Presenting a live 90-minute webinar with interactive Q&A
Divided Patent Infringement
and Inducement: Protecting IP Rights
Latest Strategies for Drafting and Prosecuting Claims and Allocating Liability
THURSDAY, OCTOBER 24, 2013
1pm Eastern
|
12pm Central | 11am Mountain
|
10am Pacific
Today’s faculty features:
Thomas L. Irving, Partner, Finnegan Henderson Farabow Garrett & Dunner, Washington, D.C.
Sharon L. Davis, Member, Rothwell Figg Ernst & Manbeck, Washington, D.C.
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Presented by Sharon L. Davis
and Tom Irving
Divided Infringement –
Allocation of Liability & Litigation Issues
October 24, 2013
© 2013 Rothwell Figg
Disclaimer
•
This presentation is public information and has been prepared solely for
educational purposes to contribute to the understanding of intellectual property law.
These materials reflect only the personal views of the authors and are not
individualized legal advice and do not reflect the views of FINNEGAN or
ROTHWELL, FIGG, ERNST & MANBECK. It is understood that each case is factspecific, and that the appropriate solution in any case will vary. Therefore, this
presentation may or may not be relevant to any particular situation. Thus,
FINNEGAN. ROTHWELL, FIGG, ERNST & MANBECK, and the authors cannot be
bound either philosophically or as representatives of their various present and
future clients to the comments expressed in this presentation. This presentation
does not establish any form of attorney-client relationship with FINNEGAN,
ROTHWELL, FIGG, ERNST & MANBECK, or the authors. While every attempt
was made to insure that these materials are accurate, errors or omissions may be
contained therein, for which any liability is disclaimed.
October 24, 2013
© 2013 Rothwell Figg
5
I.
Introduction – The Law Before Akamai en banc
A. Direct Joint Infringement
B. Indirect Induced Infringement
II. Recent Federal Circuit Treatment of Divided Infringement and Inducement
A. Akamai and McKesson Federal Circuit en banc decision Aug. 31, 2012
B. Commil USA v. Cisco Systems
III. Strategies for Protecting IP Rights
A. Patent Claim Drafting Considerations
B. Patent Prosecution
C. Assessing Risk of Liability in Partnerships
D. Key Litigation Issues for Asserting and Defending Joint Infringement
and Inducement
October 24, 2013
© 2013 Rothwell Figg
6
Divided Infringement
• Also called “split infringement” or “joint infringement”
• Combined actions of multiple parties (as compared with
single party satisfying all elements of the claim)
• A method for indicating channel quality comprising:
receiving a signal; (step performed in the mobile station by
subscriber)
computing a channel quality indicator (CQI) value …; (step
performed in the mobile station by subscriber)
transmitting the CQI value; (step performed in the mobile station
by subscriber)
receiving the CQI value …. (step performed in a base station by
service provider/network operator)
October 24, 2013
© 2013 Rothwell Figg
7
Divided Infringement
• 35 U.S.C. § 271(a) – “Direct Infringement”
– Patent is infringed by one who “without authority
makes, uses, offers to sell, or sells … [the] patented
invention, within the United States, or imports into the
United States … [the] patented invention during the
term of the patent therefore ….”
• 35 U.S.C. § 271(b) – “Induced Infringement”
– “Whoever actively induces infringement of a patent
shall be liable as an infringer.”
October 24, 2013
© 2013 Rothwell Figg
8
Divided Infringement
• While most patent claims can be infringed by making, using,
selling, or offering to sell the patented device, method claims
can only be infringed by using the patented method.
» NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282, 1317-18
(Fed. Cir. 2005).
• Direct patent infringement generally requires a single actor to
practice every element of a patent claim.
• Indirect infringement, (i.e. contributory and induced
infringement), requires a showing of underlying direct
infringement.
October 24, 2013
© 2013 Rothwell Figg
9
Important Federal Circuit Cases
• On Demand Machine Corp. v. Ingram Industries, Inc., 442 F.3d 1331
(Fed. Cir. 2006)
• BMC Resources v. Paymentech, 498 F.3d 1373, 1381 (Fed. Cir.
