This post originally appeared here on June 26, 2012, and is reposted here with the author’s permission.
I recently attended and spoke at the Rocky Mountain IP Institute in Denver. It was the second year in a row I have attended and spoken at the Institute. In my opinion, the Rocky Mountain IP Institute is one of the two best IP CLE events (and destinations) in the country. As evidence of that, the following is one of a series of posts from the excellent presentations over the two days of the conference. I encourage you to consider joining me at next year’s Rocky Mountain IP Institute.
This post focuses upon William Sloan Coates’ presentation on the status of divided patent infringement. This is an important issue for retailers facing patent troll suits because internet-based litigations routinely have joint and divided infringement issues where an end-user or vendor are required to complete each element of a claim. Coates acknowledged that he had been hoping for decisions in the McKesson and Akamai cases currently before the Federal Circuit. Unfortunately, until the Federal Circuit decides those cases, much of the presentation had to be speculative with the exception, of course, of the history of divided infringement. Here are the highlights:
- Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565 (Fed. Cir. 1983) was an early case looking at divided infringement. The Federal Circuit held that the company that produced printing plates could not be directly infringing because its customers had to apply a coating to the plates as a final step.
- Cross Medical Prods., Inc. v. Medtronic Sofamor Danek, Inc., 424 F.3d 1293 (Fed. Cir. 2005) is a more recent case involving surgeons placing bone screws into a spinal column. The claim was construed to require connection of a bone interface in an anchor to the spinal bone. The screw maker could not directly infringe because a surgeon was required to set the screw into the bone.
- On Demand Machine Corp. v. Ingram Indus., Inc., 442 F.3d 1331 (Fed. Cir. 2006) introduced the single entity rule. The Federal Circuit holds that where more than one entity together perform all of the elements of a claim they can be joint infringers with joint liability.
- BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) reinforced that a single entity must perform all elements, unless there is a “mastermind” that contracts out the steps to another entity or otherwise directs or controls the other parties. The Court reasoned that expanding direct infringement to encompass multiple parties performing infringement in concert would “subvert” indirect infringement because indirect infringement requires intent which is not required by direct infringement.
- Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008) elaborates on the definition of a mastermind. Controlling access to the accused system was not sufficient control.
- Golden Hour Data Systems, Inc. v. emsCharts, Inc., 614 F.3d 1367 (Fed. Cir. 2010) further defined direction and control. The two companies that put the accused product together were not joint infringers, because one company sold the entire, combined product and therefore could have been a direct infringer.
- Akamai v. Limelight is about content delivery services. The district court held that joint infringement occurred when one entity was the agent of the other or was contractually obligated to perform the steps of the claim. The issue Is being heard en banc by the Federal Circuit and is awaiting decision.
- McKesson (argued the same day as Akamai) is about a patient communication system. The district court held that there was no evidence that the healthcare provider directed or controlled the other parties. As a result, there was no direct infringement. The Federal Circuit looked at the Akamai I holding and discussed the issue of joint tortfeasors as being addressed by contributory and induced infringement. Patent law is different than tort law because the patentee is able to control and define the bounds of its invention to avoid problems of joint infringement. The issue Is being heard en banc by the Federal Circuit and is awaiting decision.