The Incredibly Ever-Shrinking Theory of Joint Infringement: Multi-Actor Method Claims

• Author: Ken Hobday
• Position: Is an evening student at Capital University Law School and the Vice President of Intellectual Property for Fiserv, Inc. where he manages Fiserv's intellectual property group within Fiserv's Legal department
• Pages: 137-186

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THE INCREDIBLY EVER-SHRINKING THEORY OF JOINT INFRINGEMENT: MULTI-ACTOR METHOD CLAIMS

KEN HOBDAY^*

I. INTRODUCTION

At the Intellectual Property Owner’s Annual Meeting in the fall of 2003, one of the keynote speakers¹spoke passionately about common patent drafting errors. The speaker addressed one drafting error particularly common in business method patents: the failure to write method claims that can be infringed by a single entity and the consequent inability to enforce a property right in the patented invention. This drafting error results in multi-actor method claims where the explicit language of the claim identifies different actors performing various steps. The speaker’s mantra resonated with many in attendance, myself included: “Who are you going to sue?” Awakened to this issue by the speaker’s ardent comments, my colleague and I returned from the convention and began an analysis of our pending patents to identify claims that would require multiple actors to perform the complete claimed method. Indeed, we found some patent applications with claims exhibiting this type of drafting error. Fortunately, we were able to amend the claims successfully so that all steps could be performed by a single entity. This was our very first exposure to the concept of “joint infringement.”²

Copyright © 2009, Ken Hobday

* The author is an evening student at Capital University Law School and the Vice President of Intellectual Property for Fiserv, Inc. where he manages Fiserv’s intellectual property group within Fiserv’s Legal department.

BMC Resources, Inc. is a subsidiary of Fiserv, Inc. BMC Resources was the plaintiff in one of the principal cases this article addresses.

Ken wishes to thank Michael Krashin and Binal Patel of Banner & Witcoff Ltd.; Griff Griffin of Sutherland; Erin Wiggins of Weil, Gotshal and Manges LLP; and Nora Carr, Hans Dreyer, and Ken Harris of Fiserv, Inc. for their invaluable review and assistance.

¹Based on the recollection of a colleague and myself who attended, the speaker was Thomas L. Irving, a partner in the chemical patent practice at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. However, Mr. Irving’s presentation did not include an explicit reference to the topic of multi-actor method claims.

²See, e.g., On Demand Mach. Corp. v. Ingram Indus., 442 F.3d 1331, 1345 (Fed. Cir. 2006) (“Where the infringement is the result of the participation and combined action(s) of

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More recently, I have followed some key patent infringement cases where the method claims at issue required other parties besides the alleged infringer to perform one or more of the claim steps. This article will examine those cases and their impact on patent infringement jurisprudence in depth. A key focus will be the interaction of the agency and tort-based concept of vicarious liability with the evolving theory of joint infringement.

This article also discusses the related issue of multi-jurisdictional or extraterritorial performance of method claims and the implications of finding liability for infringement. One flavor of extraterritorial performance closely resembles joint infringement by multiple actors: where different steps of the claimed method are performed in more than one jurisdiction.³Another flavor involves the supply of a component from the United States that is then used in the performance of the method claim.⁴

A. A Brief Introduction to Patents and Method Claims

A patent is an intellectual property right granted for a limited time to allow inventors or owners of the patent right to recoup their investment in discovering and developing a new, useful, and non-obvious invention.⁵

The Constitution authorizes Congress “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to . . . Inventors the exclusive Right to their respective . . . Discoveries.”⁶Congress enacted the first Patent Act in 1790 and has made several major revisions since then, most recently in 1952.⁷The United States district courts have original subject matter jurisdiction over all patent cases because all patents are governed by federal law.⁸Since 1982, all appeals from district courts

one or more persons or entities, they are joint infringers and are jointly liable for the infringement.”).

³See, e.g., Mark A. Lemley et al., Divided Infringement Claims, 33 AIPLA Q.J. 255, 263–67 (2005).

⁴Id.

⁵JANICE M. MUELLER, AN INTRODUCTION TO PATENT LAW 6 (2d ed. 2006).

⁶U.S. CONST. art. I, § 8. This constitutional provision is sometimes referred to as the “Intellectual Property Clause.” MUELLER, supra note 5, at 29.

⁷MUELLER, supra note 5, at 30–31. The Patent Act is codified in Title 35 of the United States Code. See 35 U.S.C. §§ 1–376 (2006).

