DIVIDED INFRINGEMENT IN LIGHT OF MCKESSON & AKAMAI

Transcription

1 DIVIDED INFRINGEMENT IN LIGHT OF MCKESSON & AKAMAI June 15, 2012 Omni Hotel, Dallas, Texas HarrisMartin IP Litigation Conference Presented by: Brett Govett Miriam Quinn

2 Why Are We Here? Akamai Techs. v. Limelight Networks, , 1380, 1416, 1416 (appealed from District Court of Massachusetts, Judge Rya Zobel) Argument heard on November 18, 2011 Decision en banc expected Spring 2012 McKesson Technologies v. Epic Systems Corp., (appealed from Northern District of Georgia, Judge Jack T. Camp) Argument heard on November 18, 2011 Decision en banc expected Spring

3 Akamai Techs., Inc. v. Limelight Networks, Inc. A method of delivering content over the Internet Limelight provided content providers with the information necessary to modify their web pages to use Limelight service Content providers performed the tagging and serving steps The jury found infringement, and Limelight moved for JMOL on the ground of non-infringement The district court initially denied the motion, but reversed upon reconsideration in light of intervening decision in Muniauction Some Connection? Standard customer contract Content provider responsible for identifying all URLs to enable content to be delivered by Limelight and Customer provides Limelight with all cooperation and information necessary for Limelight to implement the Content Delivery Service 3

4 Akamai Techs., Inc. v. Limelight Networks, Inc. The Federal Circuit found in favor of Limelight No control under traditional agency law Limelight s customers decide what content, if any, is delivered (and then perform the tagging and serving steps) The form contract did not obligate the Limelight customers to perform the patented steps 4

5 McKesson Info. Solutions LLC v. Epic Sys. Corp. Method for automatic and electronic communication between a health care provider and patient Accused product = MyChart Most steps performed by MyChart User performs step of initiating a communication Some Connection? Login information, terms and conditions to use the system, control over level of user access, user accept cookies and be limited in view... If no person ever visited Defendant s website, then Plaintiff s patent would never be infringed 5

6 McKesson Info. Solutions LLC v. Epic Sys. Corp. Federal Circuit affirmed A doctor-patient relationship does not itself create an agency or contractual relationship Court warned against subverting the existing statutory scheme for indirect infringement Absent direct infringement, a patentee has not suffered a compensable harm Patentees stand in a unique position to define the boundaries of his or her rights, and so notify the public 6

7 Dissent in McKesson: Newman 7

8 Vacated Holdings Akamai Control or direction is a consideration, as is the extent to which one party provides instructions to another; however, what is essential is whether the relationship between the parties is such that acts of one may be attributed to the other. There can only be joint infringement when (1) there is an agency relationship between the parties who perform the method steps or (2) when one party is contractually obligated to the other to perform the method steps McKesson [W]here the actions of multiple parties combine to perform every step of a claimed method, the claim is directly infringed only if one party exercises control or direction over the entire process such that every step is attributable to the controlling party. The control or direction standard is satisfied in situations where the law would traditionally hold the accused direct infringer vicariously liable for the acts committed by another party that are required to complete performance of a claimed method 8

9 Questions Presented En Banc Akamai McKesson 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? 1) 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? 2) 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? 9

10 Amicus Briefs Akamai: 38 Amici Altera Corporation AIPLA Apple Inc. Aristrocrat Biotechnology Indus. Org. CTIA Cisco Systems Conejo Valley Bar Association Dell, Inc. Electronics Frontier Foundation Encore Wire Corp. Facebook, Inc. Google, Inc. HTC Hewlett-Packard Co. Intel Corp. Internet Retailers Intuit, Inc. Linkedin Corporation MetroPCS Wireless McKesson: 28 Amici Micron Technology, Inc. Myriad Genetics, Inc. NetApp, Inc. NY Intellectual Property Law Assoc. Pharmaceutical Research and Manuf. Of America Ring Central, Inc. SAP America, Inc. Shuffle Master, Inc. Symantec Corporation The Financial Services Roundtable San Diego IPLA Thomson Reuters Corporation VNS Corporation Washington State Patent Law Assoc. Weatherford International Yahoo! Inc. Zynga Inc. ebay Inc. 10

