Divided Patent Infringgement: Protecting IP Rightsmedia.straffordpub.com/.../presentation.pdf · Divided Infringement – BMC Resources – On appeal • The parties conceded that

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WEDNESDAY, FEBRUARY 16, 2011

Today’s faculty features:

Brent A. Hawkins, Partner, McDermott Will & Emery, Chicago

Keith Jaasma, Of Counsel, Patterson & Sheridan, Houston

Brian A. Tollefson, Member, Rothwell Figg Ernst & Manbeck, Washington, D.C.

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Divided InfringementDivided Infringement –Federal Circuit Precedent

Presented byPresented byBrian A. Tollefson

February 11, 2011 © 2011 Rothwell Figg 4

My slidesMy slides

• Introduce divided infringementIntroduce divided infringement• Federal Circuit precedent on divided

infringementinfringement• Federal Circuit precedent on use and

performanceperformance


Brian A. Tollefson• Partner, JD 1998 (Maryland), BSEE 1991 (Va Tech)• 12 plus years experience handling preparation and

prosecution of U.S. and international patent applications in a broad range of technologies and fields including computerbroad range of technologies and fields, including computer hardware and software, databases, semiconductors, memory devices, telecommunications, medical devices and financial trading systems (202) 783-6040

bt ll f @ f • Involved in all phases of litigation, including pre-suit investigation, fact discovery, taking and defending depositions, expert discovery and trial

• Substantial experience preparing patent opinions relating to

[email protected]

Substantial experience preparing patent opinions relating to infringement and validity, and involving evaluation of industry standards

• Second career lawyer -- substantial industry experience


Divided Infringement• Also called “split infringement” and “joint infringement”

• Combined actions of multiple parties (as compared with single party p p ( p g p ysatisfying all elements of the claim)

• Example

– A method for indicating channel quality comprising:receiving a signal; (step performed in the mobile station by subscriber)computing a channel quality indicator (CQI) value …; (step performed in the

mobile station by subscriber)mobile station by subscriber)transmitting the CQI value; (step performed in the mobile station by

subscriber)receiving the CQI value …. (step performed in a base station by service

provider/network operator)


p o de / et o ope ato )

Divided Infringement

• 35 U.S.C. § 271(a)– Patent is infringed by one who “without– Patent is infringed by one who without

authority makes, uses, offers to sell, or sells … [the] patented invention, within the United [ ] p ,States, or imports into the United States … [the] patented invention during the term of the patent therefore ….”


Divided Infringement

– Direct patent infringement generally requires a single actor to practice every element of a patent claim.

– Indirect infringement, such as contributory infringement and inducement, also require a showing of underlying direct infringement by a single actorof underlying direct infringement by a single actor.

– While most patent claims can be infringed by making, using, selling, or offering to sell the patented device, method claims can only be infringed by using the patented method.

» NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282, 1317-18


, , , ,(Fed. Cir. 2005).

Federal Circuit Cases • Divided Infringement

– On Demand Machine Corp. v. Ingram Industries, Inc. 442 F.3d 1331 (Fed. Cir. 2006)

– BMC Resources v Paymentech 498 F 3d 1373 1381 (Fed Cir 2007)BMC Resources v. Paymentech, 498 F.3d 1373, 1381 (Fed. Cir. 2007)– Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008),cert.

denied, 129 S. Ct. 1585 (2009)– Golden Hour Data Sys. v. emsCharts, Inc., 614 F.3d 1367 (Fed. Cir.

2010)2010) – Akamai Techs., Inc. v. Limelight Networks, Inc., No. 19-1372 (Fed. Cir.

Dec. 20, 2010)• Use and Performance

C tilli D t S t LLC Q t C i ti I t ti l– Centillion Data Systems, LLC. v Qwest Communications International, Inc., No. 10-1110 (Fed. Cir. Jan. 20, 2011)

– Sirf Technology, Inc. et al. v. International Trade Commission, et. al. , 601 F.3d 1319 (Fed. Cir. 2010)


Divided Infringement – On Demand – The patent at issue claimed a method where a retailer of books

provides a computer console for customer use, wherein the computer stores promotional and other information such as book reviews and prices and also stores the complete text and coverreviews and prices, and also stores the complete text and cover design. The customer can browse through the stored information, inspect the text, and select a book for purchase; the book is then printed and bound, preferably at the same site.p , p y

– The patent owner sued two defendants under a joint infringement theory; the first defendant printed and sold books ordered by publishers, and the second defendant received orders from

d ld d i l i f th fi t d f d tconsumers and could order single copies from the first defendant.– The jury found that both defendants infringed upon the patent

holder’s invention.


Divided Infringement – On Demand – Although the CAFC reversed the judgment of

infringement on claim construction, the court endorsed a jury instruction that read:a jury instruction that read:

• It is not necessary for the acts that constitute infringement to be performed by one person or entity. When infringement results from the participation and combined action(s) of moreresults from the participation and combined action(s) of more than one person or entity, they are all joint infringers and jointly liable for patent infringement. Infringement of a patented process or method cannot be avoided by having anotherprocess or method cannot be avoided by having another perform one step of the process or method.

– The panel stated that this was an accurate statement f th l


of the law.

Divided Infringement – BMC Resources – In BMC Resources, the plaintiff asserted two patents which

claimed a method of processing debit bill payment transactions without a personal identification number (PIN).

– Defendant, Paymentech, did not perform all the steps of the claims. The different parts of the claimed process were performed by retail merchants, debit networks, and participating financial institutionsinstitutions.

– BMC’s asserted a joint infringement theory: Paymentech participated, coordinated, and worked in concert with third parties to perform all of the steps.

