Limelight Networks: A Comedy of Errors by SCOTUS*

Back in 2012, I discussed in a two-part article (here and here) the conundrum created by the Federal Circuit’s joint infringement doctrine, as particularly reflected in its extremely discordant and fragmented en banc decision of almost 100 total pages in the combined cases of Akamai Technologies, Inc. v. Limelight Networks, Inc. and McKesson Technologies, Inc. v. Epic Systems Corp. In an opinion over 30 pages long, a bare six judge per curiam majority found it unnecessary to resolve the joint infringement issue. Instead, the per curiam majority ruled that the Akamai Technologies and McKesson Technologies cases should be resolved by applying the doctrine of inducing (indirect) infringement under Section 271(b). The majority also ruled that such indirect infringement could occur as long as all steps of the claimed method are performed, but didn’t requiring that all steps be performed by a single actor.

In a decision barely reaching 11 pages, a unanimous Supreme Court in Limelight Networks, Inc. v. Akamai Technologies reversed and remanded the Federal Circuit’s per curiam majority ruling in Akamai Technologies and McKesson Technologies. That the Supreme Court overturned the Federal Circuit’s per curiam majority ruling is not a surprise. But what is truly shocking are the factually inaccurate statements, as well as the problematical reasoning that appears in Justice Alito’s opinion for this unanimous Supreme Court. With all due respect, Alito’s opinion is an abysmal “comedy of errors.” (In terms of one factually inaccurate statement, Alito’s opinion has been characterized as “embarrassing” and rightly.)

So here are those “comedic errors’ in all their sordidness:

Comedic Error No. 1: Mischaracterizing the Federal Circuit’s Per Curiam Majority Ruling. This gaffe is the most egregious of these “comedic errors.” See page 6 of Alito’s slip opinion which says the following:

“The Federal Circuit’s contrary view would deprive §271(b) of ascertainable standards. If a defendant can be held liable under §271(b) for inducing conduct that does not constitute infringement, then how can a court assess when a patent holder’s rights have been invaded? What if a defendant pays another to perform just one step of a 12-step process, and no one performs the other steps, but that one step can be viewed as the most important step in the process? In that case the defendant has not encouraged infringement, but no principled reason prevents him from being held liable for inducement under the Federal Circuit’s reasoning, which permits inducement liability when fewer than all of a method’s steps have been performed within the meaning of the patent.” (Emphasis added.)

As others have observed, the “reasoning” of the Federal Circuit’s per curiam majority contains no such “view” that infringement liability (including inducing infringement liability under Section 271(b)) may be based upon anything other than that all steps of the claimed method must be performed by the accused infringer(s), whether by one actor or by a combination of several actors: “To be clear, we hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity.” See page 10 of the slip opinion from the Federal Circuit’s per curiam majority ruling. Such a faux pas by Alito’s opinion is not only astonishing, but frankly undermines the credibility of the ruling made by the Supreme Court because it is based upon a fundamental factual error, i.e., inaccurately characterizing the lower court’s (i.e., the Federal Circuit’s) ruling.

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Comedic Error No. 2: Blindly Relying Upon the Deepsouth Packing Albatross. This “comedic error” is more subtle, but nonetheless reflects extremely shallow and rote analytical thinking in Alito’s opinion by relying upon the ruling in the Supreme Court’ 1972 Deepsouth Packing Co. v. Laitram Corp. decision (and a bare 5-4 majority ruling at that). This blind reliance by Alito’s opinion upon this case is particularly problematical to me because I’m intimately familiar with the Deepsouth Packing decision, as well as the 1984 enactment by Congress of Section 271(f) which was clearly intended to overrule that decision in its entirety. See Guttag, When Offshore Activities Become Infringing: Applying Section 271 to Activities that “Straddle” Territorial Borders, 14 Rich. J. Law & Tech., Issue 1, ¶4 (November 2007) at: http://jolt.richmond.edu/v14i1/article1.pdf.

In commenting on the impact of Section 271(f), the sentence bridging pages 6 and 7 of Alito’s opinion says the following:

“As this provision illustrates, when Congress wishes to impose liability for inducing activity that does not constitute direct infringement, it knows precisely how to do so.”

