Askeladden Urges Supreme Court to Review Federal Circuit's Decision in Limelight v. Akamai

Warns of Increased Litigation Risk and Harm to Innovation in the Financial Services Industry if Lower Court Decision Allowed to Stand

For Immediate Release:

Date:  March 7, 2015
Contact: Sean Oblack, 202.649.4629

Download full amicus brief

New York, NY - Askeladden LLC, as part of its Patent Quality Initiative, urged the U.S. Supreme Court to review and reverse a Federal Circuit decision that risks serious consequences to innovation and will likely increase frivolous patent lawsuits in the banking industry. Askeladden filed the amicus brief with the Court on Friday in support of Limelight Networks, Inc.’s petition for a writ of certiorari in Limelight, Inc. v. Akamai Technologies.

Askeladden, a wholly-owned subsidiary of The Clearing House, argued in the brief that the Federal Circuit inappropriately expanded liability for direct infringement and, as a result, has potentially exposed banks to unjustified liability based on actions of third parties:

“[B]anks now face a risk of liability for patent infringement even if they do not intend to infringe, have no knowledge of the patent alleged to be infringed, and do not control the actions of their customers that constitute part of the alleged infringement.”

Under the Federal Circuit’s new standard, an entity—for example, a bank—may be liable for the conduct of third parties that it does not control, even though it would not be liable for the third parties’ conduct under established principles of vicarious liability.

In its brief, Askeladden explains that the Federal Circuit’s decision is not supported by the Patent Act or established legal principles and should be overturned. In fact, the Federal Circuit’s decision reintroduces the same risks of expensive and meritless patent litigation that arose from its earlier decision in this case, which the Supreme Court reversed.

“The Federal Circuit has created a situation where banks and other companies will be at a high risk for patent lawsuits based on the actions of third parties—including customers—and will be deterred from developing innovative products their customers want,” said Sean Reilly, General Counsel of Askeladden, LLC. “The Supreme Court should once again reverse the Federal Circuit’s decision.”

Instead of applying established principles of vicarious liability, the Federal Circuit has created a vague and patent-specific standard of liability that creates uncertainty and increases the likelihood that banks will subjected to expensive and frivolous litigation, Askeladden argued. The uncertainty created by the Federal Circuit’s decision and the enormous expense associated with patent litigation will make it increasingly difficult for financial institutions to interact with their customers through new technologies. 

As outlined in the brief:

Banks generally lack knowledge of the particular hardware devices and software their customers are using, let alone detailed knowledge about how those devices and software work and what patents they implicate. For example, a bank may create an application that allows access to its customer’s banking account, for use on an “Android”-compliant device. The bank does not know whether its customers’ devices are made by Samsung, LG, Sony, Motorola, or any other of multitude of hardware manufacturers that make Android-compliant phones.  Nor does the bank know what other software the customer has in-stalled on his or her smartphone.  In this situation, banks have no way of knowing whether the operation of their electronic product offerings in conjunction with a user’s device and software may implicate one or more of the thousands of patents issued for computer hardware and software. Nor can banks reasonably control what devices and software customers use with bank products.  Yet the Federal Circuit’s decision puts banks at risk in these circumstances, as long as a creative plaintiff can allege that a banking customer is performing a “step or steps of a patented method” through some activity on their device related to a banking app, and that they receive a “benefit” from the bank for doing so.

If allowed to stand, the Federal Circuit’s decision opens the door to claims that banks are liable for interactions between their products and products manufactured by, sold to, and used by third parties. Those third parties include not only customers, but wireless service providers, mobile phone carriers, application developers, hardware manufacturers, software manufacturers, and operating system manufacturers, all of whom are involved in today’s electronic transactions.

In support of innovation in the financial services sector and elsewhere, Askeladden urges the Supreme Court to grant Limelight’s writ of certiorari and reverse the Federal Circuit’s decision.

About Patent Quality Initiative

Askeladden L.L.C. is a wholly-owned subsidiary of The Clearing House. Established in 1853, The Clearing House is the oldest banking association and payments company in the United States and is owned by the world’s largest commercial banks, which hold half of all U.S. deposits. Askeladden is an education, information and advocacy organization with the goal of improving the understanding, use and reliability of patents in financial services and other industries. As part of its Patent Quality Initiative, Askeladden strives to promote better patents and patent holder behaviors by regularly filing amicus briefs, Inter Partes Reviews (IPRs) and engaging in educational activities.