Akamai Loses Appeal in Limelight Patent Case Over Networks

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Akamai Technologies Inc. lost its appeals court bid to revive a $45.5 million patent-infringement verdict against Limelight Networks Inc.

Limelight doesn’t infringe an Akamai patent for content delivery networks, the U.S. Court of Appeals for the Federal Circuit in Washington said in an opinion posted on its electronic docket. Akamai said it will ask the full court to consider the case and will appeal to the Supreme Court if necessary.

Limelight and Akamai compete in the market to remotely store video and graphics so that Web users can access content without slowing the response of a website. At issue in the case was whether Limelight was responsible if its customers performed some of the steps outlined in Akamai’s patent; the court said it was not.

“There is nothing to indicate that Limelight’s customers are performing any of the claimed method steps as agents for Limelight, or in any other way vicariously on behalf of Limelight,” Circuit Judge Richard Linn said in the 2-1 ruling.

Limelight’s victory came because of a U.S. Supreme Court ruling last year that limited some types of patent lawsuits that could be filed against technology companies. The Tempe, Arizona-based company said it was pleased with the decision.

‘Precious Assets’

“We have used precious assets and time to defend our position, and we are very pleased with today’s outcome,” Bob Lento, Limelight’s chief executive officer, said in a statement.

In her dissent, Circuit Judge Kimberly Moore said the Akamai technology, developed at the Massachusetts Institute of Technology by Akamai’s two co-founders, helped transform the Internet by allowing ever more content to be distributed without interruption. Limelight should not escape liability because its customers perform the last of four steps covered by the patent, she said.

The majority decision “creates a gaping hole in what for centuries has been recognized as an actionable form of infringement,” Moore said.

Jeff Young, a spokesman for Cambridge, Massachusetts-based Akamai, said the Federal Circuit had considered the question at an earlier stage and “Judge Moore’s dissenting opinion provides all the more reason for the court to do so again.”

The case attracted interest from companies including Apple Inc., Google Inc., Yahoo! Inc., and Facebook Inc., as well as industry groups such as the Biotechnology Industry Association, the Financial Services Roundtable and the Internet Retailers. The technology companies generally supported Limelight, while the drug industry backed Akamai.

Trial Win

Akamai first sued in 2006 and won a trial two years later. The trial judge later threw out the verdict after ruling that Limelight’s actions alone didn’t use Akamai’s technology.

Limelight rose as much as 4.7 percent on the news. It rose 1.5 percent to $4.11 at close of trading in New York. Akamai rose 0.2 percent to $76.13.

The case is Akamai Technologies Inc. v. Limelight Networks Inc., 2009-1372, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Akamai v. Limelight, 06-11585, U.S. District Court for the District of Massachusetts (Boston).

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