2007)
• Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008)
• Golden Hour Data Sys. v. emsCharts, Inc., 614 F.3d 1367 (Fed. Cir.
2010)
• Centillion Data Systems, LLC. v Qwest Communications
International, Inc., 631 F.3d 1279 (Fed. Cir. 2011).
• SiRF Technology, Inc. v. International Trade Commission, 601 F.3d
1319 (Fed. Cir. 2010)
October 24, 2013
© 2013 Rothwell Figg
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Divided Infringement – On Demand
• CAFC (J. Newman) endorsed, as an accurate statement
of the law, a jury instruction that read:
– “It is not necessary for the acts that constitute
infringement to be performed by one person or entity.
When infringement results from the participation and
combined action(s) of more than one person or entity,
they are all joint infringers and jointly liable for patent
infringement. Infringement of a patented process or
method cannot be avoided by having another perform
one step of the process or method.”
October 24, 2013
© 2013 Rothwell Figg
11
Divided Infringement – BMC Resources
• Overruled in-part by Akamai en banc
• The parties conceded that the accused infringer did not perform all
the steps of the claims. At issue was the proper standard for proving
direct infringement under a joint infringement theory.
• CAFC (J. Rader) held that, “the law imposes vicarious liability on a
party for the acts of another in circumstances showing that the liable
party controlled the conduct of the acting party.”
• Defined proper standard as “direction and control.”
• “A party cannot avoid infringement, however, simply by contracting
out steps of a patented process to another entity. In those cases, the
party in control would be liable for direct infringement. It would be
unfair indeed for the mastermind in such situations to escape liability.”
October 24, 2013
© 2013 Rothwell Figg
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Divided Infringement - Muniauction
• Not (explicitly) overruled by Akamai en banc
• Joint Infringement Theory: Claims directed to electronic methods for
conducting original issuer auctions of financial instruments; “inputting
step” performed by bidder, other steps performed by issuer
• CAFC (J. Gajarsa), applying BMC and not On Demand, held that for
combined actions of multiple parties, where no single party performs
each step:
– Infringement only if one party exercises “control or direction” over the
entire process such that every step is attributable to the controlling party.
– “Control or direction” standard satisfied where direct infringer would be
held “vicariously liable” for acts committed by another party that are
required to complete performance of the claimed method.
October 24, 2013
© 2013 Rothwell Figg
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Divided Infringement - Golden Hour
•
Accused infringers formed a strategic partnership, enabling their programs
to work together and sold the programs as one product.
•
District Court (ED Tex.) granted JMOL for both system and method claims,
holding that one party must control details of the independent contractor
work:
– Independent contractor cannot perform the work as it chooses
– Evidence insufficient to show that Agreement imposed duties or
responsibilities granting direction or control, and Agreement did not
create agency, partnership or joint venture
– Party did not relinquish control over how its program was written, only
gave the right to provide the program.
– Defendant was not accused of being the mastermind.
•
CAFC (J. Dyk) affirmed joint infringement requirements with regard to both
method and system claims.
October 24, 2013
© 2013 Rothwell Figg
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According to Golden Hour, What is NOT
Joint Infringement
• “Making information available to the [other] party,
• prompting the [other] party,
• instructing the [other] party, or
• facilitating or arrange for the [other] party’s
involvement in the alleged infringement is not
sufficient [to find direction of control].”
October 24, 2013
© 2013 Rothwell Figg
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Divided Infringement and Systems– Centillion
•
Patent claiming an electronic billing system comprising several elements on “back
end” system maintained by service provider and one element on a “front-end” system
maintained by end user.
•
In accused systems, end users may (but do not have to) use a feature employing
technology that Centillion contends is the fourth, front-end element, while service
providers’ systems allegedly practice the first three elements.
•
District Court held Defendant Qwest did not exercise direction or control over end
users creating liability for vicarious infringement.
•
CAFC (J. Moore) held “control” to require only the ability to put a system as a whole
into service, not physical or direct control over all elements and held the location of
“use” is where the system is put into service and the beneficial use of the system is
obtained.