– The district court found that BMC had to prove that the alleged infringer directs or controls the other entities whose combined actions infringe the patented process


Divided Infringement – BMC Resources – On appeal

• 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 theoryinfringement under a joint infringement theory.

• BMC pushed for the court to adopt the On Demandstandard.


Divided Infringement – BMC Resources Judge Rader began his analysis:– These rules for vicarious liability might seem to y g

provide a loophole for a party to escape infringement by having a third party carry out

f th l i d t it b h lfone or more of the claimed steps on its behalf. To the contrary, the law imposes vicarious liability on a party for the acts of another inliability on a party for the acts of another in circumstances showing that the liable party controlled the conduct of the acting party.


co t o ed t e co duct o t e act g pa ty

Divided Infringement – BMC Resources – The court held that On Demand’s standard should be followed

because that panel “did so without any analysis of the issues presented relating to divided infringement.”

– Defined proper standard as “direction and control.” – “Courts faced with a divided infringement theory generally refused

to find liability where one party did not control or direct each step of the patented process ”of the patented process.

– “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 t ose cases, t e pa ty co t o ou d be ab e o d ectinfringement. It would be unfair indeed for the mastermind in such situations to escape liability.”


Divided Infringement – BMC Resources In recognition of the difficulty patentees may hav

proving that the “direction and control” standard is met, the CAFC stated that

– “Concerns over a party avoiding infringement b l th ti ll bby arms-length cooperation can usually be offset by proper claim drafting.”

• BMC Resources v Paymentech 498 F 3d 1373 1381 (Fed• BMC Resources v. Paymentech, 498 F.3d 1373, 1381 (Fed. Cir. 2007) (emphais added).


Divided Infringement - Muniauction – Patent at issue directed to electronic methods

for conducting original issuer auctions of financial instruments

– Disclosed an “integrated system on a single ” th t ll i t th tiserver” that allows issuers to run the auction

and bidders to prepare and submit bids using a conventional web browser without the use ofconventional web browser, without the use of other separate software (col. 5, ll. 13-28)


Divided Infringement - Muniauction– 1. In an electronic auction system including an

issuer's computer having a display and at least one bidder's computer having an input device and abidder s computer having an input device and a display, said bidder's computer being located remotely from said issuer's computer, said computers being coupled to at least one electronic network for communicating data messages between said computers, an electronic auctioning process for p , g pauctioning fixed income financial instruments comprising:


Divided Infringement - MuniauctionDivided Infringement Muniauction

– Issuer’s computer (10)– Network (12)– Bidders’ computers (14)


1. In an electronic auction system including …, an electronic auctioning process for auctioning fixed income financial instruments comprising:

inputting data associated with at least one bid for at least one fixed income financialinputting data associated with at least one bid for at least one fixed income financial instrument into said bidder's computer via said input device;

automatically computing at least one interest cost value based at least in part on said inputted data said automatically computed interest cost value specifying a rateinputted data, said automatically computed interest cost value specifying a rate representing borrowing cost associated with said at least one fixed income financial instrument;

submitting said bid by transmitting at least some of said inputted data from said g y g pbidder's computer over said at least one electronic network; and

communicating at least one message associated with said submitted bid to said issuer's computer over said at least one electronic network and displaying, on said i ' t di l i f ti i t d ith id bid i l di id t dissuer's computer display, information associated with said bid including said computed interest cost value,

wherein at least one of the inputting step, the automatically computing step, the submitting step the communicating step and the displaying step is performed using a


submitting step, the communicating step and the displaying step is performed using a web browser.

Divided Infringement - Muniauction• Joint Infringement Theory

• “inputting step” performed by bidderp g p p y• Other steps performed by Thomson (issuer)• Muniauction alleged direct infringement by Thomson

d j i t i f i t th b dunder joint infringement theory based on relationship of parties


Divided Infringement - Muniauction• Combined actions of multiple parties (no single

party that performed each step)I f i t l if t i “ t l– Infringement only if one party exercises “control or direction” over the entire process such that every step of claimed method is attributable to the

t lli tcontrolling party– “Control or direction” standard satisfied where direct

infringer would be held “vicariously liable” for acts g ycommitted by another party that are required to complete performance of the claimed method

• Applied BMC not On DemandFebruary 11, 2011 © 2011 Rothwell Figg 23

• Applied BMC, not On Demand

Divided Infringement - Golden Hour• Patent claimed systems and methods for information management

services in connection with emergency medical transport, patient charting and billing

• The system recited two separate modules (1) a first module for• The system recited two separate modules (1) a first module for dispatching an emergency transport crew, and (2) a second module for filling the patient.

• The method recited three step (1) collecting flight information, (2) collecting patient information and (3) integrating the flightcollecting patient information, and (3) integrating the flight information and the patient information to create an “encounter” record.

• Accused infringers, emsCharts and Softtech formed a strategic Cpartnership. emsCharts produced web-based medical charting;

Softtech produced computer-aided flight dispatch software. The two enabled their programs to work together and sold the two programs as one unit.


Divided Infringement - Golden Hour• At a trial before Judge Ward, jury verdict of joint infringement.

emsCharts was found to not perform the dispatching step but Softtech was.

• Motion for judgment as a matter of law of no infringement granted. Ward found insufficient evidence to prove direction and control.

• One party must control details of the independent contractor work– Independent contractor cannot perform the work as it chooses

C S f• Agreement between emsCharts and Softtech did not create agency, partnership or joint venture

• Softtech did not relinquish control over how its program was itt l Ch t th i ht t id th


written, only gave emsCharts the right to provide the program

Divided Infringement - Golden Hour• Not evidence that the emsCharts-Softtech

agreement imposed duties or responsibilities upon Softtech sufficient to prove direction and control by emsCharts

• Softtech was not accused of being the mastermind.

• JMOL was granted for both method and system claims.


