Patent Case Could Upset International Law

Kristen Jakobsen Osenga Professor, University of Richmond School of Law
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The Supreme Court is considering a case that threatens radically to destabilize decades of settled law governing software patents and other patents on methods. Limelight Networks v. Akamai Technologies was argued Wednesday as the Court’s last case in this session. Unless the Court acts, one major casualty in this case could be the essential principle that United States patents apply specifically in the United States.

Akamai and Limelight both distribute content over the Internet. In 2006, Akamai sued Limelight for infringement of its patents of a method for delivering the content that arrives on a customer’s screen. Limelight performed some of the steps of the method in question; its customers performed others.

Under longstanding law, direct infringement of a patented method requires that the alleged infringer or those under his or her legal control perform all the steps of the method. Because Limelight divided the steps of Akamai’s method between it and its customers, who were not under its legal control, the district court held for Limelight.

Akamai appealed to the U.S. Court of Appeals for the Federal Circuit, which in 2010 upheld the district court. The full Federal Circuit reviewed and, in a 6 to 5 decision, came to a different and revolutionary conclusion. It held that, although no one party had directly infringed Akamai’s patent (because no single party carried out every step of the method), Limelight could be held liable for indirect infringement.

This distinction is important. Previously, indirect infringement required that there be an underlying act of direct infringement. That is, in the case of a method claim, someone had to have performed every step of the method before another party could be held to have induced infringement. By a one-judge majority, the Federal Circuit threw out this rule.

That change alone represented a significant broadening of patent law. For example, app developers can now be held liable if their software combined with cell phone operating system software uses all of the steps of a patented method. It also opened the door for an even greater extension – the potential to apply United States patent law to extraterritorial behavior.

Direct infringement is based on domestic behavior and only domestic behavior. It asks, does the alleged infringer make, use, sell, or offer to sell the patented invention in the United States? If any of the steps of a method occur outside of the United States, there is no direct infringement. Before the Federal Circuit’s decision, if there was be no direct infringement of a patent, there could also be no indirect infringement. After the decision, however, because there is no requirement of direct infringement, liability for indirect infringement of a United States patent can be based on behavior that occurs outside of the United States.

There is a long-standing international presumption that patent law is territorial – the rights conferred by a U.S. patent are confined to the United States and its territories. Congress is presumed to only pass laws that respect other countries’ sovereignty; the Federal Circuit’s interpretation of the statute governing indirect patent infringement that permits infringement based on extraterritorial behavior cannot be what Congress intended.

Then, too, the Internet often plays a role in high tech and information technology patents, and the Internet is not limited to the United States. In fact, in an earlier brief in the Limelight case, the parties are described as having content delivery networks “located in multiple locations across the United States and around the world.” Given the importance of this technology space, it is critical to maintain certain and clear lines as to what constitutes infringing behavior. The Federal Circuit decision erased those lines.

The price of not reversing will be high. Where there is uncertainty, people and companies will hesitate to invest in innovation, not knowing what patent rights will be available to them. Strong, well-defined patent laws provide incentives for companies to engage in innovation and commercialization. Allowing the Federal Circuit to overturn well-established rules and essentially rewrite the patent laws will hurt American innovation and everyone working in the innovation space.

Kristen Osenga is a professor of law at the University of Richmond School of Law and one of ten intellectual property law professors to file an amicus brief with the Supreme Court on v. Akamai Technologies.

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Kristen Jakobsen Osenga