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Navigating Patent Damages Part III: Statutory Indemnification - Implied Warranty Against Infringement

Federal Circuit Reaffirms Single Entity Rule for Divided Infringement under Section 271(a) in Akamai, Making Method Claims Difficult to Enforce

On May 13, 2015, the Federal Circuit issued the much-anticipated decision in Akamai Technologies, Inc. v. Limelight Networks, Inc. following a remand from the Supreme Court.[1] The Federal Circuit, in a 2-1 decision, held that “direct infringement liability of a method claim under 35 U.S.C. § 271(a) exists when all of the steps of the claim are performed by or attributed to a single entity[.]” This is consistent with its 2008 Muniauction decision, where the Federal Circuit first made clear that “direct infringement requires a single party to perform every step of a claimed method.”[2] The Akamai Court concluded that when “one party, acting as ‘mastermind’ exercises sufficient ‘direction or control’ over the actions of another,” the “single entity” requirement may be met and the direct infringement may be found. Sufficient direction or control may occur in a principal-agent relationship, a contractual arrangement, or a joint enterprise.

Will 101 lead to mutually assured destruction?

Although the Supreme Court’s decision in Alice Corp. v. CLS Bank International has been hailed by some as an important development in the efforts to curb abusive patent litigation by non-practicing entities, others have raised concerns about unintended effects. For example, software companies have been particularly concerned about the long-term impact of Alice on the viability of patent protection for software. More generally, it is important to note that Alice is not limited to NPEs, but affects even competitor (B2B) disputes.