⁸MUELLER, supra note 5, at 32–33. Accord 28 U.S.C. § 1338(a) (2006) (“The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents . . . .”); see also Holmes Group, Inc. v. Vornado Air Circulation Sys.,

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raising issues concerning federal patent law are heard by the U.S. Court of Appeals for the Federal Circuit—now the source of most patent case law.⁹

A patent property right “is a negative right; i.e., a right to exclude others from making, using, selling, offering to sell, or importing the patented invention in the United States during the term of the patent.”¹⁰A

patent property right now typically expires twenty years from the filing date of the patent application (or the filing date of its earliest ancestor).¹¹

Issued patents consist of multiple parts, including the written description, associated drawings, and most importantly, the claims.¹²The

written description and associated drawings disclose (“teach”) the invention and how to practice it.¹³In contrast, the patent claims define the scope of the patent owner’s negative right to exclude—much as a deed defines the “metes and bounds” of real property.¹⁴

Software-related inventions (which constitute the bulk of the patents discussed herein) may be claimed in both product and method claims.¹⁵A

product claim describes a tangible item,¹⁶such as a computer system or a software application. In contrast, a process or method claim consists of a sequence of actions to be performed.¹⁷

Because a process is “nothing more than the sequence of actions of which it is comprised,” infringement of a method or process claim does not

Inc., 535 U.S. 826, 830 (2002) (explaining that the well-pleaded complaint rule governs whether a case arises under federal law).

⁹MUELLER, supra note 5, at 35–36.

¹⁰Id. at 14 (referring to 35 U.S.C. § 154(a)(1)).

¹¹Id. at 17 (citing 35 U.S.C. § 154(a)(2)). Congress revised § 154 in 1995 so some patents (those already issued or pending in 1995) remained in force with termination occurring either twenty years from filing or seventeen years from issuance, whichever date was later. Id. Also, an issued patent’s term may be adjusted due to patent office delay during prosecution. Id. at 18.

¹²Id. at 8.

¹³Id.

¹⁴Id. at 14.

¹⁵Nari Lee, Fragmented Infringement of Computer Program Patents in the Global Economy, 48 IDEA 345, 357 (2008).

¹⁶See, e.g., NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1317 (Fed. Cir.

2005) (citing In re John Kollar, 286 F.3d 1326, 1332 (Fed. Cir. 2002)).

¹⁷See id. at 1318; Ricoh Co. v. Quanta Computer Inc., 550 F.3d 1325, 1335 (Fed. Cir.

2008) (quoting Kollar, 286 F.3d at 1332).

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occur unless the alleged infringer performs every recited step of the claimed method.¹⁸

B. Thesis

The precise boundaries and contours of direct infringement of multi-actor claims under a theory of joint infringement remain unclear, despite recent Federal Circuit decisions.¹⁹The theory of joint infringement still has some vitality; however, recent decisions have significantly narrowed the theory’s applicability to infringement claims where multiple parties perform the steps of the claim(s).²⁰Indeed, the Federal Circuit’s most recent decision in this area has largely eviscerated the theory’s usefulness in proving infringement of such claims.²¹Consequently, it is now questionable whether and under what circumstances owners of patents, including multi-actor method claims—especially business method claims covering web-based inventions—can recover against alleged infringers for any type of infringement (direct or indirect).

In one leading case, BMC Resources, Inc. v. Paymentech, L.P.,²²the

Federal Circuit imposed a “direct or control” standard for assessing direct infringement under a joint infringement theory, holding that a party could be found liable for direct infringement so long as the party directed or controlled each step of the patent process.²³This standard requires a showing of more than mere collaboration of independent parties.²⁴

Subsequently, in Muniauction Inc. v. Thomson Corp.,²⁵another Federal

¹⁸NTP, Inc., 418 F.3d at 1318; see also Joy Techs, Inc. v. Flakt, Inc., 6 F.3d 770, 775 (Fed. Cir. 1993) (“A method claim is directly infringed only by one practicing the patented method.”).

¹⁹See, e.g., BMC Res., Inc. v. Paymentech, L.P., 498 F.3d 1373, 1378 (Fed. Cir. 2007) (holding that direct infringement requires a party to perform or use each and every step or element of a claimed method or product); Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008).

²⁰See, e.g., BMC Res., Inc., 498 F.3d at 1373; Muniauction, Inc., 532 F.3d at 1318.

²¹See Brief of Amicus Curiae Intellectual Prop. Owners Ass’n in Support of Petition for Panel Rehearing and Rehearing En Banc at 5, Muniauction, Inc. v. Thomson Corp., 532
F.3d 1318 (Fed. Cir. 2008) (No. 2007-1485).

²²498 F.3d...