Joint Infringement Issues During Litigation and Prosecution

Joint Infringement Issues

During Litigation and Prosecution

October 19, 2012

Irfan A. Lateef

Tokyo

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Outline

• What is joint infringement?

• Review of Recent Federal Circuit Cases

• Effect of Recent Decisions

©2012 Knobbe Martens, Olson & Bear, LLP all rights reserved. ©2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 3

What is joint infringement?


Joint Infringement

• Direct infringement:

– General rule: all elements of the claim must be practiced by a single entity.

– “Joint infringement” exception: if several entities jointly practice the claim, one or more entities may be liable for direct infringement in limited circumstances.

• Joint infringement

– General rule:

• (1) a party knew of the patent

• (2) a group under the control of a party performed the steps of the method or a party induced others to perform, and

• (3) those steps were actually performed


Joint Infringement

• Joint infringement issues tend to arise where:

– the invention involves a multi-party transaction;

– the accused infringer uses a third party service that performs a portion, such as a web service; and/or

– the claims are poorly drafted.


Induced by Party

with Knowledge of Patent

Infringement Theories

Party Third Party Activity

Direct Infringement as

Sole Infringer

Contributing to or Inducing

Third Party Direct

Infringement

Direct Infringement

as Joint Infringers

Controlled/Directed by Party

Induced Infringement


Recent Federal Circuit Cases



• BMC Resources, Inc. v. Paymentech, L.P. (Fed. Cir. 2007)

– Affirmed summary judgment of no joint infringement

– Stated On Demand language was dicta

– Reinforced rule that a single entity must perform all elements, unless:

• The accused infringer directs or controls the actions of another entity in practicing the relevant claim elements.

• The accused infringer contracts out steps of a patented process to another entity.

– Overruled by Akamai with respect to the holding that in order for a party to be liable for induced infringement, another party must be liable for direct infringement.



• Muniauction, Inc. v. Thomson Corp. (Fed. Cir. 2008)

– Control or direction standard is satisfied if vicarious liability for the acts committed by another party would be proper.

– Accused infringer’s control over its customers’ access to an online system, coupled with instructions on how to use that system, was not enough to establish direct infringement.

– The Court reversed the jury verdict and held that there was no joint infringement as a matter of law.



• Akamai Techs., Inc. v. Limelight Networks, Inc. (Fed. Cir. 2010) (Panel Decision)

– Akamai’s claimed method related to placing content on replicated web servers and modifying a content provider’s web page to instruct web browsers to retrieve content from those servers.

– Affirmed JMOL of no joint infringement where customers of accused infringer carried out some steps.

– Panel decision focused on whether there is an agency relationship or contractual obligation to perform the steps at issue.

– No direct infringement because form contract does not obligate the customers to perform the steps; it merely explains that the customer will have to perform the steps if it decides to use the allegedly infringing service.

– Panel opinion vacated April 20, 2011 and judgment reversed in en banc decision issued August 31, 2012.



• Centillion Data Sys., LLC v. Qwest Commc’ns Int’l, Inc. (Fed. Cir. 2011)

– No joint infringement by accused infringer because it “in no way directs its customers to perform nor do its customers act as its agent.” It only supplied software & provided technical assistance; it did not use the claimed system

– Vacated summary judgment of noninfringement with regards to system claims and remanded.

– Can be infringement if customer "puts the system as a whole into service, i.e., controls the system and obtains benefit from it" - even if the customer does not physically possess or own elements of the system.



• McKesson Tech., Inc. v. Epic Sys. Corp. (Fed. Cir. 2011)

– Affirmed summary judgment of noninfringement because McKesson unable to attribute the performance of all steps to a single party.

– Users of the personalized medical records web page acted for their own benefit and under their own control.

– Rejected the comparison to joint tortfeaser liability and vicarious copyright liability.

– Panel opinion vacated May 26, 2011 and judgment reversed in en banc decision issued August 31, 2012.


En Banc Decision: Akamai and McKesson

• Issues that were briefed:

– Akamai

• If separate entities each perform separate steps of a method claim, under what circumstances would that claim be directly infringed and to what extent would each of the parties be liable?

– McKesson

• If separate entities each perform separate steps of a method claim, under what circumstances, if any, would either entity or any third party be liable for inducing infringement or for contributory infringement?

• Does the nature of the relationship between the relevant actors matter (e.g., service provider/user; doctor/patient)?



• Decided August 31, 2012

• 6-5 en banc decision

– Rader, Lourie, Bryson, Moore, Reyna, and Wallach joined Court’s per curiam opinion

– Newman wrote one dissent

– Linn wrote another dissent, joined by Dyk, Prost, and O’Malley

• Opinion limited to induced infringement, does not extent to direct infringement

• Reverses BMC’s single-entity rule that inducement requires that a single party directly infringe a patent

• Inducement liability no longer requires that all steps be performed by a single entity



• Inducement liability exists where accused infringer:

– (1) knew of the patent

– (2) performed the steps of the method or induced others to perform, and

– (3) those steps were actually performed



• Akamai: on remand, accused infringer will be liable for inducing infringement if the patentee can show that:

– (1) accused infringer knew of the patent,

– (2) accused infringer performed all but one of the claimed steps,

– (3) accused infringer induced the content providers to perform the final step of the claimed method, and

– (4) the content providers in fact performed that final step



• McKesson: on remand, accused infringer will be liable for inducing infringement if the patentee can show that:

– (1) accused infringer knew of the patent,

– (2) accused infringer induced the performance of the steps of the method claimed in the patent, and

– (3) those steps were performed


Effect of Recent Decisions


Joint Infringement – Method Claims

• For a method claim, a party that does not perform all steps of the claim can be liable for infringement if:

– 1. Direct Infringement: the party directs or controls the actions of another entity in practicing the relevant elements of the claim

• Control is found when:

– an agency relationship exists between the parties who perform the method steps; or

– one party is contractually obligated to the other to perform the steps.

• Similar to vicariously liability for the acts committed by another party

– Federal Circuit’s En Banc Akamai Decision

• Although the holding was limited to induced infringement, the Federal Circuit stated: "To be sure, the court has recognized that direct infringement applies when the acts of infringement are committed by an agent of the accused infringer or a party acting pursuant to the accused infringer’s direction or control.”


Joint Infringement – Method Claims

• For a method claim, a party that does not perform all steps of the claim can be liable for infringement if :

– 2. Induced Infringement: One party can be liable for induced infringement when the party:

• (1) knew of the patent

• (2) performed the steps of the method or induced others to perform, and

• (3) those steps were actually performed


Joint Infringement – System Claims

• For joint infringement of a system claim to be found, one party must put the system as a whole into service

– Party controls the system and obtains benefit from it

– Party is not required to physically possess or own all elements of the system

Irfan A. Lateef

2040 Main Street, 14th Floor

Irvine, California 92614

[email protected]

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Joint Infringement Issues During Litigation and Prosecution