•
On remand, no direct infringement was found, and, therefore, no indirect infringement.
October 24, 2013
© 2013 Rothwell Figg
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Divided Infringement and Systems– SiRF
• Claims for GPS system requiring receiving
satellite data, communicating and/or extracting
data, and processing data at remote receiver.
• CAFC (J. Dyk) found that no joint infringement
theory is necessary because SiRF performed all
the steps of the method claims.
– Found that SiRF’s argument related to unclaimed
steps (i.e., the user’s activity) was irrelevant.
– Found that SiRF’s software and devices dictated the
performance of the claimed steps.
October 24, 2013
© 2013 Rothwell Figg
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Summary of pre-Akamai law
• Until 2012, BMC, Muniauction, Golden Hour, Akamai line of cases
appeared to have solidly established the standard of an agency
relationship (“control and direction”) for evaluating divided
infringement.
• Still, divided infringement does not always require that one party
control and direct the alleged infringement:
– “Use” can be established with system claims even if not all parts of the
system within control (Centillion)
– Performance of some steps may be performed indirectly (SiRF)
– Steps that are not claimed (even if essential to performing the method)
do not count. (SiRF)
• Until 2012, it was established that proving indirect infringement
required proof of direct infringement by someone else.
October 24, 2013
© 2013 Rothwell Figg
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Akamai en banc – A New Rule for Inducement
• Akamai Technologies, Inc. v. Limelight Networks, Inc.
and McKesson Technologies, Inc. v. Epic Systems Corp.,
692 F.3d 1301 (Fed. Cir. 2012) (en banc)
• 6-5
• Majority opinions by Judges Rader, Lourie, Bryson,
Moore, Reyna and Wallach (per curiam)
• Dissents by (a) Judge Newman and (b) Judge Linn
joined by Judges Dyke, Prost and O’Malley
October 24, 2013
© 2013 Rothwell Figg
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Fact Patterns in Akamai and McKesson
• Akamai: Accused infringer performs some steps of the
claimed method and its customers perform the other
steps
– The claimed method involved placing content on a set of
replicated servers and modifying the content
– Accused infringement was placing content on the servers and
then instructing its customers on how to modify the content.
• McKesson: Multiple customers (but not the accused
infringer) perform the steps of the claimed method.
– Claimed method of communication between health care
providers and patients
– Performing steps of method divided between patients and
healthcare providers, using accused infringer’s software
October 24, 2013
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Key Questions in Akamai en banc
• Is a defendant liable for induced infringement if it
has performed some of the steps of a claimed
method and has induced other parties to commit
the remaining steps (as in Akamai)?
• Is a defendant liable for induced infringement if it
has induced other parties to collectively perform
all the steps of the claimed method, but no
single party has performed all of the steps (as in
McKesson)?
October 24, 2013
© 2013 Rothwell Figg
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Section 271(b) is not limited to
infringement by a single entity
• The Akamai majority holds that precedents interpreting
section 271(b) to mean that there is no infringement
unless the accused infringer directs or controls the
actions of the party performing the claimed steps are
“wrong as a matter of statutory construction, precedent
and sound patent policy.”
• “Nothing in the text indicates that the term infringement
in section 271(b) is limited to ‘infringement’ by a single
entity.”
October 24, 2013
© 2013 Rothwell Figg
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BMC Expressly Overruled
• The Akamai majority expressly overrules BMC
Resources.
• “To be clear, we hold that all the steps of a claimed
method must be performed in order to find induced
infringement, but that it is not necessary to prove that all
the steps were committed by a single entity.”
• “If an entity has induced conduct that infringes a patent,
there is no justification for immunizing the inducer from
liability simply because no single party commits all of the
components of the appropriative act.”
October 24, 2013
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Need not Decide Issue of Divided Infringement
• Akamai majority sidesteps the issue of the
standard for direct infringement:
– “Because the reasoning of our decision today is not
predicated on the doctrine of direct infringement, we
have no occasion at this time to revisit any of those
principles regarding the law of divided infringement as
it applies to liability for direct infringement under 35
U.S.C. § 271(a).