11 The Statutes 271(a) [W]hoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefore, infringes the patent 271(b) Whoever actively induces infringement of a patent shall be liable as an infringer. 271(c) Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in infringement of such patent, and not a stable article or commodity of commerce suitable for substantial noninfringing use, shall be liable as s contributory infringer. 11

12 Direct Infringement 35 U.S.C. 271 (a): a claim is infringed by whoever makes, uses, offers to sell, sells or imports a patented invention. All elements rule Single entity rule Strict liability Applied to method claims Every step is performed By a single entity Regardless of knowledge or intent 12

13 Direct Infringement by Multiple Actors Fact Patterns The end user and service provider The manufacturer and reseller Network and internet-based services Other multi-entity processes and services (e.g., medical, financial) If separate entities each perform separate steps of a method claim Under what circumstances is it directly infringed? To what extent would each of the parties be liable? 13

14 A Loophole or Balance of Interests? Current statutory scheme Direct infringement covers single actors Indirect infringement covers multiple actors 35 U.S.C. 271(b) & (c) Requires predicate finding of direct infringement Requires evidence of knowledge & other facts beyond performance of all elements Direct infringement by multiple actors? E.g., contracting out a step of a patented process to avoid infringement 14

15 Early Theories on Joint Infringement Some Connection Direct and intentional concert of action between a defendant and licensee Defendant contracted out a conventional step Participation and combined actions of the defendants Worked in concert with other entities to complete the process of infringement Courts have accepted that there is a circumstance under which multiple actors can be liable for direct infringement 15

16 What is Sufficient Connection? On Demand Mach. Corp. v. Ingram Indus., Inc., 442 F.3d 1331 (Fed. Cir. 2006) Where the infringement is the result of the participation and combined action(s) of one or more persons or entities, they are joint infringers and are jointly liable for the infringement. 16

17 What is Sufficient Connection? BMC Res., Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) A method of PIN-less debit bill payment including a payee s agent (e.g., BMC), a remote payment network (e.g., an ATM network), and a card-issuing financial institution On Demand s participation and combined action standard was mere dicta Affirms single entity rule The mastermind can be held liable Ability to contract around infringement does not outweigh risk of subverting statutory scheme for indirect infringement 17

18 What is Sufficient Connection? BMC Res., Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) As a matter of fairness, vicarious liability for direct infringement is still a possibility where one party control[s] or direct[s] each step of the patented process. 18

19 Explaining Direction and Control Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1329 (Fed. Cir. 2008) Methods of conducting original issuer municipal bond auctions over the Internet using a web browser One step by bidder, another by auctioneer s system Rejected district court jury instruction employing factors: (1) acting jointly and together, (2) aware of other s existence, and (3) one party taught, instructed, or facilitated other party s participation Controlling access and providing instruction on use is not sufficient to establish liability for direct infringement 19

20 Explaining Direction and Control Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1329 (Fed. Cir. 2008) Sufficient direction and control is Where the law would traditionally hold the accused vicariously liable for the acts committed by another party that are required to complete performance of a claimed method. 20

21 Explaining Direction and Control Centillion Data Sys., LLC v. Qwest Commc ns Int l, Inc., 631 F.3d 1279,1286 (Fed. Cir. 2011) No liability where defendant provided software and technical assistance that allegedly facilitated the customer s use of the infringing system Entirely the decision of the customer whether to install and operate the software Global Patent Holdings, LLC v. Panthers BRHC LLC, 318 F. App x 908 (Fed. Cir. 2009) The third party must perform the steps of the patented process by virtue of a contractual obligation or other relationship that gives rise to vicarious liability 21

