Limelight Networks, Inc. v. Akamai Techs., Inc.

• Decision Date: 02 June 2014
• Docket Number: No. 12–786.,12–786.
• Citation: 572 U.S. 915,134 S.Ct. 2111,189 L.Ed.2d 52
• Parties: LIMELIGHT NETWORKS, INC., Petitioner v. AKAMAI TECHNOLOGIES, INC., et al.
• Court: U.S. Supreme Court

572 U.S. 915

134 S.Ct. 2111

189 L.Ed.2d 52

LIMELIGHT NETWORKS, INC., Petitioner

v.AKAMAI TECHNOLOGIES, INC., et al.

No. 12–786.

Supreme Court of the United States

Argued April 30, 2014.

Decided June 2, 2014.

Aaron M. Panner, Washington, DC, for Petitioner.

Ginger D. Anders, for the United States as amicus curiae, by special leave of the Court, supporting the petitioner.

Seth P. Waxman, Washington, DC, for Respondents.

Alexander F. MacKinnon, Kirkland & Ellis LLP, Los Angeles, CA, Dion Messer, General Counsel–Intellectual Property, Limelight Networks, Inc., Tempe, AZ, Aaron M. Panner, Counsel of Record, John Christopher Rozendaal, Gregory G. Rapawy, Michael E. Joffre, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., Washington, DC, for Petitioner.

Donald R. Dunner, Kara F. Stoll, Finnegan, Henderson, Farabow, Garrett & Dunner LLP, Washington, DC, Seth P. Waxman, Counsel of Record, Thomas G. Saunders, Thomas G. Sprankling, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, DC, Jennifer S. Swan, Finnegan, Henderson, Farabow, Garrett & Dunner LLP, Palo Alto, CA, David H. Judson, Law Office of David H. Judson, Dallas, TX, Mark C. Fleming, Lauren B. Fletcher, Brook Hopkins, Eric F. Fletcher, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA, Robert S. Frank, Jr., Carlos Perez–Albuerne, Choate, Hall & Stewart LLP, Boston, MA, for Respondents.

Justice ALITO delivered the opinion of the Court.

This case presents the question whether a defendant may be liable for inducing infringement of a patent under 35 U.S.C. § 271(b) when no one has directly infringed the patent under § 271(a) or any other statutory provision. The statutory text and structure and our prior case law require that we answer this question in the negative. We accordingly reverse the Federal Circuit, which reached the opposite conclusion.

I

A

Respondent the Massachusetts Institute of Technology is the assignee of U.S. Patent No. 6,108,703 ('703 patent), which claims a method of delivering electronic data using a "content delivery network," or "CDN." Respondent Akamai Technologies, Inc., is the exclusive licensee. Akamai maintains many servers distributed in various locations. Proprietors of Web sites, known as "content providers," contract with Akamai to deliver their Web sites' content to individual Internet users. The '703 patent provides for the designation of certain components of a content provider's Web site (often large files, such as video or music files) to be stored on Akamai's servers and accessed from those servers by Internet users. The process of designating components to be stored on Akamai's servers is known as "tagging." By " aggregat[ing] the data demands of multiple content providers with differing peak usage patterns and serv[ing] that content from multiple servers in multiple locations," 614 F.Supp.2d 90, 96 (D.Mass.2009), as well as by delivering content from servers located in the same geographic area as the users who are attempting to access it, Akamai is able to increase the speed with which Internet users access the content of its customers' Web sites.

Petitioner Limelight Networks, Inc., also operates a CDN and carries out several of the steps claimed in the '703 patent. But instead of tagging those components of its customers' Web sites that it intends to store on its servers (a step included in the '703 patent ), Limelight requires its customers to do their own tagging.¹ Respondents claim that Limelight "provides instructions and offers technical assistance" to its customers regarding how to tag, 629 F.3d 1311, 1321 (C.A.Fed.2010), but the record is undisputed that Limelight does not tag the components to be stored on its servers.

B

In 2006, respondents sued Limelight in the United States District Court for the District of Massachusetts, claiming patent infringement. The case was tried to a jury, which found that Limelight had committed infringement and awarded more than $40 million in damages.