October 24, 2013
© 2013 Rothwell Figg
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Both Cases Reversed and Remanded
• Akamai: “Limelight would be liable for inducing
infringement if the patentee could show that (1) Limelight
knew of Akamai’s patent, (2) it performed all but one of
the steps of the method claimed in the patent, (3) it
induced the content providers to perform the final step of
the claimed method, and (4) the content providers in fact
performed that final step.”
• McKesson: “Epic can be held liable for inducing
infringement if it can be shown that (1) it knew of
McKesson’s patent, (2) it induced the performance of the
steps of the method claimed in the patent, and (3) those
steps were performed.”
October 24, 2013
© 2013 Rothwell Figg
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Summary of Akamai en banc impacts
• To prevail on a claim for direct infringement, (at least for
the time being) requires proof that either (1) one party
commits the infringement or (2) one party meets the
“direction and control” standard.
• To prevail on a claim for inducing infringement, requires,
inter alia, proof that some combination of persons
commits all the steps for infringement but does not
require that those parties be under the direction and
control of the accused infringer.
October 24, 2013
© 2013 Rothwell Figg
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Inducement - Commil v. Cisco Systems
• In June 2013, the CAFC revisited what constitutes “knowledge that
the induced acts constitute patent infringement” to establish liability
for inducement.
• CAFC held instructions erroneous based on Global-Tech (standard
knowledge or willful blindness):
“to the extent our prior case law allowed the finding of induced infringement
based on recklessness or negligence such case law is inconsistent with
Global-Tech and no longer good law.”
• When determining induced infringement, accused infringer’s goodfaith belief about patent invalidity could potentially negate finding of
intent; such belief is evidence that should be considered.
October 24, 2013
© 2013 Rothwell Figg
27
Inducement after Global-Tech and Commil
• To impose liability for inducement of
infringement, patentee must show:
– Accused infringer knew of the patent
– Actual knowledge or willful blindness that the induced
acts constitute patent infringement (Global Tech)
• To defend, accused infringer may rely on:
– Good faith belief of non-infringement
– Good faith belief of invalidity
October 24, 2013
© 2013 Rothwell Figg
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Strategies for Protecting IP Rights
Patent Claim Drafting Considerations
October 24, 2013
29
Keep Enforcement in Mind
When Drafting Claims
• Consider who will infringe the claims and how
infringement will be proven.
• Goal: claims that will be directly and literally
infringed by competitors.
• Goal: claims that will be directly and literally
infringed by one actor.
– Avoid divided infringement issue.
October 24, 2013
30
Consider How Infringement Will Be Proven
• Amgen, Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313 (Fed.
Cir. 2003)
– Claim: A having a property which differs from that of A1.
– Specification taught three measurement methods, but failed to limit “which
differs” to particular method.
– DC: Invalid and no infringement.
• Patent failed to identify a single standard by which the “difference” could be
measured, so patent invalid for failure to satisfy §112 and no infringement.
– FC: Affirmed because claims indefinite.
• “One cannot logically determine whether an accused product comes within the
bounds of a claim of unascertainable scope.”
October 24, 2013
31
Consider How Infringement Will Be Proven
• Honeywell Int’l, Inc. v. ITC, 341 F.3d 1332 (Fed. Cir. 2003)
– Claims recited a particular "melting point elevation"
• Art disclosed that “melting point elevation” results differed depending on which of
four methods was used.
• Patent did NOT disclose which method to use.
– FC: claims invalid as indefinite (“insolubly ambiguous”)
• (1) a claimed property value must be determined and,
• (2) in determining that value, several possible sample preparation methods
can be used;
• (3) the determined value changes depending on the method used; and
• (4) the patent does not provide any direction regarding the method to be
used.
See also, Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 723 F.3d 1363 (Fed. Cir.
2013) and Osram GmbH v. ITC, 505 F.3d 1351 (Fed. Cir. 2007) for more cases
where measurement method not indicated in specification).
