Divided Patent Infringement and Inducement: Protecting IP Rights Strategies for Drafting and Prosecuting Claims and Allocating Liability Today’s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. TUESDAY, OCTOBER 30, 2012 Presenting a live 90-minute webinar with interactive Q&A Thomas L. Irving, Partner, Finnegan Henderson Farabow Garrett & Dunner, Washington, D.C. Brian A. Tollefson, Member, Rothwell Figg Ernst & Manbeck, Washington, D.C.
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Divided Patent Infringement and Inducement: Protecting IP Rights
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Divided Patent Infringement
and Inducement: Protecting IP Rights Strategies for Drafting and Prosecuting Claims and Allocating Liability
• The parties conceded that the accused infringer did not perform all the steps of the claims. At issue was the proper standard for proving direct infringement under a joint infringement theory.
• CAFC (J. Rader) held that, “the law imposes vicarious liability on a party for the acts of another in circumstances showing that the liable party controlled the conduct of the acting party.”
• Defined proper standard as “direction and control.”
• “A party cannot avoid infringement, however, simply by contracting out steps of a patented process to another entity. In those cases, the party in control would be liable for direct infringement. It would be unfair indeed for the mastermind in such situations to escape liability.”
• Accused infringers formed a strategic partnership, enabling their programs to work together and sold the programs as one product.
• District Court (ED Tex.) granted JMOL for both system and method claims, holding that one party must control details of the independent contractor work: – Independent contractor cannot perform the work as it chooses
– Evidence insufficient to show that Agreement imposed duties or responsibilities granting direction or control, and Agreement did not create agency, partnership or joint venture
– Party did not relinquish control over how its program was written, only gave the right to provide the program.
– Defendant was not accused of being the mastermind.
• CAFC (J. Dyk) affirmed joint infringement requirements with regard to both method and system claims.
• Patent claiming an electronic billing system comprising four elements, three elements on a “back end” system maintained by service provider and fourth element on a “front-end” system maintained by an end user.
• In Qwest’s systems, end users may (but do not have to) use a feature employing technology that Centillion contended is the fourth, front-end element, while service providers’ systems allegedly practice the first three elements.
• District Court (SD Ind.) held Defendant Qwest did not practice the end-user element and did not exercise direction or control over end users creating liability for vicarious infringement.
• CAFC (J. Moore) held “control” to require only the ability to put a system as a whole into service, not physical or direct control over all elements and held the location of “use” is where the system is put into service and the beneficial use of the system is obtained.
• Claims for GPS system requiring receiving satellite data, communicating and/or extracting data, and processing data at remote receiver.
• CAFC (J. Dyk) found that no joint infringement theory is necessary because SiRF performed all the steps of the method claims. – Found that SiRF’s argument related to unclaimed
steps (i.e., the user’s activity) was irrelevant.
– Found that SiRF’s software and devices dictated the performance of the claimed steps.
• “The use of a claimed system under section 271(a) is the place at which the system as a whole is put into service, i.e., the place where control of the system is exercised and beneficial use of the system obtained.” NTP, Inc. v. Research In Motion, Ltd.
• For a method step, it is often an issue of claim construction (e.g., “enabling,” “displaying,” etc.)
• Previously, BMC, Muniauction, Golden Hour, Akamai line of cases appeared to have solidly established the standard of an agency relationship for evaluating divided infringement.
• Still, divided infringement does not always have to be proved:
– “Use” can be established with system claims (Centillion)
– Performance of some steps may be performed indirectly (SiRF)
• Akamai en banc decision steers clear of direct infringement.
Dissenting opinion filed by Judge LINN, in which Judges
DYK, PROST, and O’MALLEY join.
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Joint Infringement
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Akamai: Competitor performed part of claimed method and
competitor’s customers completed it.
Claimed method: placing content on a set of replicated servers and
modifying the content.
Limelight’s accused process places some content on its servers, and
then instructs its customers on the steps needed to modify.
