In two recent opinions, the Federal Circuit clarified the requirements for so-called “divided” infringement, i.e., where the infringing acts are committed by multiple actors. The bottom line is that for method claims, joint infringement is limited to vicarious liability situations. For system claims, however, either of two parties which separately possess parts of a claimed system, infringe if that party “put[s] the invention into service, i.e., control[s] the system as a whole and obtain[s] benefit from it.”
First, in Akamai Technologies v. Limelight Networks, Case No. 2009-1372 (Fed. Cir. Dec.20, 2010), the Court addressed joint infringement of method claims. There, the Court held that Limelight (the accused infringer) did not infringe because it did not perform all of the steps of the claimed method and the actions of its customers, who carried out other steps, could not be attributed to Limelight. Joint infringement of a method claim, the Court held, requires either that (1) there is an agency relationship between the parties who perform the method steps; or (2) one party is contractually obligated to the other to perform the steps.
The patents at issue in Akamai covered a method for storing Internet content across a network of servers. The patented method included steps involving (1) the storage of embedded objects from a customer’s web page on a network (called a CDN) and (2) “tagging” embedded objects in the customer’s web page to link the object to the CDN. Under Limelight’s contract with its customers, Limelight stored the objects on the CDN, but the customers chose which objects to tag, and the customer performed the tagging as instructed by Limelight. Thus, neither Limelight nor its customer performed all of the steps of the patented method.
Under BMC Res., Inc. v. Paymentech LP, 498 F.3d 1373, 1380 (Fed. Cir. 2007), liability for joint infringement of a method claim requires that one party “control or direct” the activities of another. BMC and Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008), also hold that “control or direction” requires that the accused infringer be vicariously liable for the acts of the third party. Neither Limelight’s contract with its customer nor its instructions to its customer, the Court held, established an agency relationship such that Limelight could be held vicariously liable for the actions of its customer. That Limelight received a benefit from its customer’s actions, the Court held, was not enough.
The Federal Circuit returned to the issue of joint infringement, at least tangentially, a month later in Centillion Data Systems, LLC v. Qwest Comm’s. Int’l. Inc., 2011 U.S. App. LEXIS 1117 (Fed. Cir. Jan. 20, 2011). Centillion dealt with system claims for collecting, processing and delivering information from a telephone service provider to a customer's personal computer. The claims required three “back-end” components provided by the accused infringer, Qwest, and a “front-end” system maintained by Qwest’s customer on a personal computer.
Relying on BMC and Cross Medical Products v. Medtronic Sofamor Danek, Inc., 424 F.3d 1293 (Fed. Cir. 2005), Qwest argued that neither it nor its customers “used” the entire system under 35 U.S.C. § 271(a) nor did Qwest direct or control the actions of its customers. The District Court agreed and granted summary judgment of non-infringement, but the Federal Circuit reversed.
The Federal Circuit noted that it had never directly addressed the issue of infringement for “use” of a system that includes elements in the possession of more than actor. Looking to its decision in NTP v. Research in Motion, Ltd., 418 F.3d 1282, 1317 (Fed. Cir. 2005), the Court held that “to ‘use’ a system for purposes of infringement, a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it.” Such control, however, does not require physical or direct control. Rather, it only required the ability to place the system as a whole into service and use each and every element of the claimed invention.
A customer of Qwest, the Court held, “used” the entire system when it issued a query because it caused the system as a whole to perform processing and obtained benefit as a result. A Qwest customer also “used” the system by subscribing to Qwest’s service because by subscribing, the customer caused the back-end processing to generate a report on a monthly basis
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Qwest itself, by contrast, did not “use” the entire system because it never put into service the front-end data processing means nor did it "make" the system because only the customer combined all the claimed elements of the system. Further, Qwest was not vicariously liable for the actions of its customers because those customers did not act as its agents.
While the Federal Circuit’s limitation on infringement of method claims will cut off liability in most instances where two parties perform the steps of a claimed method, its holding that a party need not have physical or direct control over all elements of a system expands infringement liability for system claims. Presumably, patentees will focus on proving direct infringement against customers who “use” a claimed system and assert indirect infringement against defendants, like Qwest, which sell the services for which the claimed system is used.