October 24, 2013
32
Patent Claim Drafting Considerations
• Why is the goal to draft claims that will be directly
and literally infringed by competitors?
– Avoid difficulties of proving infringement under doctrine of
equivalents.
– Deny your competitor the additional defenses to induced and
contributory infringement (knowledge, intent, etc.).
– Avoid having to take extensive third party discovery, especially
of your own customers or prospective customers.
October 24, 2013
© 2013 Rothwell Figg
33
Patent Claim Drafting Considerations
• Consider where infringement will occur to avoid extraterritoriality.
• Try to draft claims that will be directly and literally infringed in
the U.S. by competitors.
• Try to draft claims that will be directly and literally infringed in
the U.S. by one actor.
– Avoid divided infringement issue.
• A method step performed outside the U.S. may mean no direct
infringement.
October 24, 2013
34
Example
• A method comprising reacting A with B to form C
and then reacting C with D to form E.
• What if A with B to form C is performed outside
of the U.S.?
• Does 35 USC §271(g) apply?
October 24, 2013
35
35 U.S.C. §271(g)
•
[w]hoever without authority imports into the United
States or offers to sell, sells or uses within the United
States a product which is made by a process
patented in the United States shall be liable as an
infringer, if the importation, offer to sell, sale, or use of
the product occurs during the term of such process
patent. . . . A product which is made by a patented
process will, for purposes of this title, not be
considered to be so made after—
1.
2.
October 24, 2013
it is materially changed by subsequent processes; or
it becomes a trivial and nonessential component of another
product.
36
Consider:
•
A method for reacting D with C to form E, with
production of C being enabled in the specification.
•
A method for reacting A with B to form C, with
subsequent production of E being enabled in the
specification.
•
A method of forming E or C, with appropriate
enablement in the specification.
October 24, 2013
37
Consider Where Infringement Will Occur
• NTP, Inc. v. Research In Motion, Ltd., 418
F.3d 1282 (Fed. Cir. 2005)
– No infringement of method claims where a
step occurs overseas.
– Infringement of system claims require
patentee to prove that the United States is
where “control of the system is exercised and
beneficial use of the system obtained.”
October 24, 2013
38
Example Of Claim Drafted
To Avoid Extraterritoriality
Uniloc v. Microsoft,
632 F.3d 1292 (Fed. Cir. 2010)
• Uniloc’s ’216 patent is
directed to a software
registration system to deter
“casual copying” of software.
• Uniloc’s system allows full
use of the software (in “use
mode”) only if the software
installation is legitimate;
otherwise, the software runs
in a demonstration mode.
October 24, 2013
39
Example Of Claim Drafted
To Avoid Extraterritoriality
User
Info
• First, a user intending to use the
software in “use mode” enters certain
user information when prompted,
which may include a software serial
number and information unique to
the user, such as name and address
information.
• An algorithm on the user’s
computer (a “local licensee unique ID
generating means”) combines the
inputted information and generates “a
registration number unique to an
intending licensee” (a “local licensee
unique ID”).
October 24, 2013
Local
LUID
40
Example Of Claim Drafted
To Avoid Extraterritoriality
User
Info
• The user information is also
sent to the vendor’s system.
• Vendor system uses the
identical algorithm (a “remote
licensee unique ID generating
means”) to create a “remote
licensee unique ID” for the user.
October 24, 2013
Local
LUID
Remote
LUID
41
Example Of Claim Drafted
To Avoid Extraterritoriality
• Local and remote licensee
unique IDs are provided to the
“mode switching means.”
• The “mode switching means”
then compares the local and
remote licensee unique IDs.
Local
LUID
Remote
LUID
• If they match, the program
enters into “use mode.”
• If they do not match, the
program enters into “demo
mode,” wherein certain features
are disabled.
