Limelight Networks, Inc. v. Akamai Technologies, Inc.

Background

A patent owner in this case is the Massachusetts Institute of Technology, which licensed the patent to Akamai Technologies. Akamai’s system stores large website files on many servers and tags content for storage. Limelight operates a similar content delivery network and carries out several steps of the patented method, but it requires its customers to do the tagging step. Akamai sued Limelight for patent infringement, and a jury initially awarded more than $40 million. Lower courts later considered whether a single party must perform every step of a patented method or instead whether liability can be divided across multiple actors.

Reasoning

The Court addressed whether a company can be liable for encouraging others to infringe when no one person performed every claimed step. The Court held that inducement must be predicated on an actual direct infringement — meaning all claimed steps must be attributable to a single actor — so no inducement liability exists if no one committed direct infringement. The opinion reasoned that a patent protects a defined combination of steps, cited prior cases rejecting liability where direct infringement never occurred, and rejected the appeals court’s contrary view. The Court reversed the Federal Circuit and remanded for further proceedings, but it declined to resolve the separate question about when multiple parties’ actions count as a single actor.

Real world impact

The ruling narrows when companies can be sued for encouraging customers to perform parts of a patented process. Technology firms that split steps with users face less immediate risk of inducement claims where no single actor performs all steps. The decision resolves the inducement question here but leaves related issues for lower courts to consider on remand.