The changing landscape of joint, divided and indirect infringement - the state of the law and how to address it.

AuthorLowrie, Mathew

Cite as 12 J. High Tech. L. 65 (2011)

  1. Introduction

    Patents are often written in a manner such that one part of a process is required to be performed by one person or entity and another part of the process is required to be performed by another person or entity. The infringement of these claims is sometimes referred to as "joint" or "divided" infringement. These divided claims have presented significant issues for litigants and courts to deal with in patent cases and have serious repercussions for how claims should be drafted. In particular, a number of cases were decided by the Federal Circuit between 2007 and 2011. These cases set forth various rules for assessing infringement of divided claims. The rules are complex and treat claims quite differently depending on how they were drafted, including treating "method" claims differently than "system" claims. Furthermore, some judges of the Federal Circuit have recently questioned whether the cases were correctly decided and whether they are inconsistent. Accordingly, the Federal Circuit quite recently decided to review two of those cases en banc--Akamai Techs., Inc. v. Limelight Networks, Inc., (1) and McKesson Techs., Inc. v. Epic Systems Corp. (2) These cases may change or clarify some of the rules regarding joint infringement. In the meantime, practitioners must continue to consider and adapt to the rapidly changing landscape of this area of the law.

    Many cases with divided claims also include allegations of indirect infringement, which is a separate doctrine, and recent cases have also changed the standards for providing indirect infringement. Consequently, this article examines the law as it is today and discusses the implications of the case law for issues regarding opinions of counsel, litigation, contract counseling and claim drafting, all with the understanding that we must practice in a world of uncertainty in this area of law.

  2. A Practical Example

    The complexities of divided infringement can perhaps best be addressed and understood by using a practical example. Consider a patent that includes a four-step process that occurs using a networked computer. The first 3 steps are performed by the company that sells the product and software to the user. The fourth step is performed by the user on his computer. This is essentially a simplified, abstract description of the invention described in Centillion Data Sys., LLC v. Quest Comms. Int'l, Inc., (3) which was a system for collecting, processing, and delivering information from a service provider, such as a telephone company, to a customer. (4) On the "back-end," the company stores records (step 1), generates reports from those records (step 2), and transfers those reports and records to a user (step 3). (5) On the "front-end," the user performs additional processing of the reports and records sent to him (step 4), presumably using software on his home computer. (6)

    First, assume that the patent claim is written such that the invention is a "method" with these four steps. Is there infringement if an accused product is used this way? As the law stands today, the answer is no, assuming the user is just a customer of the company that sells the software and performs the back end steps. (7) Because one person does not perform each and every step, there is no direct infringement. (8)

    Second, assume that the patent claim is written such that the invention is a "system" with these four steps. Is there infringement if an accused product is used this way? This changes the result. (9) As the law stands today, there is infringement by the user in this situation. (10) There is no direct infringement by the company, however, unless the user has an agency relationship with the company or other contractual obligation to perform the steps. (11) There may be indirect infringement, as discussed below. (12)

    Third, assume that the patent claim is again written as "method," but now it only includes the first three steps, not the fourth. In this case, there is infringement by a company that performs these back end steps, because there is no divided infringement, i.e., no third-party steps are used in the practice of the claim. (13)

    Fourth, assume again that the claim is a "method" claim with all four steps. Now, however, assume that the person per forming the fourth step--the front-end step--is not just a customer of the company that performs the back-end steps, but instead is an agent of the company or is contractually obligated to perform the step. As the law currently stands today, in this case, there is no infringement by the user, but there is infringement by the company on the basis of vicarious liability. (14)

    In the second example above, in which the only infringer is an end user, rather than the company that makes the software and operates the back end of the system, a patent holder may want to pursue litigation against the company, rather than individual customers. To do this, however, the patent holder must rely on theories of indirect infringement, which have two branches: induced infringement and contributory infringement. (15) To proceed under these theories, however, the patent holder needs to show intent, which raises new potential obstacles for the patent holder. (16) For example, what if the defendant company did not know of the patent? What if the defendant company did not think it was actually infringing the patent? What if the defendant received an opinion of counsel stating that it did not infringe? These issues will be discussed below.

    As noted above, the case law is in flux regarding joint infringement, with the Federal Circuit poised to potentially alter the rules on joint infringement when it reaches its decisions in the McKesson and Akamai cases. (17) To practice in this changing landscape requires an understanding of what the Court has been doing in the past and present.

  3. Case Law on Joint Infringement

    1. History of the Cases on Joint Infringement

      The doctrine of "joint infringement" or "divided infringement" is rooted in 35 U.S.C. [section] 271(a), the language of which has been interpreted to require that direct infringement of a patent occurs only where a single party performs or uses each and every step or element of a claimed method or product. (18) This requirement is also supported by the patent statute as a whole, which--through provisions pertaining to indirect infringement--also provides liability for situations where a party participates in or encourages patent infringement but does not directly infringe. (19) Indirect infringement still requires a finding that some party amongst the accused actors be a direct infringer, however. (20)

      The statutory sections governing direct and indirect infringement appear straightforward and simple in their application. (21) Infringement can become a highly complex determination, however, depending on the types of claims being asserted and the business relationships of one or more accused infringers. (22) The interplay between the statutory provisions dealing with direct and indirect infringement and their application to the complexities of modern business can create unique challenges for the patent practitioner. (23)

      The Federal Circuit has frequently considered issues of so-called "divided infringement" in recent years. (24) As will be discussed below, those cases set forth rules surrounding the infringement of method and system claims where acts of multiple parties are involved. (25) There have been disagreements about the correctness of those decisions, however, and whether they are consistent. (26) Consequently, the court recently signaled its intent to clarify the law of divided infringement by calling for en banc review of its decisions in Akamai Techs., Inc. v. Limelight Networks, Inc., and McKesson Techs., Inc. v. EpicSys. Corp. (27) Below we discuss the series of cases that led to the decisions to review these two cases en banc and the state of the law today, acknowledging that the Akamai and McKesson cases may result in further changes or clarifications to the law. (28)

      One of the Federal Circuit's earlier cases addressing "divided infringement," Fromson v. Advance Offset Plate, Inc., (29) involved systems and methods related to photographic printing plates for use in the art of lithography--all of which required the treatment of the plates with certain chemicals. (30) The defendants included a company that manufactured "wipe-on" plates, as well as certain customers who applied the chemical coating after purchasing the plates. (31)

      The court simply held that "because [the manufacturer's] customers, not [the manufacturer], applied the ... coating, [the manufacturer] cannot be liable for direct infringement ... but could be liable for contributory infringement" (32) and remanded to the lower court for a determination of contributory infringement of the claims requiring the conduct of multiple actors. (33) The court did not distinguish the asserted method claims from the system claims, and it did not address any allegation of vicarious liability by the manufacturer for the actions of its customers. (34)

      Before turning to other more recent Federal Circuit decisions, we note that there were some other cases concerning divided infringement from other courts. (35) Prior to Fromson and the creation of the Federal Circuit, there was a Ninth Circuit case in which the court did not specifically address divided infringement, but found that there was an "actual controversy" such that a suit could go forward where the alleged infringer had arranged for a "friendly company" to stockpile piping necessary to manufacture the allegedly infringing product. (36) The Ninth Circuit stated that, "[i]t is obvious that one may infringe a patent if he employ[s] an agent for that purpose or ha[s] the offending articles manufactured for him by an independent contractor." (37) There are also a number of decisions from lower courts, both before and after...

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