October 24, 2013
42
Example Of Claim Drafted
To Avoid Extraterritoriality
• Claim 19:
•
A remote registration station
incorporating remote licensee unique ID
generating means,
•
said station forming part of a
registration system for licensing execution of
digital data in a use mode, said digital data
executable on a platform, said system
including local licensee unique ID generating
means, said system further including mode
switching means operable on said platform
which permits use of said digital data in said
use mode on said platform only if a licensee
unique ID generated by said local licensee
unique ID generating means has matched a
licensee unique ID generated by said remote
licensee unique ID generating means; and
wherein said remote licensee unique ID
generating means comprises software
executed on a platform which includes the
algorithm utilized by said local licensee
unique ID generating means to produce said
licensee unique ID.
October 24, 2013
43
Example Of Claim Drafted
To Avoid Extraterritoriality
• Damages could be recovered for overseas registrations
because accused registration station was located in U.S.
(Redmond, WA).
• No joint infringement defense for claim 19
– “As we noted in BMC, ‘[a] patentee can usually structure a claim to
capture infringement by a single party,’ by ‘focus[ing] on one entity.’
– This is exactly what Uniloc did in claim 19, which focuses
exclusively on the ‘remote registration station,’ and defines the
environment in which that registration station must function.
October 24, 2013
44
Drafting Specification:
Focus On Objective Of Literal Infringement
• Specification acts as a definition for the claim terminology.
– Use specification to eliminate uncertainty.
• Athletic Alternatives, Inc. v. Prince Manufacturing, Inc., 73 F.3d 1573,
1581 (Fed. Cir. 1996): when there is an equal choice between a broad
and a narrow meaning of a claim, the public notice function is better
served by interpreting the claim more narrowly.
– Use specification to describe how claims will be literally infringed.
October 24, 2013
45
Drafting Specification:
Focus On Objective Of Literal Infringement
• Build literal infringement by use of
functional discussions, in addition to
structural embodiments.
• Cascading disclosure from generic
description down to preferred
embodiment.
October 24, 2013
46
Joint Tortfeasors?
May Depend on Claim Construction
• SiRF Technology, Inc. v. International Trade Com'n,
601 F.3d 1319 (Fed. Cir. 2010)
• Claim: A method of receiving global positioning system (GPS)
satellite signals comprising: receiving satellite ephemeris at a
first location; communication [sic] the satellite ephemeris to a
mobile GPS receiver at a second location; and processing
satellite signals ….
• Infringed only when actions are taken by SiRF's customers and
by the end users of the GPS devices?
• Commission: Joint infringement.
October 24, 2013
47
Joint Tortfeasors?
May Depend on Claim Construction
• SiRF (con’t)
• Federal Circuit: SiRF directly infringes because SiRF
performs all steps of the claim.
• no steps required by customers or end users.
• method can be performed and are performed by a single party
– “Neither the claim language nor the patent specification
requires that the communication/ transmission be direct.”
• “under this construction it is clear that SiRF performs the step
of communicating/ transmitting the files to the end users'
devices because SiRF initiates the process of transmitting and
communicating, and the files are actually transmitted to the end
users.”
October 24, 2013
48
Joint Tortfeasors?
May Depend on Claim Construction
• SiRF (con’t)
• FC (con’t)
• although “communicati[ng]” or ‘transmittin[g]” “can only occur
if the customer forwards the data to the end user and the end
user downloads the data. … the actions of “forwarding” or
“downloading” are not required by the claims, and, therefore,
the fact that other parties perform these actions does not
preclude a finding of direct infringement.”
• “When properly construed, it is clear that SiRF infringes
…Once the GPS receiver is enabled and ready to process the
data, only SiRF's actions are involved in “processing” or
“representing” the data.”
October 24, 2013
49
Drafting Tip
• SiRF did
language.
it
right:
avoid
overly
limitative
• Goal: Recited steps in each claim can be
satisfied by a single actor.
October 24, 2013
50
Direct Infringement By Single Party
Triggering Operation Of A Claimed System
• Centillion Data Sys., L.L.C. v. Qwest
Commc'ns Int'l, Inc., 631 F.3d 1279 (Fed.
Cir. 2011)
• DC: summary judgment of no infringement
because no single party either practiced all of
the limitations of the asserted claims or
controlled another party doing so.
