federal Circuit should revisit Muniauction and should find that direct infringement did occur.
This decision is significant for at least two reasons. First, it reaffirmed that “divided infringement” provides a safe-harbor to avoid liability for direct and indirect infringement. Second, there is a reasonable likelihood either on remand in Limelight or in a subsequent case that the Federal Circuit and the Supreme Court will soon revisit whether “divided infringement” will be recognized as an infringement that gives rise to liability under the patent law.