On remand from the Supreme Court, the three judge panel in Akamai Technologies, Inc. v. Limelight Networks, Inc. affirmed the district court’s holding that Limelight Networks, Inc. (“Limelight”) did not directly infringe the patent of Akamai Technologies, Inc. (“Akamai”). In doing so, the Federal Circuit answered the question left open by the Supreme Court’s previous June 2014 Akamai decision relating to the proper statutory scope of direct infringement under 35 U.S.C. § 271(a), and noted that the interpretation proposed by Akamai would render the indirect infringement provisions of §§ 271(b) and 271(c) redundant.

In its previous en banc decision, the Federal Circuit found Limelight liable for induced infringement because it had performed some steps of a method claim and then encouraged its customers to complete the rest of the steps. The Federal Circuit held Limelight liable even though it acknowledged no single party was liable for direct infringement. The Supreme Court granted certiorari and overturned the Federal Circuit’s decision, finding that a party cannot be held liable for inducing infringement under § 271(b) when no party has directly infringed a patent claim under § 271(a). The Court then remanded the case to the Federal Circuit for a ruling on direct infringement.

Relying on established Supreme Court precedent, the Federal Circuit pronounced that “direct infringement liability of a method claim … exists when all of the steps of a the claim are performed by or attributed to a single entity ….” The so-called “single-entity rule” precludes liability for direct infringement of a method claim where the actions of multiple parties combine to satisfy the method steps unless the parties are “in a principal-agent relationship, in a contractual arrangement, or in a joint enterprise.” The Court went on to note that where “one party, acting as ‘mastermind’ exercises sufficient ‘direction or control’ over the actions of another, such that those actions may be attributed to the mastermind, the combined performance of the steps of a method claim will directly infringe under § 271(a).”

Akamai argued that because Limelight performed some steps of the asserted method claims and then provided detailed instructions to its customers explaining how to perform the rest of the steps, rather than just loosely providing instructions, it thereby “directed or controlled” the customers to finish the act of infringement. Thus, according to Akamai, Limelight acted as a “mastermind” to infringe the patent directly due to the control and direction it asserted over its customers. The Court disagreed, declaring that “[e]ncouraging or instructing others to perform an act is not the same as performing the act oneself and does not result in direct infringement.” Furthermore, the Court determined the relationship between Limelight and its customers was “neither agency nor contract nor joint enterprise,” and that finding liability under “§ 271(a) for ‘one causing and intending an act or result’” in the absence of a relationship that would give rise to vicarious liability under common law would render both § 271(b) and § 271(c) superfluous, and ignore the intent of Congress in crafting those subsections.

Despite a vigorous dissent from Judge Newman asserting that the Court’s refusal to include joint tortfeasor liability within the purview of § 271(a) “creates a gaping hole in what for centuries has been recognized as an actionable form of infringement,” the majority responded that it was not the Court’s position “to legislate or contravene Congress’ choice—right or wrong—by importing other theories of joint liability into § 271(a).” Whether Congress will choose to address the alleged “gaping hole” relating to direct infringement remains to be seen. For now, it seems that the single-entity rule with the noted exceptions will guide the courts in deciding liability for direct infringement.