Limelight v. Akamai: A software case worthy of biotech's attention

In 2006, Akamai Technologies Inc. sued Limelight, alleging infringement of one of its patents claiming a method for delivering web content.  Limelight denied infringement, arguing they do not perform all of the steps of the claim and a company should not be held liable for encouraging patent infringement unless one party performs all of the steps of the patent claim. In this instance, Limelight performed some of the steps and instructed their customers to perform the remaining steps. In response, Akamai pursued a theory of joint infringement, arguing that the combined actions of Limelight and its customers infringed the claimed method.

The district court found Limelight not liable for infringement because Limelight did not control or direct its customers' actions, and the court held direct infringement requires a party to exercise control or direction over a third party who performs some or all of the steps of the claim. On appeal, the Federal Circuit affirmed the district court's ruling, but thereafter granted Akamai's petition for rehearing en banc.

In a 6-5 decision, the Federal Circuit determined that patent owners no longer need to prove direct infringement by a single entity to hold a party liability for induced infringement. This decision notably departed from decades of precedent, expanding the scope of potential infringement liability.

In the en banc decision, the Court analyzed the case under principles of inducement rather than determining whether there can be direct infringement when more than one party performs the steps of a method patent. The Court stated Limelight would be liable for inducing infringement if Akamai was able to prove Limelight knew of Akamai's patent, performed all but one of the steps of the claimed method, and induced its customers to perform the final step, which in fact the customers did perform.

The Supreme Court granted Limelight Network Inc.'s petition for writ of certiorari on Jan. 10, 2014.

While this case has drawn the attention of large software companies whose patents often contain method claims, the steps of which are often performed by multiple actors, the Supreme Court's decision may also have a significant impact on the biotechnology industry. Pharmaceutical and biotech patents often include diagnostic claims. Such claims may involve the administration of a drug coupled with follow-up testing or analysis. These two steps are frequently performed by separate entities—for example a doctor and a testing lab.

If the Supreme Court upholds the en banc decision, these types of diagnostic method claims may be easier to enforce, though the standards of the Federal Circuit's inducement law can also be difficult to meet. If the en banc Akamai decision is reversed, it will remain much easier to evade diagnostic method claims. This can leave biotech companies between a rock and a hard place because, under recent precedent on section 101, it can be difficult to obtain product claims in certain technology areas, such as with DNA. Thus, while the Akamai decision seems to be of the most interest to companies in the software area, its importance to the pharmaceutical and biotech industry should not be underestimated.