October 24, 2013
51
Direct Infringement By Single Party
Triggering Operation Of A Claimed System
• Centillion (con’t)
• FC: Vacate and remand
• “By causing the system as a whole to perform this processing and
obtaining the benefit of the result, the customer has “used” the
system under §271(a). …The customer is a single “user” of the
system ….”
• Qwest does not control customers’ use.
• the user of a system who triggers operation of that system is an
infringer of a claim to that system even though some elements of
the system are performed by different parties.
October 24, 2013
52
Drafting Tip
• Per Centillion, draft system claims.
• Goal: Recited steps in each claim can be satisfied by a
single actor.
October 24, 2013
53
Patent Prosecution
October 24, 2013
54
Patent Prosecution
• Too often, applicants prosecute patent
applications without adequately considering
how the claims will be asserted in litigation, in
particular, whether the patentee can proceed
on a theory of direct infringement or must
proceed on a theory of divided infringement.
October 24, 2013
55
Patent Prosecution
• Try to maintain originally drafted claims
meeting goals of direct, literal infringement
by one actor (competitor not customer).
• Try to present new and amended claims
meeting goals of direct, literal infringement
by one actor (competitor not customer) and
having written description support.
– But don’t forget your pre-AIA/AIA issues around choice of
law/effective filing date if adding new claims to an application
containing only claims with pre-AIA effective filing dates.
October 24, 2013
56
Assessing Risk Of Partnerships
To Allocate Potential Liability
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Allocating Liability Risks in Partnership
• Joint Infringement under § 271(a)
– Direction and Control is still the standard
• Law of Inducement under § 271(b) has changed
– (1) knew of the patent infringement;
– (2) induced performance of the steps of the method;
and
– (3) those steps were actually performed.
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Allocating Liability Risks: Strategies
• Operate independently
– Parties share the same goal, but don’t discuss or dictate how to
reach that goal.
– Perform independent clearance searches and each party
ensures that they don’t practice all elements of any claim
identified in the searches.
– “We need to get from A to C. We will get from A to B and not tell
you how. You get from B to C and don’t tell us how.”
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Allocating Liability Risks: Strategies
• Avoid Knowledge of Patents
– Without knowledge, there is no specific intent to
infringe.
– Once you are sued, you have notice and knowledge.
• Then perform an analysis for validity and infringement. Good faith
defenses can be used to defend against inducement claim.
• This does not avoid the strict liability of direct infringement.
– “Willful Blindness” concern of Global-Tech.
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Allocating Liability Risks: Opinions of Counsel
• New in the AIA, 35 U.S.C. § 298 Advice of counsel:
– The failure of an infringer to obtain the advice of counsel with
respect to any allegedly infringed patent, or the failure of the
infringer to present such advice to the court or jury, may not be
used to prove that the accused infringer willfully infringed the
patent or that the infringer intended to induce infringement of the
patent.
– i.e. Not getting an opinion cannot be used as a negative
inference for willfulness or inducement at trial.
• Thus, conversely, the affirmative obtaining of advice of
counsel should be evidence to prove the accused
infringer did not intend to induce infringement.
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Allocating Liability Risks: Opinions of Counsel
• Value of a Non-Infringement Opinion
– Because knowledge is specific intent to induce acts that
constitute patent infringement, a good faith belief of noninfringement of the claims provides a defense (even Judge
Newman seems to agree).
• Value of an Invalidity Opinion
– Likewise, under Commil, a good faith belief that the asserted
patents are invalid provides a defense.
• One should remain wary of producing opinions and the related risks
of discovery.
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Litigation Strategies
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Litigation Strategies
• Direct Infringement
– Pleading Joint Infringement
– Motions to Dismiss Joint Infringement
• Induced Infringement
– Pleading Induced Infringement
– Motions to Dismiss Induced Infringement
• Early Motions for Summary Judgment
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Litigation – Pleading Joint Infringement
• Make sure the Complaint fits Form 18.
