Limelight Must Face Akamai Online-Content Patent Claims

Akamai Technologies Inc. (AKAM)’s patent claims over online content delivery networks against Limelight Networks Inc. (LLNW) were revived by an appeals court.

The U.S. Court of Appeals for the Federal Circuit in Washington ordered a lower court to reconsider whether Limelight infringed the Akamai patent. In a related decision issued today, the court reinstated claims McKesson Corp. (MCK) made against closely held Epic Systems Corp. on a patent for a method of communication between doctors and their patients.

The issue in both cases was whether a company can be liable for infringing patents when various parties carry out parts of an innovation. The ruling will affect disputes over software, financial systems and medical diagnostic testing.

“Akamai should be given the benefit of this court’s ruling disapproving the line of divided infringement cases that the district court felt compelled to follow,” the court wrote.

Limelight, which argued that it can’t be held liable for infringement unless it performed all steps of an Akamai patent, was supported by Apple Inc. (AAPL), Google Inc. (GOOG) and Facebook Inc. (FB) who are seeking to curtail similar suits against them. Drugmakers including Bristol-Myers Squibb Co. and Pfizer Inc. (PFE) sided with Akamai, arguing such a limit would weaken patent rights and hurt innovation.

“Limelight continues to believe it does not infringe and will pursue all procedural avenues to vindication,” the company said today in a statement.

Aiding, Abetting

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. (NFLX) Akamai had won a $45.5 million jury verdict, only to have it thrown out after a judge ruled there was no infringement because Tempe, Arizona-based Limelight didn’t perform all of the steps covered by the patent. Some were performed by the websites.

The Federal Circuit, sitting with all active judges, heard the Akamai and McKesson cases on the same day.

“We are very pleased with the new standard the appeals court has adopted,” Jeff Young, an Akamai spokesman, said in an e-mail. “We are very excited about the opportunity to prove Limelight’s infringement as well as the new protections afforded to interactive innovations like those pioneered by Akamai.”

The majority likened its ruling to criminal cases in which a person is found guilty of aiding or abetting a crime without committing the offense.

‘Harmful Acts’

“The law frequently imposes a duty (and liability upon breach of the duty) on parties who use innocent third parties to carry out harmful acts,” the majority wrote in the unsigned 6-5 decision.

The Akamai case initially focused on whether Limelight could be found liable for direct infringement when it didn’t use all the steps. Instead, the majority said it wouldn’t address that issue and ruled on whether Limelight could lose the case if it were found to have encouraged others to use the invention.

Circuit Judge Richard Linn, in his dissent, said the majority was extending patent law beyond what Congress and the Supreme Court have allowed when it comes to indirect infringement.

San Francisco-based McKesson sued Epic over its MyChart software program, which is sold to hospitals and medical groups. Health-care providers use the software to give patients a way to access their records as well as scheduling and treatment information.

Provider, Patient

A federal judge rejected McKesson’s infringement claim, saying that Epic didn’t perform all the steps covered by the patent, nor did it control others to perform all of the steps. The McKesson patent is for a method for a health-care provider and patient to communicate automatically with each other.

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., 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 William McQuillen in Washington at bmcquillen@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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