That’s true, but what Alito and Our Judicial Mount Olympus won’t acknowledge is that Congress did “precisely” that by enacting Section 271(f) which at least implicitly (if not explicitly) overturned the two different doctrinal bases of the Supreme Court’s Deepsouth Packing ruling: (1) that U.S. patent laws do not apply extraterritorially unless Congress expressly says so (which SCOTUS refused to acknowledge in its 2007 Microsoft v. AT&T decision that Congress might have done in enacting Section 35 USC 271(f)); and (2) that infringement liability, be it direct, or indirect such as in the case of inducing infringement under Section 271(b), must always be predicated on one instance of direct infringement (something the Federal Circuit correctly observed in its 2001 Waymark Corp. v. Porta Systems Corp. decision that Congress completely and expressly did away in enacting Section 271(f)).

Comedic Error No. 3: Failure to Address What “Whoever Infringes” Means in Section 271(a). Given that Section 271(a) has been deemed to define what direct infringement is, you would have thought Alito’s opinion would have at least bothered to construe Section 271(a), including what is meant by “whoever infringes.” But paraphrasing the immortal words of explosives expert Corporal Miller of Guns of Navarone fame, all discussion in Alito’s opinion of what “whoever infringes” means in Section 271(a) is “missing, vanished.” In fact, Section III of Alito’s opinion completely “punts” on construing anything in Section 271(a):

“Our decision on the§271(b) question necessitates a remand to the Federal Circuit, and on remand, the Federal Circuit will have the opportunity to revisit the §271(a) question if it so chooses.”

That “punt” would have been fine if Section 271(a) had no impact on the question before the Supreme Court, namely, what constitutes inducing infringement under Section 271(b). But given that (1) direct infringement is defined by Section 271(a), and (b) that what constitutes direct infringement impacts what will be deemed to be inducing infringement in Section 271(b), it should have behooved Our Judicial Mount Olympus to at least construe (even in passing) what Section 271(a) means, and especially what “whoever infringes” means. But that necessary exercise is conspicuous by its absence from Section III of Alito’s opinion, something that must be causing Judge Newman to have fits of apoplexy, given that her concurring/dissenting opinion in the Federal Circuit’s en banc decision addresses (in some detail) what “whoever infringes” means in Section 271(a).

Comedic Error No. 4: Giving Those Otherwise Appropriating the Benefits of the Claimed Method a Technical “Get Out of Infringement Liability” Card. Besides tripping over itself in mischaracterizing the Federal Circuit’s per curiam majority ruling, this portion of Alito’s opinion further suggests that the accused infringer may escape liability by simply “paying another to perform just one step of” of the claimed method. Such “technical” avoidance of infringement liability while otherwise appropriating all the benefits of the claimed method is what the dissent in Deepsouth Packing “screamed” about, as well as contrary to intention of Congress which “plugged” such a loophole when it enacted Section 271(f). In fact, this suggestion by Alito’s opinion is in yet further derogation of the intent of Congress to “plug” yet another “technical” infringement avoidance mechanism when it enacted the 1994 amendment to Sections 271(a), 271(c), and 271(g) to subject a mere “offer for sale” of the claimed invention to infringement liability (whether or not the claimed invention was even in the possession of the accused infringer, or even existed in the first place).

Admittedly, and as was demonstrated by the confusion of Our Judicial Mount Olympus during oral argument, the infringement liability issues posed by Limelight Networks are complex, difficult to resolve, and require applying infringement statutes that are not easily applied to today’s Internet technologies. Nevertheless, that does not excuse the utter carelessness in Alito’s opinion, as well as its disingenuous “scolding” of the Federal Circuit’s analysis of the situation in Limelight Networks as showing a “fundamental[] misunderstanding [of] what it means to infringe a method patent.” The Federal Circuit’s mammoth opinion at least tried to “analyze” the alleged infringement situation (as well as the relevant infringement statutes) in Limelight Networks, while Alito’s miniscule opinion did nothing of the sort. Once more, Our Judicial Mount Olympus appears to operate in an alternate “patent law universe” that we “mere mortals” who inhabit the “real patent law universe” just look at with frustration.

*© 2014 Eric W. Guttag. Posted on IPWatchdog on June 11, 2014.