Divided Infringement - Golden Hour• Federal Circuit

– For methods, affirmed with little discussion“ d f t d d di i ”• “no need for extended discussion”

– For systems, affirmed because jury verdict can only be upheld if there was control or direction of Softech by emsCharts.

• Probably would have found against emsCharts– System claims now subject to joint infringement y j j g

analysis– Newman dissent – she authored On Demand


According to Golden Hour, What’s NOT Joint InfringementJoint Infringement “Making information available to the [other]

party, prompting the [other] party, p p g [ ] p y, instructing the [other] party, or facilitating or arrange for the [other] party’s facilitating or arrange for the [other] party s

involvement in the alleged infringement is not sufficient [to find direction of control] ”


not sufficient [to find direction of control].

Divided Infringement - Akamai Tech.• Three patents at issue, all claimed methods of

web content delivery that delivers a base document of a web site from a content provider’sdocument of a web site from a content provider s computer, while embedded objects are stored at a CDN.

• The claims at issue recited steps some of which• The claims at issue recited steps, some of which were performed by the content provider and others which were performed by the CDN.

• Jury rendered a verdict of infringement and awarded $40 million in damages.

• Defendants moved for JMOL of noninfringementFebruary 11, 2011 © 2011 Rothwell Figg 29

• Defendants moved for JMOL of noninfringement.

Divided Infringement - Akamai Tech.• The district court first denied motion for

JMOL of noninfringement.g• The Muniauction opinion then published.• On reconsideration the district court• On reconsideration, the district court

granted JMOL in light of Muniauction.Ak i l d• Akamai appealed.


Divided Infringement - Akamai Tech.• In discussing what is required to come to a finding of joint

infringement, the CAFC stated, – Implicit in this court's holdings in BMC

R d M i ti i th t th f f th dResources and Muniauction is that the performance of a method step may be attributed to an accused infringer when the relationship between the accused infringer and another party performing a method step is that of principal and agent, applying

ll t d i i l f th l f li t d bgenerally accepted principles of the law of agency as explicated by the Supreme Court and the Restatement of Agency (emphasis added).

– This court therefore holds as a matter of Federal Circuit law that there can only be joint infringement when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps.


p

Divided Infringement - Akamai Tech.• Defendant Limelight’s customers were not

agents of Limelight.• Customers decide what content that they want• Customers decide what content that they want

Limelight to cache and then perform the step of “tagging” that content.Li li ht’ t l f d th t f• Limelight’s customers also performed the step of “serving” their own web pages.

• Akamai asserted that Limelight told itsAkamai asserted that Limelight told its customers how to tag and therefore controlled their customers performance of the “tagging” step


step.

Divided Infringement - Akamai Tech.• Restatement (Third) of Agency:

– An essential element of agency is the principal’s right to control the agent’s actions Control is a conceptto control the agent s actions. Control is a concept that embraces a wide spectrum of meanings, but within any relationship of agency the principal initially states what the agent shall and shall not do instates what the agent shall and shall not do, in specific or general terms.”

• The restatement requires a manifestation of qconsent by one person to another that the other shall act on his behalf, and consent by the other so to act


so to act.

Divided Infringement - Akamai Tech.• Fed. Cir. found no direction and control• Fed Cir echoed the sentiment of BMCFed. Cir. echoed the sentiment of BMC

that most problems can be avoided through thoughtful claim draftingthrough thoughtful claim drafting.


Divided Infringement – Centillion Data• Patent that claims an electronic billing system comprising four

elements.• Of these elements, Centillion conceded that the first three elements

were elements on a “back end” system maintained by a servicewere elements on a back end system maintained by a service provider, while the fourth element, which involves a “personal computer,” was 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 fourthfeature employing technology that Centillion contended is the fourth, front-end element, while service providers’ systems allegedly practice the first three elements.

• The district court found that Qwest does not practice the end-user, Qpersonal computer element, nor does Qwest exercise direction or

control over its customers such that it should be liable for vicarious infringement.


Divided Infringement – Centillion Data• The main issue on appeal was the meaning of the word “use” in 35

U.S.C. § 271(a) as applied to infringement of system or apparatus claims.

• The Federal Circuit found “control” here to require only the ability to• The Federal Circuit found control here to require only the ability to put a system as a whole into service, not physical or direct control over all elements.

• The Federal Circuit relied on NTP and ruled that the location of the “use” is where the system is put into service and the beneficial useuse” is where the system is put into service and the beneficial use of the system is obtained. Here, the customers were using the system even though they did not own or control Qwest’s back office systems.

C f f f Q ’• The Federal Circuit therefore found that, as a matter of law, Qwest’s customers “use” Qwest’s accused system as a whole, but did not rule as to whether this use infringed every element of Centillion’s patent claims.


Divided Infringement – Centillion Data• In this case, direct infringement is

committed by the user and therefore, no y ,divided infringement theory is necessary.

• Remand to address indirect infringementRemand to address indirect infringement.


Who is performing a step?

• This is often the most important issue• “The use of a claimed system under sectionThe 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 s stem is e ercised and beneficialcontrol 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.)


Divided Infringement - SirfDivided Infringement Sirf• Two claims at issue.

– First claim required steps of (1) receiving satellite data at a first location, (2) communicating the satellite data to a mobile GPS receiver, and (3) processing the ( ) p gsatellite at the mobile GPS receiver

– Second claim required steps of (1) receiving satellite data, (2) extracting tracking data, (3) transmitting thedata, (2) extracting tracking data, (3) transmitting the data to remote receiver, and (4) at the remote receiver, representing said data in a second format


.

Divided Infringement - SirfDivided Infringement Sirf• Sirf appealed form the ITC a ruling of direct

i f i t d j i t i f i t thinfringement under a joint infringement theory.• Fed. Cir. found that no joint infringement theory

is necessary because Sirf performed all theis necessary because Sirf performed all the steps of the method claims.