Respondents' victory was short-lived, however. After the jury returned its verdict, the Federal Circuit decided Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (2008). In that case the Court of Appeals rejected a claim that the defendant's method, involving bidding on financial instruments using a computer system, directly infringed the plaintiff's patent. The defendant performed some of the steps of the patented method, and its customers, to whom the defendant gave access to its system along with instructions on the use of the system, performed the remaining steps. The court started from "the proposition that direct infringement requires a single party to perform every step of a claimed method." Id., at 1329. This requirement is satisfied even though the steps are actually undertaken by multiple parties, the court explained, if a single defendant "exercises 'control or direction' over the entire process such that every step is attributable to the controlling party." Ibid. The court held that the defendant in Muniauction was not liable for direct infringement because it did not exercise control or direction over its customers' performance of those steps of the patent that the defendant itself did not perform. Id., at 1330.

In light of Muniauction, Limelight moved for reconsideration of its earlier motion for judgment as a matter of law, which the District Court had denied. The District Court granted the motion, concluding that Muniauction precluded a finding of direct infringement under § 271(a) because infringement of the '703 patent required tagging and Limelight does not control or direct its customers' tagging. A panel of the Federal Circuit affirmed, explaining that a defendant that does not itself undertake all of a patent's steps can be liable for direct infringement only "when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps." 629 F.3d, at 1320. Since neither of these conditions was met in the present case, the Federal Circuit panel held that Limelight could not be held liable for direct infringement.² Ibid.

The Federal Circuit granted en banc review and reversed. The en banc court found it unnecessary to revisit its § 271(a) direct infringement case law. Instead, it concluded that the "evidence could support a judgment in [respondents'] favor on a theory of induced infringement" under § 271(b). 692 F.3d 1301, 1319 (2012) (per curiam ). This was true, the court explained, because § 271(b) liability arises when a defendant carries out some steps constituting a method patent and encourages others to carry out the remaining steps—even if no one would be liable as a direct infringer in such circumstances, because those who performed the remaining steps did not act as agents of, or under the direction or control of, the defendant. The Court of Appeals did not dispute that "there can be no indirect infringement without direct infringement," id., at 1308, but it explained that "[r]equiring proof that there has been direct infringement ... is not the same as requiring proof that a single party would be liable as a direct infringer," id., at 1308–1309 (emphasis deleted). Judge Newman and Judge Linn both dissented (with the latter joined by Judges Dyk, Prost, and O'Malley).

Limelight sought certiorari, which we granted. 571 U.S. ––––, 187 L.Ed.2d 701, 134 S.Ct. 895 (2014).

II

A

Neither the Federal Circuit, see 692 F.3d, at 1308, nor respondents, see Tr. of Oral Arg. 44, dispute the proposition that liability for inducement must be predicated on direct infringement. This is for good reason, as our case law leaves no doubt that inducement liability may arise "if, but only if, [there is] ... direct infringement." Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 341, 81 S.Ct. 599, 5 L.Ed.2d 592 (1961) (emphasis deleted).³

One might think that this simple truth is enough to dispose of this appeal. But the Federal Circuit reasoned that a defendant can be liable for inducing infringement under § 271(b) even if no one has committed direct infringement within the terms of § 271(a) (or any other provision of the patent laws), because direct infringement can exist independently of a violation of these statutory provisions. See 692 F.3d, at 1314.

The Federal Circuit's analysis fundamentally misunderstands what it means to infringe a method patent. A method patent claims a number of steps; under this Court's case law, the patent is not infringed unless all the steps are carried out. See, e.g., Aro, supra, at 344, 81 S.Ct. 599 (a "patent covers only the totality of the elements in the claim and ... no element, separately viewed, is within the grant"). This principle follows ineluctably from what a patent is: the conferral of rights in a particular claimed set of elements. "Each element contained in a patent claim is deemed material to defining the scope of the patented invention," Warner–Jenkinson Co. v. Hilton Davis Chemical Co., 520 U.S. 17, 29, 117 S.Ct. 1040, 137 L.Ed.2d 146 (1997), and a patentee's rights extend only to the claimed combination of elements, and no further.

The Federal Circuit held in Muniauction that a method's steps have not all been performed as claimed by the patent unless they are all attributable to the same defendant, either because the defendant actually performed those steps or because he directed or controlled others who performed them. See 532 F.3d, at 1329–1330. Assuming without deciding that the Federal Circuit's holding in Muniauction is correct, there has simply been no infringement of the method in which respondents have staked out an interest, because the performance of all the patent's steps is not attributable to any one person. And, as both the Federal Circuit and respondents admit, where there has been no direct infringement, there can be no inducement of infringement under § 271(b).

The Federal Circuit's contrary view would deprive § 271(b) of ascertainable standards. If a defendant can be...