Transcript DIVIDED/JOINT INFRINGEMENT – WILL A LOOPHOLE BE …

DIVIDED/JOINT INFRINGEMENT –
WILL A LOOPHOLE BE CLOSED?
Presented to AIPPI, Italy
February 10, 2012
By
Joseph A. Calvaruso
Orrick, Herrington & Sutcliffe LLP
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How Divided/Joint Infringement Issues Arise
• A Person Invents A New And Useful Process That Requires
Steps A-C To Be Completed By One Person And Step D To
Be Completed By Another Person.
• While The Claims May Satisfy Every Aspect Required For
Patentability, The Patent Holder May Be Left Without
Any Means To Enforce His Or Her Patent Rights.
— Why? Because, generally, under the current law there
can be no infringement of a patent claim if different
entities perform separate steps of the claimed
process.
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Indirect Infringement Does Not Remedy The Problem
• Contributory Infringement – 35 USC § 271(c)
– Infringement occurs when an actor “offers to sell or sells
within the United States or imports into the United States a
component of a patented machine, manufacture, combination
or composition, or a material or apparatus for use in practicing
a patented process, constituting a material part of the
invention, knowing the same to be especially made or
especially adapted for use in infringement of such patent, and
not a staple article or commodity of commerce suitable for
substantial non-infringing use.”
• Induced Infringement – 35 USC § 271(b)
– Infringement occurs when an actor “actively induces
infringement of a patent.”
• No Indirect Infringement Without A Finding Of Direct Infringement
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Federal Circuit Will Address Divided Infringement En Banc
• Two Federal Circuit Cases Had En Banc Hearings On
November 18, 2011 To Address The Issue Of Divided
Infringement With Respect To Method Claims.
– Akamai Techs., Inc. v. Limelight Networks, Inc.,
629 F.3d 1311 (Fed. Cir. 2011)
– McKesson Techs., Inc. v. Epic Systems Corp., 2011
WL 2173401 (Fed. Cir. 2011)
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BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373
(Fed. Cir. 2007)
Background
• BMC’S Patent Discloses A Method For Payment of
Bills Requiring The Combined Action Of Several
Participants:
— Payee’s agent
— Remote Payment Network (ATM Network)
— Card-issuing financial institutions
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BMC Resources, Inc. v. Paymentech, L.P.,498 F.3d 1373
(Fed. Cir. 2007) (cont’d)
District Court
• Granted Summary Judgment Of No Infringement Because
Defendant:
— Did not perform all of the steps of the asserted method
claims.
— Did not direct or control the activity of unrelated
entities who performed the claimed steps not
performed by defendant.
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BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373
(Fed. Cir. 2007) (cont’d)
Federal Circuit
• Affirmed
— Direct infringement requires a showing that a
defendant has practiced each and every element of
the claimed invention.
— Courts faced with a divided infringement theory have
generally refused to find liability where one party did
not control or direct each step of the patented
process.
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BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373
(Fed. Cir. 2007) (cont’d)
Federal Circuit (cont’d)
— “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.”
— The concerns over a party avoiding infringement by
arms-length cooperation can usually be offset by
proper claim drafting.”
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BMC Resources, Inc. v. Paymentech, L.P.,498 F.3d 1373
(Fed. Cir. 2007) (cont’d)
Federal Circuit (cont’d)
— “Without this direction or control of both the debit
networks and the financial institutions, Paymentech
did not perform or cause to be performed each and
every element of the claims.”
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Muniauction, Inc. v. Thomson Corp. et al., 532 F.3d 1318
(Fed. Cir. 2008)
Background
• Patent Directed To Municipal Bond Auctions Over The
Internet
• No Dispute That No Single Party Performs Every Step Of
Asserted Claims
— “Inputting” step performed by bidder
— Remaining steps performed by auctioneer’s system
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Muniauction, Inc. v. Thomson Corp. et al., 532 F.3d 1318
(Fed. Cir. 2008) (cont’d)
District Court
• Combined Action By Auctioneer And Bidders Was
Infringement By Auctioneer
• Willful Infringement
• Enhanced Damages Of $76.9 Million
• Prejudgment Interest of $7.7 Million
• Permanent Injunction
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Muniauction, Inc. v. Thomson Corp. et al., 532 F.3d 1318
(Fed. Cir. 2008) (cont’d)
Federal Circuit
• Reversed Judgment Of Infringement
— “[W]here the actions of multiple parties combine to perform
every step of a claimed method, the method is directly
infringed only if one party exercises ‘control or direction’ over
the entire process such that every step is attributable to the
controlling party, i.e. The ‘Mastermind’.”