• Found that Sirf’s argument related to unclaimed gsteps (i.e., the user’s activity was irrelevant)

• Found that Sirf’s software and devices f d th t


performed the steps.

Divided Infringement - SirfDivided Infringement Sirf• Fed. Cir. found that some of the steps

could be performed indirectly because Sirf’s devices and software initiated the tsteps.

• Gave the analogy of placing a telephone ll d t t l th it h i licall – need not control the switches in line

• Sirf’s devices dictated the performance of th l i d t


the claimed steps.

SummarySummary• BMC, Muniauction, Golden Hour, Akamai line of

cases appear to have solidly established the standard for evaluating divided infringement– Establishment of an agency relationship appears to

be the test• Divided infringement does not always have to be

proved Use can be established with system claims– Use can be established with system claims (Centillion)

– Performance of some steps may be performed indirectly (Sirf)


indirectly (Sirf)

THANK YOU!


“Divided” Patent Infringement

District Court Cases

Keith Jaasma

District Court Cases

Keith JaasmaFebruary 16, 2011

California California TexasTexas New Jersey New Jersey North CarolinaNorth Carolina

CUSTOMERS AS THIRD-PARTY

Attorney Work Product 45

Keithley v. The Homestore.com, Inc.636 F. Supp. 2d 978 (N.D. Cal. 2008)

Claim 1: A method of acquiring and displaying real estate

information utilizing an information processing systeminformation utilizing an information processing system . . ., the method comprising the steps of

Selectively providing . . . Real estate data based on . . . Digital electronic end user information;

Accessing data files by . . . end users [through] a plurality of inquiries from individual first end p y qusers . . . .

Court found insufficient “direction and control” where Court found insufficient direction and control where website owner “allows users access to its websites, but does not cause those users to access any particular information ”


information.

Global Patent Holdings, LLC v. Panthers BRHC LLC586 F.Supp.2d 1331, 1335 (S.D. Fla. 2008)

Representative claim: A method for downloading responsive data from a remote server

comprising the follo ing stepscomprising the following steps: Identifying a query via a data input means and inputting said

query to remote query and data retrieval means; . . . Transmitting said query from said remote query and data

retrieval means to said remote server via an input/output means;

Court held that performance of first claim step was not “controlled” by website operator who provided Javascript program to remote use to allow process to begin whereprogram to remote use to allow process to begin, where defendant had no “direction or control” over remote user’s decision to visit website.


PA Advisors, LLC v. Google, Inc.706 F. Supp.2d 739 (E.D. Tex. 2010)

Judge Rader of Federal Circuit sitting by designation

Claims covered various methods of generating internet g gsearch results that required home user to initiate a search request

Court rejected plaintiff’s argument that Google and Yahoo! performed this step by offering suggestions and spelling changes after a home user made a request.p g g q

“Even where search suggestions or spelling changes are provided by the system, the user is still first required to initiate a search request” and “continues to choose the course of the search without the ‘control or direction’ of the accused search engines.”


the accused search engines.

Aristocrat Technologies v. Int’l Game Technology714 F.Supp.2d 991(N .D. Cal. May 13, 2010)

Claims covered a method of awarding a progressive jackpot to one of several players of a network of gaming

himachines

First step of claim required “making a wager at a particular gaming machine in the network of gamingparticular gaming machine in the network of gaming machines”

“Making a wager” means “betting,” a step performed by a g g g, p p ycustomer

Machine owner does not exercise control or direction over player by providing free credits to induce gambling at its machines


ARMS-LENGTH RELATIONSHIPS


Gammino v. Cellco Partnership527 F.Supp.2d 395 (E.D. Pa. 2007)

Patents covered methods for blocking international calls from payphones and other phones

Defendant contracted for international call blocking from phone service providers that performed one of thephone service providers that performed one of the method steps – evaluating the dialing sequence to determine if it is a blocked phone number

Court granted summary judgment where owner of payphones did not control how the step was performedpayphones did not control how the step was performed or even know how it was performed


The Friday Group v. Ticketmaster2008 WL 5233078(E.D. Mo. Dec. 12, 2008)

Basic claim steps: Providing an opportunity to purchase a recording of a live event

at a point-of-sale of tickets before the event occurs Conducting the live event Recording at least a portion of the live event Manufacturing copies of the recording

Di t ib ti th f t d i t th h d d Distributing the manufactured copies to those who preordered; Patentee sued Ticketmaster and concert promoters Complaint dismissed without prejudice for failure to state

l ia claim By simply alleging that “direction or control” was

exercised over the practice of the steps of the claims, “Pl i tiff tt t t i li t h d f d t“Plaintiff . . . attempts to implicate each defendant without identifying any single defendant as the ‘mastermind’ or that one would ultimately be vicariously liable for the acts of the other defendants ”


liable for the acts of the other defendants.

Advanced Software Design Corp. v. Fiserv, Inc.650 F.Supp.2d 924(E.D. Mo. 2009)

Patents covered a method of validating a check the involved (1) printing an encrypted code on a ( ) g ycheck and (2) decrypting the information to decide whether it should be cashed.

FiServ sold its system to banks, who used it themselves or sold to customers

FiServ did decrypt information for some customersFiS did t di tl i f i b it did t FiServ did not directly infringe because it did not print check or encrypt check data


Travel Sentry, Inc. v. Tropp2010 U.S. Dist. LEXIS 94137 (E.D. N.Y. Sept. 10, 2010)

Claims covered methods related to using special TSA approved locks for luggage

At least one step of method required TSA action – “The TSA acting pursuant to a prior agreement to look for” identifying codes on a lock and using “the specialidentifying codes on a lock and using the special procedure to, if necessary, to open the lock.”