– In re Bill of Lading, 681 F.3d 1323 (Fed. Cir. 2012)
• If the asserted claims involve steps that are performed
by end users or other parties other than accused
infringer, should plead “direction or control” of that party
over the others.
• For system claims, include allegations that accused
infringer uses the system, along the lines of SiRF and
Centillion.
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Litigation – Early Motions to Dismiss
• Motions to Dismiss Extend the Pleadings
– Increase cost to Plaintiff.
– Defendant does not have to Answer immediately.
• More time to prepare a response.
• Timing can be advantageous in some jurisdictions, e.g. N.D. Ill.
where patent disclosure is keyed on the Final Pleading and not
the Rule 26(f) conference.
– More time to discuss settlement.
– More time to seek transfer of venue.
– More opportunity to pursue post-grant procedures, such
as inter partes review.
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Litigation – Motions to Dismiss Joint
Infringement Claims
• Challenge that the Plaintiff does not allege that
one party exercises ‘control or direction’ over the
entire process such that every step is attributable
to the controlling party, i.e., the ‘mastermind.
• Challenge that performance of each and every
element has not been pled.
– Can you distinguish from Centillion or SiRF?
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Litigation – Pleading Induced Infringement
• Twombly/Iqbal regime requires that a plaintiff
plead, “sufficient factual matter, accepted as
true, to state a claim that is plausible on its face.”
– More than mere formulaic recitation of elements and
conclusory legal statements.
• Plead that each and every element is practiced.
– Induced infringement effectively requires an
underlying direct infringement, but not a direct
infringer.
– J. Newman’s dissent in Akamai en banc points out the
inconsistency of this concept.
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Litigation – Pleading Induced Infringement
• Knowledge, Inducement, & Actual Performance:
– Plead that the accused infringer acted with knowledge
that the induced acts constituted patent infringement.
• See Akamai en banc, Maj. Op. at 14., citing Global-Tech v. SEB,
131 S.Ct. 2060 (2011).
– Evidence of inducement should be more than a bare
allegation.
• Example situations of inducement are provided by Akamai
(Dependant Limelight performing at least 1 step) and McKesson
(Defendant Epic not performing any step, but providing a system).
– Again, each and every element of a claim must be
practiced.
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Litigation – Pleading Induced Infringement
• Pleading inducement requires alleging knowledge of the patent.
• If patent has been sent to accused infringer, plead facts surrounding
that notice.
• If not, may need to plead direct infringement first, then add indirect
infringement pleadings later.
– Avoid motions to dismiss thin indirect infringement pleadings.
– Potentially receive further information in responses to support indirect
infringement claims.
• If a party is inducing infringement, almost by definition that action is
willful (or can be construed as such to a jury), so seek treble
damages for willful infringement.
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Litigation – Motions to Dismiss Induced
Infringement Claims
• Attack the knowledge prong.
– Assert that defendant did not know the induced acts
constituted patent infringement.
• More than mere knowledge or notice of the patent.
• Opinions of Counsel can provide protection here.
– If the Defendant did not know of the patent before the
lawsuit, then there could be no specific intent to induce.
• Moving forward, the defense of the case may provide cover.
• Challenge whether there is actual performance.
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Litigation – Early Motion for Summary Judgment
• Generally, convince the Judge that the present
case is appropriate for SJ.
• Is there any uncontroverted evidence that no
one party performs all elements, and that there
is no direction or control?
– Then file for SJ regarding any direct infringement
claims.
– If successful will often knock out claims for past
damages, making case easier to resolve.
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Litigation: Key Strategic Issues
• For patentee:
– Whether to provide pre-suit notice of patent
– Whether to plead inducement in original complaint
– How will you establish that all the steps are infringed
to establish that direct infringement occurred
(remember intent alone does not suffice)?
• For accused infringer:
– How to establish lack of intent/whether to rely on
opinions of counsel
– How will you present lack of intent to jury?
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Thank You!
Contact Information:
Sharon Davis
Rothwell, Figg, Ernst & Manbeck
[email protected]
Tom Irving
Finnegan
[email protected]
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