— “Mere arms-length cooperation will not give rise to direct
infringement by any party.”
— “That Thomson controls access to its system and instructs
bidders on its use is not sufficient to incur liability for direct
infringement”
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The Aftermath
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Global Patent Holdings, LLC v. Panthers BRHC LLC, 586 F.Supp. 2d
1331(S.D. Fla. 2008) (cont.d)
Background
• Patent Directed To A Method For Downloading Material
From A Remote Server In Response To A Query.
• Defendant Provided Users With Instructions And Materials
That Allowed Access To Its Server.
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Global Patent Holdings, LLC v. Panthers BRHC LLC, 586 F.Supp. 2d
1331(S.D. Fla. 2008) (cont’d)
Holding
• No Infringement.
• “It Appears That The Level Of ‘Direction or Control’ The
Federal Circuit Intended Was Not Mere Guidance Or
Instruction . . . Instead, . . . The Third Party Must
Perform . . . By Virtue Of A Contractual Obligation Or
Other Relationship That Gives Rise To Vicarious
Liability.”
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Emtel, Inc. v. Lipidlabs, Inc.,583 F. Supp. 2d 811(S.D. Tex. 2008)
Background
• Patent Directed To A Method For Allowing Physicians To
Provide Emergency Diagnostic Or Treatment Services Remotely
Via Teleconference.
Holding
• No Infringement.
• Although The Physicians Were Under Contract With the
Videoconference System Operator, They Were Not Directed Or
Controlled By the Operator Because The Physicians Retained
Their Professional Judgment In Performing The Medical Work
Required By The Claims.
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Akamai Techs., Inc. v. Limelight Networks, Inc.
Background
• June 2006, Akamai Sued Limelight Asserting Infringement
Of The ‘645, ‘703, And ‘413 Patents.
• February 2008, Boston Jury Found Infringement And
Awarded $40.1 Million In Lost Profits And $1.4 Million In
Reasonable Royalty Damages.
• April 2009, District Court For The District Of
Massachusetts Overturned Boston Jury Finding And Ruled
Non-infringement.
• Appeal To The United States Court Of Appeals For The
Federal Circuit (CAFC).
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Akamai Techs., Inc. v. Limelight Networks, Inc. (cont’d)
•
Claim At Issue In Akamai
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;
— 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 the domain instead of the content provider
domain;
— responsive to a request for the given page received at the content
provider domain, serving the given page from the content provider
domain; and
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— serving at least one embedded object of the given page from a given
content server in the domain instead of from the content provider
domain.
© AIPLA 2012
Akamai Techs., Inc. v. Limelight Networks, Inc. (cont’d)
• Limelight’s Accused System
– Limelight operated a Content Delivery Network
(CDN) - a system of webservers that maintain
copies of embedded webpage objects such as
images.
– Limelight provided its customers with instructions
on how to “tag” but the customers ultimately
determined which content should be tagged.
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Akamai Techs., Inc. v. Limelight Networks, Inc. (cont’d)
• Original Federal Circuit Panel Affirmed No Infringement
– “While control or direction is a consideration, as is the extent
to which instructions, if any, may be provided, what is
essential is not merely the exercise of control or the
providing of instructions, but whether the relationship
between the parties is such that acts of one may be
attributed to the other.”
– 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.”
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– The Federal Circuit found no infringement by Limelight
because its customers were not tagging the objects on behalf
of Limelight.
© AIPLA 2012
McKesson Techs. Inc. v. Epic Systems Corp.
Background
• December 2006, McKesson Sued Epic For Induced
Infringement.
• May 2011, District Court Grants Summary Judgment
Of Non-infringement.
• McKesson Appeals To The Federal Circuit.
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McKesson Techs. Inc. v. Epic Systems Corp. (cont’d)
• Claim At Issue In Mckesson
— A method of automatically and electronically communicating between
at least one health-care provider and a plurality of users serviced by
the health-care provider, said method comprising the steps of:
•
initiating a communication by one of the plurality of users to the
provider for information, wherein the provider has established a
preexisting medical record for each user;
•
enabling communication by transporting the communication through
a provider/patient interface over an electronic communication
network to a website…
•
electronically comparing content of the communication with mapped
content…
•
returning the response to the communication automatically to
the user’s computer…
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McKesson Techs. Inc. v. Epic Systems Corp. (cont’d)
• Epic’s customers – healthcare providers – licensed the
accused software from Epic.