Memorandum of Understanding between defendant and TSA i hi h d f d t ld id TSA ith tTSA, in which defendant would provide TSA with master keys and training on identifying and opening its locks, and agreement by TSA to use “good faith efforts” to use g y gthe keys and procedures did not show direction or control over TSA by defendant.


“CONTROLLED” THIRD-PARTY VENDORS


Rowe Int’l Corp. v. ECast, Inc.586 F.Supp.2d 924, 932-33 (N.D. Ill. 2008)

Representative claims: An improved computer jukebox . . . comprising:

a communication interface for receiving the compressed digital song data and song identity data; y ;a data storage unit for storing the received compressed digital song data and received song identity data;a display for showing information identifying the songs for which digital song data is stored; selection keys responsive to a selection of a song to be played on the computerselection keys responsive to a selection of a song to be played on the computer jukebox . . . a processor connected to a memory, the memory including a decompression algorithm for decompressing compressed digital song data; . . . .

Defendant argued in motion for summary judgment that it made only the memory, and not the jukebox components

Court denied MSJ based on: Court denied MSJ based on: manufacturing and distribution contracts for designing jukeboxes designed to operate

in defendant’s network service ECast regarded jukebox manufacturers as “partners” ECast gave manufacturers specifications and said that the other companies make


g p pjuke boxes “for us”

Fisher-Barton Blades, Inc. v. Blount, Inc.584 F.Supp.2d 1126 (E.D. Wisc. 2008)

Representative claim: 1. A process for forming a rotary cutting blade, comprising the

steps of ) ki bl k f b l h b l d i da) working a blank of boron steel to have a beveled cutting edge;

and b) heat treating the formed blank to elevate the blank hardness . . . to thereby form a rotary cutting blade . . . .

Defendant asserted that it did not “direct or control” its vendors heat treating of blades, relying only on evidence th t d i t l l titthat vendor is a separate legal entity

Patentee offered evidence that Defendant directed that the blades meet a certain hardness and the vendor hardened them to meet the specification


Summary judgment for Defendant denied

TGIP, Inc. v. AT&T Corp.527 F.Supp.2d 561, 577-78(E.D. Tex. 2007)

Representative claims: A method to enable customers to obtain pre-paid calling card accounts

from a plurality of point-of-sale locations and to use the pre-paid calling card accounts to access a telephone network using a telephone thecard accounts to access a telephone network using a telephone, the method comprising:

transferring activation information associated with a particular pre-paid calling card account from a data terminal located at a particular p g pone of the point of sale locations to a remote location having a database of pre-paid calling card accounts, . . .

activating the particular pre-paid calling card account in the database of prepaid calling card accounts in response to receipt of the activationprepaid calling card accounts in response to receipt of the activation information by associating an active call authorization amount with the particular pre-paid calling card account; . . .

Court denied JMOL of non infringement where: Court denied JMOL of non-infringement where: Third parties formatted data for AT&T in accordance with specifications

provided by AT&T and An AT&T representative had testified that third-parties acted “on behalf

of” AT&T


of AT&T.

Emtel, Inc. v. Lipidlabs, Inc.583 F.Supp.2d 811 (S.D. Tex. 2008)

Representative claims: A business method for delivery of medical services

i l di l lit f t llit di l f ilitiincluding a plurality of satellite medical care facilities [with] at least one physician disposed at a central medical video-conferencing station, the method

i i th t fcomprising the steps of: Establishing a video-conferencing communications

system among said medical video-conferencing y g gstation and said plurality of satellite medical care facilities;

Diagnosing a medical condition at said first of Diagnosing a medical condition . . . at said first of said plurality of satellite medical care facilities by said physician from said central medical video-conferencing station


conferencing station . . . .

Emtel, Inc. v. Lipidlabs, Inc.583 F.Supp.2d 811 (S.D. Tex. 2008)

“[F]or liability to attach, the ‘mastermind’ must so control the third party in its performance of the infringing steps that the third party does so as the defendant’s agent. The degree of control must be such that the defendant could be vicariously liable for the third-party’s performancedefendant could be vicariously liable for the third-party s performance. . . . Making information available to the third party, prompting the third party, instructing the third party, or facilitating or arranging for the third-party’s involvement in the alleged infringement is not sufficient.” Id. at 839839.

“Requiring physicians to purchase liability insurance, follow generally accepted professional standards, schedule times to be on call, and to use certain administrative steps does not make the physicians the movants’ agents so as to establish a basis for making the movants vicariously liable for the physicians’ acts in diagnosing remote patients . . . .”

“[T]he elements of claim[] 1 could be rewritten to refer to the telemedicine videoconferencing system provider receiving in a central medical videoconferencing station a physician’s diagnosis of a


medical videoconferencing station a physician s diagnosis of a medical condition of a patient in a satellite medical care facility . . . .”

COMPUTER CODE PERFORMS STEPS


American Patent Dev. Corp. v. Movielink, LLC637 F.Supp.2d 224 (D. Del. 2009)

Patents covered a method of limiting the number of times a computer user could view a downloaded video program.

Claims included steps of (1) storing video at the user site (2) Claims included steps of (1) storing video at the user site, (2) decoding data to establish the number of times a video could be viewed and (3) blocking access to the video when the number is exceeded, all of which occurred on user computer.exceeded, all of which occurred on user computer.

Summary judgment denied – Joint infringement theory not necessarily required.

Although steps were performed on a remote computer there were Although steps were performed on a remote computer, there were no steps that were required to be performed by the remote user, as opposed to by the software provided by Movielink.