McKesson: Competitor did not perform any part of claimed
method; multiple customers of competitor completed steps, but
none performed all steps.
Claimed method of communication between healthcare providers and
their patients.
Steps of the patent are divided between patients, who initiate
communications using the competitor’s software, and healthcare
providers, who perform the remainder of the steps.
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Joint Infringement
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Akamai and McKesson (con’t)
Questions:
Whether a defendant may be held liable for induced
infringement if the defendant has performed some of the
steps of a claimed method and has induced other parties
to commit the remaining steps (as in Akamai)?
Whether a defendant may be held liable for induced
infringement if the defendant has induced other parties
to collectively perform all the steps of the claimed
method, but no single party has performed all of the
steps itself (as in McKesson)?
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Joint Infringement
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Akamai and McKesson (con’t)
Majority
“Recent precedents of this court have interpreted section
271(b) to mean that unless the accused infringer directs or
controls the actions of the party or parties that are
performing the claimed steps, the patentee has no remedy,
even though the patentee’s rights are plainly being violated
by the actors’ joint conduct. We now conclude that this
interpretation of section 271(b) is wrong as a matter of
statutory construction, precedent, and sound patent
policy.”
“Nothing in the text indicates that the term “infringement” in
section 271(b) is limited to “infringement” by a single entity.”
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Previous Interpretation of
§271(b) is Wrong
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Akamai and McKesson (con’t)
Majority
“In doing so, we reconsider and overrule the 2007 decision of
[BMC Resources] in which we held that in order for a party to
be liable for induced infringement, some other single entity
must be liable for direct infringement. …To be clear, we hold
that all the steps of a claimed method must be performed in
order to find induced infringement, but that it is not
necessary to prove that all the steps were committed by a
single entity.”
“If an entity has induced conduct that infringes a patent,
there is no justification for immunizing the inducer from
liability simply because no single party commits all of the
components of the appropriative act.”
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BMC Overruled
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Akamai and McKesson (con’t)
Majority:
“Because the reasoning of our decision today is not
predicated on the doctrine of direct infringement,
we have no occasion at this time to revisit any of
those principles regarding the law of divided
infringement as it applies to liability for direct
infringement under 35 U.S.C. § 271(a).”
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Decide Don’t Have to Decide
Divided Infringement
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Akamai and McKesson outcomes
Both cases reversed and remanded.
McKesson: “Epic can be held liable for inducing infringement if it
can be shown that (1) it knew of McKesson’s patent, (2) it induced
the performance of the steps of the method claimed in the patent,
and (3) those steps were performed.”
Akamai: “Limelight would be liable for inducing infringement if the
patentee could show that (1) Limelight knew of Akamai’s patent, (2)
it performed all but one of the steps of the method claimed in the
patent, (3) it induced the content providers to perform the final
step of the claimed method, and (4) the content providers in fact
performed that final step.”
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Reversed and Remanded
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Akamai and McKesson, Judge LINN, dissenting
“The majority’s approach is contrary to both the Patent Act and to the Supreme
Court’s longstanding precedent that “if there is no direct infringement of a
patent there can be no contributory infringement.”
“The majority opinion is rooted in its conception of what Congress ought to
have done rather than what it did.”
“direct infringement is required to support infringement under § 271(b) or §
271(c) and properly exists only where one party performs each and every claim
limitation or is vicariously liable for the acts of others in completing any steps
of a method claim, such as when one party directs or controls another in a
principal-agent relationship or like contractual relationship, or participates in a
joint enterprise to practice each and every limitation of the claim.”
Would affirm non-infringement in both Akamai and McKesson.
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LINN Dissent
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Akamai and McKesson, Judge NEWMAN, dissenting
“A scant majority” made “dramatic changes in the law of
infringement.”
New: “only an inducer can be liable for divided infringement, on loose
criteria for inducement”
No requirement for direct infringement.