• It was undisputed that none of the healthcare
providers “initiated a communication” as the claim
required.
— The initiating step was performed by the
healthcare providers’ patients.
• McKesson alleged that Epic infringed via the
healthcare providers’ use of the system.
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McKesson Techs. Inc. v. Epic Systems Corp. (cont’d)
• Original Federal Circuit Panel Affirmed No
Infringement
– Reaffirmed the holding in Akamai that an agency
relationship is required to support a finding of joint
infringement.
– Because the healthcare providers’ patients held
the choice of whether to “initiate a
communication” there was no joint infringement.
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Federal Circuit Grants En Banc Review
Questions To Be Addressed By The En Banc Review
• 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 –
e.g., service provider/user; doctor/patient – affect the question of
direct or indirect infringement liability?
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Amicus Briefs Support Change In Law
• AIPLA Position
— The so-called “single entity” rule for deciding method claim
infringement where multiple actors perform the claim steps has
created loopholes that drastically reduce the exclusive rights
conferred by validly issued patents.
— 35 USC § 271(a) which deals with direct infringement provides:
•
“Except as otherwise provided in this title, whoever without
authority makes, uses, offers to sell, or sells any patented
invention, within the United States or imports into the United
States any patent invention during the term of the patent
therefor, infringes the patent.
•
“Whoever” applies to one or more person or persons unless
context indicates otherwise 1 U.S.C. § 1.
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Amicus Briefs Support Change In Law (cont’d)
• AIPLA Position (cont’d)
— While proof of infringement requires evidence that all of the
method claim steps are performed, nothing in § 271(a) or its history
requires that all of those steps be performed by a single entity.
— A direct infringement determination should establish whether there
has been an unauthorized practice of all of the method stops in the
patent claim, without regard to the number of actors engaged in
the performance of such steps.
— Determining direct infringement based on whether the participants
in the method steps had principal/agent relationship is not
appropriate – it invites a defendant to simply outsource steps to
avoid infringement.
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Joint Infringement: System Claims
• Joint Infringement Is Not Solely An Issue For Process
Claims.
• Liability For Infringement Of A System Claim May Arise
When A Single Entity Controls The Patented System
And Obtains A Benefit From It.
• The Federal Circuit Addressed Joint Infringement Of
System Claims In:
– NTP, Inc. v. Research in Motion, Ltd., 418 F.3d
1282 (Fed. Cir. 2005)
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Joint Infringement: System Claims
NTP, Inc. v. Research in Motion, Ltd
• Claims Were Directed To Systems And Methods That Permitted
End Users To Receive Email Over A Network.
• Rim Argued That Its Blackberry Email Systems Did Not Infringe
NTP’s Patent Because It Utilized A Relay Located In Canada And,
Therefore, There Was No Use Of The System In The United States
• The Federal Circuit Disagreed And Held That The “Use” Of A
System Only Requires That A Party Exercise Control Of The
System As A Whole And Obtain Benefit From It.
— Because end Blackberry users sent and received messages
from their devices in the United States, this amounted to an
infringing “use” of the patented system in the United States.
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Minimizing Divided/Joint Infringement Issues
• Draft Method Claims Such That The Recited Steps In Each
Claim Can Be Satisfied By A Single Actor.
— Focus on one entity and whether it supplies or receives
any other elements of the invention.
• Draft Claims That Capture The Behavior Of Potential
Infringers In The U.S. - Performance Of Any Method
Step Outside The United States Will Likely Avoid Direct
Infringement.
• Draft Claims Directed To Systems, Which Under Current
Law More Easily Avoid Issues Of Direct Infringement. See
NTP.
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Minimizing Divided/Joint Infringement Issues
• If A Patent Has Already Issued And Contains Claims Requiring
Joint Infringers, Several Strategies May Be Employed To
Ensure Protection:
– If a continuation application is still pending, draft claims in
unitary style.
– If there is no continuation pending, an applicant may seek a
reissue patent, but
• Because it may be a broadening reissue, it must be filed
within two years of issuance from the original patent.
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• This may create intervening rights for competitors that
adopted the technology before the reissue application
issued.
© AIPLA 2012
DIVIDED/JOINT INFRINGEMENT –
WILL A LOOPHOLE BE CLOSED?
Thank You
Joseph A. Calvaruso
Orrick, Herrington & Sutcliffe LLP
51 West 52nd Street
New York, NY 10019
[email protected]
1-212-506-5140
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www.orrick.com/ip