Limelight Urges Cap on Patent Infringement in Group Inventions

Limelight Networks Inc., an online content delivery provider, urged a U.S. appeals court to limit patent-infringement claims when separate entities perform the steps of an invention.

The U.S. Court of Appeals for the Federal Circuit is considering whether a company can be liable for infringing patents when various parties carry out parts of an innovation. A three-judge court panel cleared Limelight, whose argument is supported by Apple Inc. (AAPL), Google Inc. (GOOG) and Facebook Inc., on Dec. 20 of an infringement claim by Akamai Technologies Inc. (AKAM) The issue was heard today by 10 of the court’s active judges.

A decision in the Akamai case and in a similar dispute heard today involving drug distributor McKesson Corp. (MCK) may determine the scope of patent rights involving the performance of multiple steps in a process.

“It’s a pretty big deal,” said Wayne Porter, a patent lawyer with Banner & Witcoff in Washington who’s been following the case. “There are an awful lot of patents out there that would require multiple people to perform the steps, so it’s an important question. It’s very difficult to write a patent claim that’s directed to just one single step.”

E-commerce companies such as EBay Inc. (EBAY) and technology companies including Cisco Systems Inc. (CSCO) sought to curtail suits filed against them, while the trade groups for drug and biotechnology companies argued such a limit would weaken patent rights and hurt innovation.

Limelight and Cambridge, Massachusetts-based Akamai compete in the market for content-delivery networks that store and distribute movies or music to computers on behalf of services such as Hulu LLC or Netflix Inc. The three Akamai patents in the case are for the process of delivering content.

Verdict Thrown Out

Akamai won a $45.5 million jury verdict, only to have it thrown out after a court ruled there was no infringement because Limelight didn’t perform all of the steps covered by the patent. Some were performed by the websites.

“This is a huge and unfair loophole in the law,” Akamai lawyer Donald Dunner of Finnegan Henderson in Washington told the court. “You have a content delivery network and a content provider. Each knows what the other is doing.”

Limelight lawyer Aaron Panner of Kellogg Huber in Washington said the law allows infringement to be found when two entities are acting as a joint enterprise to use the invention. That wasn’t the case in this issue, he said.

“It is undisputed that Limelight does not carry out one of the steps of the method” covered by the Akamai patents, he said. Customers of Tempe, Arizona-based Limelight “are under no legal obligation to perform that step.”

Personalized Web Pages

In addition to the Limelight case, the Federal Circuit heard arguments on a patent suit McKesson brought against closely held Epic Systems Corp. over a method of communication between doctors and their patients over personalized Web pages. While the Akamai case involved direct infringement claims, the McKesson case involves indirect actions that cause a violation.

Myriad Genetics Inc. (MYGN), a maker of tests to determine the risk of developing breast cancer, argued in a court filing that methods of diagnosing and treating diseases are often carried out by two parties, such as a testing lab and a doctor.

Limiting the concept of joint infringement “will be devastating to personalized medicine if not reversed,” Myriad wrote. It “encourages collusion among collaborating parties to escape infringement liability.”

Limelight Support

Google, EBay, Cisco, Dell Inc., Intel Corp. and Yahoo! Inc. were among companies that supported Limelight. A victory for Akamai would “threaten legitimate commerce” and “complicate already dysfunctional multiparty litigation,” they said in the filing.

Such a ruling would “stifle commerce and place further upward pressure on product costs by allowing for opportunistic litigation in which more and more market participants that touch a multifeature product or system or network are sued together,” the companies said. “Likewise, opportunistic plaintiffs would pursue even more companies to seek cost-of-defense style settlements from each.”

Apple and HTC Corp. (2498) each filed papers supporting Limelight, as did the trade groups for Internet retailers and financial services companies, according to the court’s docket.

The trade group for drugmakers including Abbott, Bristol- Myers Squibb Co. and Pfizer Inc. (PFE) sides with Akamai’s arguments, saying a ruling that limits the suits would “seriously devalue thousands of issued patents.

‘Multiple Entities’

‘‘When multiple entities acting in concert combine to carry out all of the steps of a valid method claim, they cause an infringement that harms the patent owner,’’ the Pharmaceutical Research and Manufactures of America said in a filing with the court.

The case is Akamai Technologies v. Limelight Networks, 2009-1372, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Akamai Technologies v. Limelight Networks Inc. (LLNW), 06cv11109, U.S. District Court, District of Massachusetts (Boston).

The McKesson case is McKesson Technologies Inc. v. Epic Systems Corp., 2010-1291, U.S. Court of Appeals for the Federal Circuit. The lower court case is McKesson Information Solutions LLC v. Epic Systems Corp., 06cv2965, U.S. District Court for the Northern District of Georgia (Atlanta).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Michael Shepard at mshepard7@bloomberg.net

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