See also Paltalk Holdings Inc v Sony Computer Ent 2010 U S See also Paltalk Holdings, Inc. v. Sony Computer Ent., 2010 U.S. Dist. LEXIS 101436 (E.D. Tex. Sept. 1, 2010) (Plaintiffs sufficiently alleged that remotely performed steps were performed not by customers but by the software owned by defendants and licensed to


y ycustomers)

Intellect Wireless, Inc. v. T-Mobile USA, Inc.2010 U.S. Dist. LEXIS 83288 (E. D. Ill. Aug. 13, 2010)

Claims covered instant messaging between mobile phones

First step of claim required “initiating a message from a message originator to a message recipient under the control of the message originator as to when thecontrol of the message originator as to when the message is sent to a message center”

Citing SiRF Technology, the court determined that the li it ti d t l l i d t b thlimitation does not clearly require conduct by the message originator, i.e., it does not say that the message is initiated by the message originator. g y g g

Distinguished Judge Rader’s PA Advisors decision


RELEVANT FOR DIRECT INFRINGEMENT ONLY


Flexsys America LP v. Kumho Tire U.S.2010 U.S. Dist. LEXIS 720127 (N.D. Ohio July 12, 2010)

Claims related to a method for making an anti-degradant for automobile tires

Chemicals allegedly made abroad using patented method and imported into U.S.

“Control or direction” standard does not apply to claims Control or direction standard does not apply to claims under § 271(g), which attaches liability to one who “imports” product made abroad using a patented

th d D t tt h did th f t imethod. Does not matter who did the manufacturing. Also noted that party accused of inducing infringement

need not have “control or direction” over direct infringer.need not have control or direction over direct infringer. Citing Nuance Communs. Inc. v. TellmeNetworks, Inc., 707 F. Supp. 2d 472 (D. Del. 2010).


How Much Direction and Control Is Enough? Where Third-Party Is an Agent and Vicarious Liability Exists?

Likely Enough. Where Computer Code Provided By the Main Party Causes the Third- Where Computer Code Provided By the Main Party Causes the Third-

Party to Perform a Patent Step? Probably Not “Divided” Infringement Where a Third-Party is Required By Contract to Perform Acts Covered by

a Patent Limitation? Probably Enougha Patent Limitation? Probably Enough. Where Two Parties to an Arms-Length Transaction Together Perform All

Steps of a Patent; Neither is the “Mastermind”? Probably Not Enough. Where the Main Party Merely Permits Third Party to Perform a Step or Where the Main Party Merely Permits Third-Party to Perform a Step or

Facilitates or Instructs Them How to Perform the Step? Not Enough.

YES NO

Agent/Vicarious Liability

Customer Permitted Access

YES NO

Arms-Length Transaction

Automatic Computer

Action

Contractual Obligations


Keith JaasmaPATTERSON & SHERIDAN, L.L.P.

O S3040 Post Oak Blvd. Suite 1500Houston, TX 77056-6582

Direct Dial (713) [email protected]@pattersonsheridan.comhttp://www.pattersonsheridan.com


Claim Drafting Strategies To Minimize Divided Infringement IssuesDivided Infringement IssuesBrent A. [email protected]

F b 16 2011

www.mwe.com

February 16, 2011

Boston Brussels Chicago Düsseldorf Houston London Los Angeles Miami Milan Munich New York Orange County Rome San Diego Silicon Valley Washington, D.C.

Strategic alliance with MWE China Law Offices (Shanghai)

© 2011 McDermott Will & Emery LLP. McDermott operates its practice through separate legal entities in each of the countries where it has offices. This communication may be considered attorney advertising.Previous results are not a guarantee of future outcome. The following legal entities are collectively referred to as "McDermott Will & Emery," "McDermott" or "the Firm": McDermott Will & Emery LLP, McDermott Will &Emery/Stanbrook LLP, McDermott Will & Emery Rechtsanwälte Steuerberater LLP, MWE Steuerberatungsgesellschaft mbH, McDermott Will & Emery Studio Legale Associato and McDermott Will & Emery UK LLP.These entities coordinate their activities through service agreements. This communication may be considered advertising under the rules regulating the legal profession.

Claim Drafting Strategies: A Single Actor

“The concerns over a party avoiding infringement by arms-length The concerns over a party avoiding infringement by arms-length cooperation can usually be offset by proper claim drafting. A patentee can usually structure a claim to capture infringement by a single

t ” party.”

• A method claim is infringed only when a single party performs each

BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d at 1373, 1381 (Fed. Cir. 2007)(emphasis added)

• A method claim is infringed only when a single party performs each step of the asserted claim

• Draft claim such that it focuses on a single actor (i e a single actor Draft claim such that it focuses on a single actor (i.e., a single actor performs each of the claimed steps)

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• Consider which actor would be the best target for infringement

• Draft action steps so that they are performed by a single actor

• Eliminate unnecessary actors from claims• Remove secondary actors entirely• Remove secondary actors entirely

• Make secondary actors the emanating source of an action from whom the primary actor receives information or to whom the primary actor transmits information (e.g., an instruction selected by a first user vs a first user sending an instruction)selected by a first user vs. a first user sending an instruction)

• Make sure claim preamble does not breath life into the claim in a manner that inadvertently requires secondary actors

• Consider recasting method claims as product/computer program/system claims whenever possible

• An alleged infringer must be shown only to exercise control over the system to the benefit of

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• An alleged infringer must be shown only to exercise control over the system to the benefit of the infringer


Consider a typical scenario:Consider a typical scenario:• Remote User

• Web ServerWeb Server

• Middleware Server

• Database Server

• Database

• This scenario takes into account 3 separate actors therefore 3 potential infringers• This scenario takes into account 3 separate actors – therefore 3 potential infringers

• The goal is to draft claims from the perspective of a single potential infringer or entity (e.g., the client, the web server or the database.)

