The Supreme Court has sided with Limelight Networks in a patent infringement lawsuit originally brought by Akamai Technologies.
In a unanimous vote released on Monday, all of the justices sided with Justice Samuel Alito and reversed the 2012 ruling by the U.S. Court of Appeals for the Federal Circuit, which was in favor of Akamai.
A Massachusetts jury heard the trial and decided that Limelight infringed on the patents. It awarded $40.1 million in lost profits and $1.4 million in damages to the company, according to Reuters.
The case was seen as having implications on the nature of intellectual property claims involving more than one party, InsideCounsel reported last month.
In his opinion, Alito ruled one party cannot be liable for inducing another party to infringe unless that other party actually committed the infringement – which would be “direct infringement” under 35 U.S.C. 271(a), according to the American Intellectual Property Law Association (AIPLA).
The case was limited to liability of the "inducer," and the Supreme Court assumed there had to be a single party who directed the various actors, the AIPLA added in a statement on the ruling. In addition, the case was remanded to the Federal Circuit to decide if Limelight committed direct infringement.
"We are pleased that the Supreme Court recognized the need for greater clarity in these areas and moved quickly to provide guidance," AIPLA President Wayne Sobon said in the statement.
In reviewing the decision, Marla Butler, a partner with Robins, Kaplan, Miller & Ceresi, said the Limelight opinion has the Supreme Court citing Section 271(f) of the Patent Act.
“The Court has presented to Congress an opportunity to create some balance in the Patent Reform Bill, should Congress take the bill up again,” she added. “While that bill is focused on curbing the behavior of patent trolls, the Supreme Court has now highlighted a loophole in the law that allows two parties to conspire to infringe another’s patent and avoid liability. Congress can close that loophole while also addressing abusive and deceptive behavior on the part of patent owners.”
Another attorney who specializes in intellectual property, Michael Kahn of Ropes & Gray, said the Supreme Court in its decision “rejected the Federal Circuit’s application of liability for induced infringement to a situation where there is no underlying liability for direct infringement. This case marked the latest decision on … ‘divided infringement’ – where multiple actors perform different steps of claimed methods.”
He explained that these cases are particularly applicable to computer-implemented methods, interactive software patents and multi-actors. Also, Kahn said the Supreme Court raised the possibility that the Federal Circuit’s Muniauction standard may have “too narrowly circumscribed the scope of §271(a).”
“The … appropriate route for addressing the perceived gap in infringement liability … would be either for the Federal Circuit to reconsider the ‘direction or control’ standard, or for Congress to revise the Patent Statute,” he continued. “Whichever route is taken, there is a significant chance that the standard for direct infringement of method claims will once again be changed, so the ultimate winner remains to be seen.”
“The Supreme Court’s decision and reasoning were as expected by many practitioners,” added Gene Lee, who also works at Ropes & Gray in intellectual property. “This decision will have a significant impact on industries that involve activities that are carried out in a distributed way, by multiple entities, especially industries involving computer networks and telecommunications networks such as online commerce.”
In addition, Lee said the Supreme Court “expressed the view that the Federal Circuit had overstepped its bounds and issued a standard that departed from the patent statutes and attempted to change the law in a way that only Congress may do. The Court also raised the possibility that the Federal Circuit could, on remand, revisit the standard for joint infringement under Section 271(a), under which liability exists if the accused activities are carried out by more than one entity, and one entity ‘directs or controls’ or requires by contractual obligation the actions of another entity.”