22 Explaining Direction and Control RESTATEMENT (SECOND) OF TORTS 877 (1979) For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he orders or induces the conduct, if he knows or should know of circumstances that would make the conduct tortious if it were his own. Often a principal or master, although status not required Compare to 35 U.S.C. 271(b) and (c) (b) knowledge that the induced acts constitute patent infringement (c) knowledge of the existence of the patent that is infringed 22

23 Explaining Direction and Control RESTATEMENT (SECOND) OF TORTS 876 (1979) For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he does a tortious act in concert with the other or pursuant to a common design with him Mere common plan, design or even express agreement is not enough for liability; there must be acts of a tortious character in carrying it into execution RESTATEMENT (THIRD) OF AGENCY 1.01 (2006) Agency is a fiduciary relationship arising when one person (a principal ) manifests assent to another person (an agent ) that the agent shall act on the principal s behalf and subject to the principal s control, and the agent manifests assent or otherwise consents so to act. 23

24 QUIZ 24

25 Method Claim: Fact Pattern 1 End-User to initiate a call by dialing a number Service provider to place a call to the intended user Service provider to connect the two users Users access system through subscription agreement Plaintiff alleges that service provider reserves the right to restrict calls or connections to any telephone in its sole discretion. Joint Infringement? NO 25

26 Method Claim: Fact Pattern 2 Defining a satellite account number associated with a satellite account for use in financial transaction carried out with a satellite card Issuing a satellite card A non-party (a bank) issues the card Defendants impose requirements banks follow to issue cards such as using Defendant s brand name and embossing user identification Banks have latitude in defining pricing and terms and conditions, and minimum age requirements Joint Infringement? MAYBE 26

27 Fact Pattern 3 Method Claim: Establishing video-conferencing communication system between a medical video-conferencing station and satellite medical care facility Diagnosing a medical condition of a patient via video-conferencing by a physician Providing instructions via the video-conferencing system to a caregiver Two parties: physician and video-conferencing operator Contract between operator and physician that it must supervise and control all medical services and operator does not engage in such medical services. By Contract: Defendants decide pairing between physician and operator Joint Infringement? NO 27

28 Amici Curiae The Concerns (and the Briefs) Pile On e h t s Patentable, but d l o h p Who is better u e l u r t situatw htaotechnology? 5 3 e d n i unprotectable e Whutory schem prevent the ha rm? stat at if Wh o)?r n. 27th1e? s i ich t step ml iins shou step or ar U.Sro.oC gov is m al? t ern the ld pri n o c inor or a t if pr al ( uch? Bright-line ordecide? sliding scale? m l What the Court ghean tioinwill o c r w t i o p n W vceyn? H algs ho co u f tor n o n o e c ts Can this issue be avoridthede rinisk? a e t h b e f i d r l s t u p l a o Can liability be mitigated Who shce by clever c l a im drafting? by clever contract drafting? 28

29 Common Law Joint Tortfeasor & Proximate Causation: BPLA Active Causation & Acting in Concert: Myriad Genetics Some involvement & Substantial Participation AIPLA Common Law Joint Tortfeasor & Proximate Causation; knowing combination: Aristocrat Techs. Agency: Altera, HTC, Weatherford Int l Substantial Contribution: Cascade Ventures, VNS Corp. Agency: Cisco, Dell, ebay, Google, HP, Intel, Intuit, Micron, NetApp, RingCent l, SAP Am., Symantec, Yahoo, Zynga Degree of Connec+on Participation & Combined Action: Biotech. Indus. Org. Partial Inducement: Cascade Vent., VNS Corp. Substantial Contribution; Joint & Several Liability: PhRMA Direction & Control: WSPLA Agency: Facebook Linkedin Direction & Control: Electronic Frontier Found. 29

30 Questions? 30

31 AUSTIN BEIJING DALLAS DENVER DUBAI HONG KONG HOUSTON LONDON LOS ANGELES MINNEAPOLIS MUNICH NEW YORK PITTSBURGH-SOUTHPOINTE RIYADH SAN ANTONIO ST. LOUIS WASHINGTON, D.C FULBRIGHT [ ] 31