In a case closely watched by the high-tech and life sciences industries, the US Supreme Court will hear oral arguments Wednesday in a long-running patent dispute between Web content delivery firm Akamai Technologies Inc. of Cambridge and rival Limelight Networks Inc. of Arizona.
The case has pitted Akamai against a coalition of tech industry power players, led by Google Inc., who are supporting Limelight amid a fear that a win for Akamai would lead to a surge in frivolous patent lawsuits and increase their legal costs.
By contrast, the life sciences industry has sided with Akamai out of a concern that a loss for the company would make certain health care-related patents harder to protect.
The question being considered by the Supreme Court is whether a company can be held liable for infringing a patent if it performs some of the steps covered by the patent and then compels an outside party to take the remaining steps. The US Court of Appeals for the Federal Circuit had found in 2012 that infringement is possible under such circumstances, in a ruling that created a novel legal concept known as “divided infringement.”
The case being heard on Wednesday goes back to a 2006 lawsuit in which Akamai accused Limelight of infringing patents related to Akamai’s method for quicker delivery of online content such as photos and videos.
Akamai has contended that Limelight performs most of the steps covered in Akamai’s patents but then induces customers to perform the remaining step in the process, which involves directing the customer’s website to pull in certain content from Limelight’s servers.
“Limelight’s business is built on infringing this patent,” said Tom Saunders, legal counsel for Akamai. “The core of what they do in their business is practicing this method.”
Limelight contends that its technology is distinct from Akamai’s. “We firmly believe that we don’t infringe the patent,” said Limelight chief legal officer Phil Maynard.
Along with Google, tech industry giants including Cisco, eBay, Facebook, and Oracle have petitioned the Supreme Court to favor Limelight. The tech companies believe that if “divided infringement” is allowed to stand, lawsuits from so-called “patent trolls” — firms that only make money by suing for patent infringement — will increase, said John Murphy, a patent attorney with BakerHostetler who has been following the case.
Lawsuits from “patent trolls” are typically settled prior to trial but can be costly. According to a Boston University study, patent related lawsuits cost companies $29 billion in 2011.
On the other side of the dispute are the large life sciences companies who, through the trade group Pharmaceutical Research and Manufacturers of America, have filed a brief in support of Akamai. The group’s member companies include Johnson & Johnson, Novartis, and Pfizer.
If the Supreme Court rules that multiple parties acting together can divide up the steps covered in a patent and not commit infringement, the life sciences industry fears that certain health care processes — such as drug administration — could be copied legally by simply having different parties do the different steps, Murphy said.
If Akamai prevails in the case, it could see the reinstatement of $40 million in damages, which had previously been awarded in a jury verdict but was later overturned. Alternatively, the case could be sent back to district court for a new trial over “divided infringement.”
There is also a good chance that the Supreme Court will side with Limelight and end Akamai’s bid for damages, said Hunter Keeton, an intellectual property attorney at Wolf Greenfield who has followed the case.
Keeton explained that the Supreme Court’s own precedent is contradicted by the notion of “divided infringement,” and the court is not likely to let that stand. To many in the legal profession, the lower court’s “divided infringement” concept “seems like a bizarre reading” of legal precedent, he said.
The Supreme Court is expected to issue a ruling in the case by the end of June.
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.
Customers of Akamai include Apple, FedEx, and IBM, while Limelight customers include Amazon.com, Netflix, and Microsoft.
This article appears on page B5 of the Boston Globe on April 30, 2014, with the headline: All eyes are on Akamai’s patent battle.