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Akamai loses Supreme Court patent case

By Kyle Alspach

New York Times

POSTED:
LAST UPDATED: 06:32 p.m. HST, Jun 02, 2014



The U.S. Supreme Court ruled against Akamai Technologies Inc. on Monday in a long-running patent dispute that had split the technology and biotech communities.

Cambridge, Mass.-based Akamai claimed that a rival Internet service, Limelight Networks Inc., had improperly copied its technology for quicker delivery of online content, such as photos and videos. The important issue in the case was Akamai's assertion that Limelight copied most of the steps involved in its technology, but then got its customers to complete the last step.

The Court of Appeals for the Federal Circuit had ruled in Akamai's favor in 2012. Cases where multiple parties are alleged to have copied patented material are referred to as "divided infringement."

But the Supreme Court came to the opposite conclusion, ruling unanimously that only "direct infringement" -- when all steps of a patent are performed by a single party -- is grounds for liability.

''The Federal Circuit's analysis fundamentally misunderstands what it means to infringe a method patent," Justice Samuel Alito wrote. "In this case, performance of all the claimed steps cannot be attributed to a single person, so direct infringement never occurred. Limelight cannot be liable for inducing infringement that never came to pass."

Akamai was in the unusual position of seeing other important technology companies oppose its case. A group of tech firms led by Google Inc. that included Cisco Systems Inc., Facebook Inc., and Oracle Corp. warned the Supreme Court that a ruling in Akamai's favor would trigger more frivolous challenges of their intellectual property from so-called "patent trolls" -- firms that make money by suing for patent infringement.

But some prominent biotech companies supported Akamai, arguing that the nature of their technology leaves them more vulnerable to cases of "divided infringement."

In its ruling, the Supreme Court also sent the case to the Appeals Court for new proceedings, which could begin as soon as this year.

Akamai said it will use the new court review to prove that Limelight by itself was directly infringing on its technology.

''We look forward to the opportunity to go back to the Court of Appeals and re-present our arguments about why there was direct infringement in this case and why the jury verdict in Akamai's favor should be reinstated," Akamai said in its statement.

Limelight said in a statement that "by promoting clear rules governing liability for patent infringement, the Supreme Court's decision is a win not only for Limelight, but also for innovators throughout the country."

Akamai was founded in 1998, three years before Limelight, and had revenue of $1.6 billion last year, compared to Limelight's $173 million.

Both companies are publicly traded.

Akamai's customers include Apple, FedEx, and IBM, while Limelight counts Amazon.com, Netflix, and Microsoft as customers.






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