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Claim Drafting Strategies: A Single Actor BMC Resources v Paymentech L P 498 F 3d at 1373 (Fed Cir 2007)BMC Resources, v. Paymentech, L.P., 498 F.3d at 1373 (Fed. Cir. 2007)

A method of paying bills using a telephone A method of paying bills using a telephone connectable to at least one remote payment card network via a payee’s agent’s system . . .Multi-Actor Steps:

determining whether sufficient available credit or funds exist on the PIN-less credit or debit card account;

charging the entered payment amount against charging the entered payment amount against the PIN-less credit or debit card account;

adding the entered payment amount to an account associated with the entered account number;number;

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Claim Drafting Strategies: A Single Actor BMC Resources, v. Paymentech, L.P., 498 F.3d at 1373 (Fed. Cir. 2007), y , , ( )

6. A method of paying bills using a telecommunications network line connectable

6. A method of paying bills using a telecommunications network line connectable telecommunications network line connectable

to at least one remote payment card network via a payee's agent's system wherein a caller begins session using a telecommunications network line to initiate a spontaneous payment t ti t th th d i i

telecommunications network line connectable to at least one remote payment card network via a payee's agent's system wherein a caller begins session using a telecommunications network line to initiate a spontaneous payment t ti t th th d i i transaction to payee, the method comprising

the steps of: ……determining, during the session, whether sufficient available credit or funds exist in an

t i t d ith th t b

transaction to payee, the method comprising the steps of: ……receiving a determination [determining], during the session, whether sufficient available

dit f d i t i t i t d account associated with the payment number to complete the payment transaction,……charging the entered payment amount against the account with the entered payment number

credit or funds exist in an account associated with the payment number to complete the payment transaction,……causing [charging] the entered payment amount to be charged against the account number,…

adding the entered payment amount to an account associated with the entered account number, and …

amount to be charged against the account with the entered payment number,…receiving a notification that the entered payment amount was added to an account associated with the entered account number

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associated with the entered account number…


• BMC claim could have been recast as a “computer readable medium” claim

6. A method of paying bills using a telecommunications network line connectable to at least one remote payment card network via a payee's agent's system wherein a caller begins session using a

6. A non-transitory computer readable medium adapted to control a computer and comprising a plurality of code segments for paying bills using a telephone connectable to at least one remote payment card wherein a caller begins session using a

telecommunications network line to initiate a spontaneous payment transaction to payee, the method comprising the steps of: ……determining, during the session, whether

to at least one remote payment card network via a payee’s agent’s system, the non-transitory computer readable medium comprising:

…a code segment for determining, during the g, g ,sufficient available credit or funds exist in an account associated with the payment number to complete the payment transaction,…

charging the entered payment amount

g g, gsession, whether sufficient available credit or funds exist in an account associated with the payment number to complete the payment transaction,…

a code segment charging the entered …charging the entered payment amount against the account with the entered payment number,…adding the entered payment amount to an account associated with the entered

…a code segment charging the entered payment amount against the account with the entered payment number,…a code segment for adding the entered payment amount to an account associated

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account associated with the entered account number, and …

payment amount to an account associated with the entered account number, and …


• BMC claim could have been recast as a system claim

6. A method of paying bills using a telecommunications network line connectable to at least one remote payment card network via a payee's agent's system wherein a caller begins session using a

6. A system for paying bills using a telephone connectable to at least one remote payment card network via a payee’s agent’s system comprising:wherein a caller begins session using a

telecommunications network line to initiate a spontaneous payment transaction to payee, the method comprising the steps of: ……determining, during the session, whether

…logic for determining, during the session, whether sufficient available credit or funds exist in an account associated with the payment number to g, g ,

sufficient available credit or funds exist in an account associated with the payment number to complete the payment transaction,…

charging the entered payment amount

p ycomplete the payment transaction,…… logic for charging the entered payment amount against the account with the entered payment number,……charging the entered payment amount

against the account with the entered payment number,…adding the entered payment amount to an account associated with the entered

with the entered payment number,…logic for adding the entered payment amount to an account associated with the entered account number, and …

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account associated with the entered account number, and …

Claim Drafting Strategies: A Single Actor Akamai Tech Inc v Limelight Networks Inc No 2009-1372 (Dec 20 2010)Akamai Tech., Inc. v. Limelight Networks, Inc., No. 2009 1372 (Dec. 20, 2010)

A content delivery service comprising:: A content delivery service, comprising:: Multi-Actor Step:

… tagging the embedded objects of the page so that requests for the page objects resolve to the q p g jdomain instead of the content provider domain;

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Claim Drafting Strategies: A Single Actor Akamai Tech., Inc. v. Limelight Networks, Inc., No. 2009-1372 (Dec. 20, 2010), g , , ( , )

19. A content delivery service, comprising: 19. A content delivery service, comprising: replicating a set of page objects across a wide area network of content servers managed by a domain other than a content provider domain;

replicating a set of page objects across a wide area network of content servers managed by a domain other than a content provider domain; p

for a given page normally served from the content provider domain, tagging the embedded objects of the page so that requests for the page objects resolve to

pfor a given page normally served from the content provider domain, [tagging the]receiving tagged embedded objects of the page so that requests for the page eques s o e page objec s eso e o

the domain instead of the content provider domain;…serving at least one embedded object of the given page from a given content

e page so a eques s o e pageobjects resolve to the domain instead of the content provider domain;…serving at least one embedded object of the given page from a given content server the given page from a given content

server in the domain instead of from the content provider domain.

the given page from a given content server in the domain instead of from the content provider domain.