“a significant minority of the en banc court continues to favor the
‘single-entity rule,’ whereby divided infringement is not actionable at
all unless all of the participants are in a contract or agency relationship
that is directed or controlled by a single ‘mastermind.’”
“The only issue for which these cases were taken en banc, the only
issue on which briefing was solicited from the parties and amici curiae,
was the conflict in precedent arising from the single-entity rule of BMC
Resources and Muniauction.”
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NEWMAN Dissent
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Direct Infringement By Single Party
Triggering Operation Of A Claimed System
Centillion Data Sys., L.L.C. v. Qwest
Commc'ns Int'l, Inc., 631 F.3d 1279 (Fed. Cir.
2011), reh’g denied (April 25, 2011)
DC: summary judgment of no infringement
because, under NTP and BMC, no single party
either practiced all of the limitations of the
asserted claims or controlled another party
doing so.
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Direct Infringement By Single Party
Triggering Operation Of A Claimed System
Centillion (con’t)
FC: Vacate and remand
“By causing the system as a whole to perform this processing and obtaining
the benefit of the result, the customer has “used” the system under
§271(a). It makes no difference that the back-end processing is physically
possessed by Qwest. The customer is a single “user” of the system and
because there is a single user, there is no need for the vicarious liability
analysis from BMC or Cross Medical.”
Qwest not vicariously liable because does not control customers’ use.
the user of a system who triggers operation of that system is an infringer of
a claim to that system even though some elements of the system are
performed by different parties.
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No Infringement By Single Party
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Centillion, on remand
2012 WL 4505851
No direct infringement by Qwest
No direct infringement by customer
No indirect infringement by Qwest
Joint Tortfeasors?
May Depend on Claim Construction
• SiRF Technology, Inc. v. International Trade Com'n,
601 F.3d 1319 (Fed. Cir. 2010)
• Claim: A method of receiving global positioning system (GPS)
satellite signals comprising: receiving satellite ephemeris at a
first location; communication [sic] the satellite ephemeris to a
mobile GPS receiver at a second location; and processing
satellite signals ….
• Infringed only when actions are taken by SiRF's customers and
by the end users of the GPS devices?
• Commission: joint infringement.
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Joint Tortfeasors?
May Depend on Claim Construction
• SiRF (con’t)
• Federal Circuit: SiRF directly infringes because SiRF performs all steps of the claim.
• no steps required by customers or end users.
• method can be performed and are performed by a single party – “Neither the claim language nor the patent specification requires that the communication/ transmission be direct.”
• “under this construction it is clear that SiRF performs the step of communicating/ transmitting the files to the end users' devices because SiRF initiates the process of transmitting and communicating, and the files are actually transmitted to the end users.”
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Joint Tortfeasors?
May Depend on Claim Construction
• SiRF (con’t)
• FC (con’t)
• although “communicati[ng]” or ‘transmittin[g]” “can only
occur if the customer forwards the data to the end user and
the end user downloads the data. … the actions of
“forwarding” or “downloading” are not required by the claims,
and, therefore, the fact that other parties perform these
actions does not preclude a finding of direct infringement.”
• “When properly construed, it is clear that SiRF infringes
…Once the GPS receiver is enabled and ready to process the
data, only SiRF's actions are involved in “processing” or
“representing” the data.”
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DIVIDED INFRINGEMENT:
STRATEGIES FOR
PROTECTING IP RIGHTS
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Patent Claim Drafting
Considerations
Consider who will infringe the claims and how
infringement will be proven.
Try to draft claims that will be directly and
literally infringed by competitors.
Try to draft claims that will be directly and
literally infringed by one actor.
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Patent Claim Drafting
Considerations
Consider where infringement will occur to
avoid extra-territoriality.
Try to draft claims that will be directly and
literally infringed in the U.S. by competitors.
Try to draft claims that will be directly and
literally infringed in the U.S. by one actor.
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Examples
• SIRF did it right: avoid overly limitative language.
• Claim: A method of receiving global positioning system