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By Andrew Chung
NEW YORK (Reuters) - Limelight Networks Inc did not directly infringe a patent on managing Web images and video held by rival Akamai Technologies Inc (NASDAQ:AKAM) because it did not carry out all the steps, a U.S. appeals court ruled on Wednesday.
In a longstanding case on remand from the U.S. Supreme Court, the Court of Appeals for the Federal Circuit also said there was no basis to find the media content delivery company and its customers could jointly be held liable for infringement because Limelight was not in direct control of its users.
"Limelight's customers do not become Limelight's agents simply because Limelight provides its customers a written manual explaining how to operate Limelight's product," the appeals court said in a 2-1 majority opinion.
The case dates to 2006, when Akamai accused Limelight of infringing on its patented technology for efficiently handling website content.
The case, closely watched by the high-tech industry, centered on whether a company can be held liable when the final step leading to patent infringement is carried out by a third party.
A divided Federal Circuit ruled in Akamai's favor in August 2012. It said that, in the case of software and other so-called "method patents," a defendant could be liable for infringement even if it carried out only some steps of the patent, while encouraging a downstream user to perform the rest.
Limelight petitioned the Supreme Court to hear the case, supported by tech companies such as Google Inc (NASDAQ:GOOGL), Cisco Systems Inc (NASDAQ:CSCO) and Oracle Corp (NYSE:ORCL). They said the ruling could make companies like theirs subject to more infringement suits.
The high court overturned the decision last June, ruling that a defendant is not liable for inducing infringement when not a single party has directly infringed the patent, and sent the case back to the Federal Circuit.
On Wednesday, the Federal Circuit said Limelight did not directly infringe. The court also said that, if Limelight could be found jointly liable with its downstream users, innocent customers everywhere doing as little as swiping a debit card could be targeted by predatory patent suits.
Such lawsuits and patent demand letters aimed at customers are a major concern of current Congressional bills to reform the patent system.
The case is Akamai Technologies, Inc et al. v. Limelight Networks, Inc, in the U.S. Court of Appeals for the Federal Circuit, No. 2009-1372.