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Claim Drafting Strategies: A Single Actor Muniauction Inc v Thomson Corp 532 F 3d 1318 (Fed Cir 2008)Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008)

In an electronic auction system including an In an electronic auction system including an issuer's computer having a display and at least one bidder's computer having an input device and a display, said bidder's computer being located remotely from said issuer's computer,

id t b i l d t t l t said computers being coupled to at least one electronic network for communicating data messages between said computers, an electronic auctioning process for auctioning fixed income financial instruments comprising: financial instruments comprising: Multi-Actor Step:

inputting data associated with at least one bid for at least one fixed income financial instrument into at least one fixed income financial instrument into said bidder’s computer via said input device;

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Claim Drafting Strategies: A Single Actor Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008), p , ( )

1. In an electronic auction system including i ' t h i di l d

1. In an electronic auction system including i ' t h i di l d an issuer's computer having a display and

at least one bidder's computer having an input device and a display, said bidder's computer being located remotely from said issuer's computer said computers

an issuer's computer having a display and at least one bidder's computer having an input device and a display, said bidder's computer being located remotely from said issuer's computer said computers being said issuer s computer, said computers

being coupled to at least one electronic network for communicating data messages between said computers, an electronic auctioning process for

i i fi d i fi i l

issuer s computer, said computers being coupled to at least one electronic network for communicating data messages between said computers, an electronic auctioning process for auctioning fixed i fi i l i i i auctioning fixed income financial

instruments comprising: inputting data associated with at least one bid for at least one fixed income financial

income financial instruments comprising: [inputting] receiving an input transmission of data associated with at least one bid for at least one fixed income

instrument into said bidder's computer via said input device; automatically computing at least one interest cost value based at least in part

financial instrument [into said bidder’s computer via said input device]; automatically computing at least one interest cost value based at least in part on

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interest cost value based at least in part on said inputted data...

interest cost value based at least in part on said inputted data...

Claim Drafting Strategies: A Single Actor Global Patent Holdings v. Panthers BRHC, 586 F.Supp.2d 1331 (SD FL 2008)g , pp ( )

A method for downloading responsive data from A method for downloading responsive data from a remote server comprising the following steps:.Multi-Actor Step:

identifying a query via a data input means and y g q y pinputting said query to remote query and data retrieval means;

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Claim Drafting Strategies: A Single Actor Global Patent Holdings v. Panthers BRHC, 586 F.Supp.2d 1331 (SD FL 2008)g , pp ( )

1. A method for downloading responsive data from a remote server comprising the

1. A method for downloading responsive data from a remote server comprising the from a remote server comprising the

following steps: identifying a query via a data input means and inputting said query to remote query and data retrieval means;

from a remote server comprising the following steps: [identifying a] receiving a query [via a data input means and inputting said query to remote query] and data retrieval and data retrieval means;

transmitting said query from said remote query and data retrieval means to a remote host via an input/output means;

query to remote query] and data retrieval means; transmitting said query from said remote query and data retrieval means to a remote host via an input/output means; receiving a compressed or non-

compressed response to said query at said remote query and data retrieval system from said remote host via said input/output means; and

remote host via an input/output means;

receiving a compressed or non-compressed response to said query at said remote query and data retrieval system from said remote host via said means; and

displaying a presentation corresponding to said query response on output means.

system from said remote host via said input/output means; and displaying a presentation corresponding to said query response on output means.

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Claim Drafting Strategies: A Single Actor Emtel, Inc. v. Lipidlabs, Inc., 583 F.Supp.2d 811 (S.D. TX 2008), p , , pp ( )

1 A business method for delivery of medical 1. A business method for delivery of medical services utilizing a system including a plurality of satellite medical care facilities, at least one physician disposed at a central medical video-conferencing station, and a first patient and a first

di l i di d i fi t f id medical care giver disposed in a first of said plurality of satellite medical care facilities, the method comprising the steps of: Multi-Actor Steps: p

diagnosing a medical condition of said first patient at said first of said plurality of satellite medical care facilities by said physician from said central medical video-conferencing station;central medical video conferencing station;

providing instructions via said video-conferencing system to said first medical caregiver by said physician to treat said first patient at said first said plurality of satellite medical facilities;

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said plurality of satellite medical facilities;

Claim Drafting Strategies: A Single Actor Emtel, Inc. v. Lipidlabs, Inc., 583 F.Supp.2d 811 (S.D. TX 2008), p , , pp ( )

1. A business method for delivery of medical services utilizing a system including a

1. A business method for delivery of medical services utilizing a system including a plurality services utilizing a system including a

plurality of satellite medical care facilities, at least one physician disposed at a central medical video-conferencing station, and a first patient and a first medical care giver di d i fi t f id l lit f

services utilizing a system including a plurality of satellite medical care facilities, at least one physician disposed at a central medical video-conferencing station, and a first patient and a first medical care giver disposed in a first of said plurality of satellite medical care facilities disposed in a first of said plurality of

satellite medical care facilities, the method comprising the steps of: …(d) diagnosing a medical condition of said

said plurality of satellite medical care facilities, the method comprising the steps of: … (d) receiving a medical condition diagnosis of [diagnosing] a medical condition [of said first patient at said first of said ( ) g g

first patient at said first of said plurality of satellite medical care facilities by said physician from said central medical video-conferencing station;

[of said first patient at said first of said plurality of satellite medical care facilities by said physician from said central medical video-conferencing station];( e) providing instructions [via said video-

(e) providing instructions via said video-conferencing system to said first medical caregiver by said physician to treat said first patient at said first of said plurality of

t llit di l f iliti

( e) providing instructions [via said videoconferencing system] to said first medical caregiver [by said physician to treat said first patient at said first said plurality of satellite medical facilities];…

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satellite medical facilities;…

Documents

Divided Patent Infringgement: Protecting IP Rightsmedia.straffordpub.com/.../presentation.pdf · Divided Infringement – BMC Resources – On appeal • The parties conceded that