Joint Enterprise

Joint enterprise is one of two theories under which multiple parties can be collectively liable for divided patent infringement under 35 U.S.C. § 271(a) — even when no single party performs every step of a patented method claim. The joint enterprise theory is distinct from the 'direction or control' theory: DIRECTION OR CONTROL: one party directs or controls another's performance of claim steps (e.g., contractual obligation; conditioning benefits on performance of steps); the parties are treated as a single actor. JOINT ENTERPRISE: the parties act as a joint enterprise — sharing a common purpose, a common financial interest, and an equal right to control each other's activities; both are treated as a single actor performing all steps together. The joint enterprise theory is borrowed from tort law (joint venture liability) and applied to patent infringement when the facts fit the enterprise model. Both theories are recognized under the Federal Circuit's en banc decision in Akamai Technologies, Inc. v. Limelight Networks, Inc. (Fed. Cir. 2015).

The joint enterprise test for divided patent infringement requires all four of the following elements from agency law (Restatement (Third) of Agency § 4.04): (1) EXPRESS OR IMPLIED AGREEMENT — the parties must have an agreement (express or implied) to carry on the enterprise; an informal understanding is sufficient; a formal written contract is not required; (2) COMMON PURPOSE — the parties must be engaged in a shared, common objective; performing the patented method claim steps must further the common purpose; (3) COMMUNITY OF PECUNIARY INTEREST — the parties must share a common financial stake in the enterprise; they participate in the financial results — profits AND losses — of the enterprise; (4) EQUAL RIGHT TO CONTROL — each party must have an equal right to direct and govern the conduct of the others; no single party can be the sole master — equal shared control is the defining element. DISTINCTION FROM DIRECTION/CONTROL: in direction-or-control infringement, one party is the master directing the other; in joint enterprise, both parties are equally empowered to direct each other; if the relationship is hierarchical rather than equal, it's more likely direction/control than joint enterprise.

Akamai Technologies, Inc. v. Limelight Networks, Inc. (Fed. Cir. 2015, en banc) is the controlling Federal Circuit decision on divided patent infringement liability. BACKGROUND: Akamai owned patents on methods for delivering internet content efficiently (CDN technology) where some steps were performed by Limelight and other steps were performed by Limelight's customers. The Supreme Court had held (Limelight Networks v. Akamai Technologies, S.Ct. 2014) that § 271(b) induced infringement requires an underlying act of direct infringement by a single entity — Limelight could not be liable for inducement if no single entity directly infringed all steps. On remand, the Federal Circuit sat en banc to revisit direct infringement under § 271(a). EN BANC HOLDING: a party directly infringes a method patent under § 271(a) when it (1) performs all steps itself, OR (2) directs or controls others' performance of steps in such a way that all steps are attributable to the directing party, OR (3) participates as part of a joint enterprise with another party that collectively performs all steps. THE SIGNIFICANCE: for the first time, the en banc Federal Circuit clearly articulated and recognized the joint enterprise theory as a path to single-entity § 271(a) direct infringement, not just § 271(b) induced infringement.

Joint enterprise is the harder of the two divided infringement theories to establish, primarily because of the 'equal right to control' requirement. Most commercial relationships are hierarchical — one party is a customer, the other a vendor; one is a licensor, the other a licensee; one provides a service, the other purchases it. DIFFICULT CASES (joint enterprise likely fails): (1) A company uses a third-party platform that requires users to take certain steps — even if the user's steps complete the patented method, the platform provider typically controls the service, not jointly with equal right; (2) A company's product is used by its customers who perform additional steps — the vendor/customer relationship is hierarchical, not a joint enterprise with equal control; (3) A licensor/licensee relationship — the licensee does what the licensor permits, not jointly directs. POTENTIALLY VIABLE CASES (joint enterprise possible): (1) Two companies enter a formal joint venture to jointly develop and operate a system — with actual equal governance rights in the JV; (2) Co-defendants who are genuinely equal partners in running an enterprise where the partnership performs all steps — not just contractual counterparties; (3) Two companies in a consortium with actual equal voting rights that together operate the patented method. In practice, the direction-or-control theory is far more commonly invoked than joint enterprise because equal control is rare in commercial relationships.

Patent drafters have developed several strategies to reduce the risk that a competitor will avoid infringement by splitting a method across multiple parties: (1) SYSTEM/APPARATUS CLAIMS — claim the invention as a system or apparatus rather than (or in addition to) a method; system claims are typically practiced by whoever makes, uses, or sells the system — splitting the method steps across users doesn't avoid system claims; (2) SINGLE-PARTY METHOD STEPS — draft method claims so that a single identifiable party (typically the accused infringer, not the end user) performs every step; focus claim limitations on the service provider's actions, not the user's actions; (3) 'PROVIDING' LANGUAGE — claim that the defendant 'provides' a system configured to do X — making the service provider liable without requiring the user's affirmative act; (4) INDUCEMENT CLAIMS (§ 271(b)) — where a service provider's customers complete the method, the provider may still be liable for inducement; draft the patent with that theory in mind (though inducement requires a direct infringer — Limelight's § 271(b) limit still applies); (5) MULTIPLE CLAIM TYPES — cover the invention in patents and claims of multiple types (system, method, CRM, use) to maximize the likelihood that at least one claim can be asserted against a single entity performing the infringing activity.