John B. Pegram Fish & Richardson P.C. New York “Divided” or “Joint” Infringement

Infringement of a patent. 35 U.S.C. 271(a)-(b): (a) [W]hoever without authority makes, uses, … any patented invention during the term of the patent therefor, infringes the patent. (b) Whoever actively induces infringement of a patent shall be liable as an infringer. 2 © AIPLA 2012

The Terminology “Joint infringement” used to describe infringement of an entire method claim by persons acting jointly May be applicable if one person controls the others “Divided Infringement” used to describe infringement of a method claim when no single person infringes every claim limitation 3 © AIPLA 2012

A Question of Precedent Precedent requires: The Federal Circuit and District Courts to follow holdings of the Supreme Court Federal Circuit panels (3 judges) and District Courts to follow earlier holdings of the Federal Circuit Only a decision by the Supreme Court or Federal Circuit en banc (all active judges) can overrule earlier holdings of the Federal Circuit The now-pending en banc appeals in the Akamai and McKesson cases may change the Divided/Joint Infringement Precedent 4 © AIPLA 2012

Background The current dispute is about method claims The law is more clear regarding system claims A user, who only possesses one element of the system can be an infringer if he “uses” the whole system Decca Ltd. v. United States (Ct.Cl. 1976) NTP, Inc. v. Research In Motion, Ltd. (Fed. Cir. 2005) Centillion Data Sys. v. Qwest Communications, (Fed. Cir. 2011) Persons infringe who “put the invention into service, i.e., control the system as a whole and obtain benefit from it.” 5 © AIPLA 2012

Specific Method Claim Issues Is a method claim infringed when no single person infringes every claim limitation? Current answer: Yes, if one person directs or controls. No, if there is no control. Should infringement be found when two or more persons collectively infringe all limitations of a method claim, but they independently infringe different limitations? Current answer: Only if one person controls Should the scope of method claim infringement be broader? 6

Policy Issues Under what conditions should infringement be found when two or more unauthorized persons perform all steps of a method claim? Should the result be different for similar claims written in method and system format? Are the courts limited in finding joint or divided infringement of method claims by the specific language of the Patent Act? 7 © AIPLA 2012

On Demand Machine Corp. v. Ingram Industries, Inc. (Fed. Cir. 2006) The first case to speak of “joint” infringement In passing (dicta), Judge Newman found no error in a jury instruction that said there could be joint infringement when parties had “combined action” 8 © AIPLA 2012

BMC Resources, Inc. v. Paymentech, L.P., (Fed. Cir. 2007) There must be “control” for joint infringement Does not say if the control must be legal or can also be technological (e.g., where one server responds in a determined manner to a server run by a second infringer) Distinguishes On Demand as dicta that did not change the “settled law” There was no “settled law” 9 © AIPLA 2012

Muniauction, Inc. v. Thomson Corp. (Fed. Cir. 2008) Clarified that there is joint infringement when there is legal control of the respondeat superior variety Strongly suggested that technological control would not be enough. Golden Hour Data v EMSCharts, (Fed. Cir. 2010) Majority held there was no joint infringement Dissent (Newman) argues that there should be joint infringement when the parties conspire to infringe 10 © AIPLA 2012

Akamai Technologies, Inc. v. Limelight Networks, Inc. (Fed. Cir. 2010) “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.” 11 © AIPLA 2012

Akamai panel (vacated) Patent claims a method for storing web page content using mirrored servers (“Content Delivery Network” or “CDN). Requires “tagging” the usual URLs to indicate that content is available via the CDN Defendant Limelight performed all method steps except 1 Customers “tagged” the URLs that they wanted to be available via the CDN Federal Circuit panel found affirmed judgment of no infringement in © AIPLA 2012

Akamai panel (vacated) Held: there can only be joint infringement if there is an agency relationship between the parties who perform the method steps or when one party is contractually obliged to the other to perform the steps. Akamai did not prove that Limelight’s customers were performing the claimed method steps as agents for Limelight. Akamai did not prove thatLimelight’s customers were contractually obligated to perform the tagging steps. Inducing infringement is not an issue in Akamai 13 © AIPLA 2012

Suggestions by the Panel in Akamai Proper claim drafting “A patentee can usually structure a claim to capture infringement by a single party.” See also BMC. Correct the claims by reissue But, no damages would be available until reissue patent is granted 14 © AIPLA 2012

McKesson panel (vacated) Patent claims a method for doctor-patient communication and record-keeping The claim requires the patient to initiate the access to the provider for information Defendant Epic licensed the accused software to healthcare providers, who offered a similar service to their patients The District Court granted summary judgment of noninfringement and a Federal Circuit panel affirmed 2:1 No single party was a direct infringer No liability for inducing because there was no underlying direct infringement 15 © AIPLA 2012

McKesson panel (vacated) Cites BMC, Muniauction and Akamai as precedent, requiring: Agency relationship between the parties performing the method steps; or Contractual obligation of one party to the other party to perform the step; In other words, control The fact that health care providers “encouraged” patients to initiate communication with the software was not “control” of the patients 16 © AIPLA 2012

McKesson panel (vacated) Judge Bryson, concurring, suggested the possibility of en banc review of the correctness of BMC, Muniauction and Akamai (the precedential cases). Judge Newman dissented She questioned the rule that a “single entity” must infringe for another party to be liable for induced infringement She questioned whether BMC, Muniauction and Akamai were precedent, in light of earlier Federal Circuit decisions not requiring agency or a contractual relationship 17 © AIPLA 2012

En banc Review In April-May 2011, the Federal Circuit vacated the panel decisions in Akamai and McKesson, and ordered an en banc review of each. The question on review in Akamai is: “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?” 18 © AIPLA 2012

En banc Review The two questions in McKesson are: “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? 19 © AIPLA 2012

The End Thank you John B. Pegram Fish & Richardson P.C. New York 20 © AIPLA 2012

Citations to Cases Decca Ltd. v. United States, 210 Ct.Cl. 546, 544 F.2d 1070 (1976), NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005). On Demand Machine Corp. v. Ingram Industries, Inc., 442 F.3d 1331 (Fed. Cir. 2006). BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007). Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008). Golden Hour Data v EMSCharts, 614 F.3d 1367 (Fed. Cir. 2010). Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010), vacated April 20, 2011). McKesson Technologies Inc. v. Epic Systems Corp., 2011 U.S. App. LEXIS 7531 (Fed. Cir. 2011), vacated May 26, 2011). Centillion Data Sys. v. Qwest Comm’ns, 631 F.3d 1279 (Fed. Cir. 2011) 21 © AIPLA 2012