Indirect and Foreign Infringement

1. Indirect and Foreign Infringement Prof Merges Patent Law – 11.4.2010

2. Infringement • Direct • Indirect

3. 35 U.S.C. § 271(a) (a) Except as otherwise provided in this title, whoever 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 therefor, infringes the patent.

4. Indirect infringement: Inducement and contributory infringement 35 USC 271 (b): Whoever actively induces infringement of a patent shall be liable as an infringer.

5. 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 an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.

6. Infringement checklist • Single entity? • Perform infringing act? • In US?

7. Dealing with “missing pieces”

8. Infringement checklist • Single entity? • Perform infringing act? • In US?

9. Relation to direct infringement: divided infringement claims • BMC v. Paymentech: rejects a “central coordinator” theory of liability • Different steps performed by different entities who were dealing at arm’s length with each other • BUT: does this mean an entity can escape liability by “farming out” a piece of the infringing acts to a technically separate entity?

10. NO: See Golden Hour • Golden Hour Data Systems, Inc. v. emsCharts, Inc., 614 F.3d 1367 (Fed Cir 2010) • United States Patent No. 6,117,073: “First module capable of alerting a transport crew” and “second module capable of . . . Billing the patient . . .”

11. Where the combined actions of multiple parties are alleged to infringe process claims, the patent holder must prove that one party exercised “control or direction” over the entire process such that all steps of the process can be attributed to the controlling party, i.e., the “mastermind.” Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1329 (Fed.Cir.2008) (citing BMC Res., Inc. v. Paymentech, L.P., 498 F.3d 1373, 1380-81 (Fed.Cir.2007))

12. Not the same as joint and several liability under tort law • nn

13. The evidence at trial showed that Softtech and emsCharts had a non-exclusive distributorship agreement that lasted about a year. The agreement defined the relationship as not creating “any agency, partnership, joint venture, or employer/employee relationship.” -- Slip Copy, 2009 WL 943273 (ED Texas 2009) Therefore: no mandatory direction, no mastermind, no liability

14. 35 USC 271(c) (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 an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.

15. BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) When a defendant participates in or encourages infringement but does not directly infringe a patent, the normal recourse under the law is for the court to apply the standards for liability under indirect infringement. Indirect infringement requires, as a predicate, a finding that some party amongst the accused actors has committed the entire act of direct infringement. Dynacore Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263, 1272 (Fed.Cir.2004).

16. What is required for indirect infringement? • Someone has to directly infringe • The indirect infringer must instruct or enable the infringer’s actions

17. Quick examples • Inducing: instruct on how to perform a process, with intent that customer infringe • Contributory infringement: sell component whose only real use is to infringe

18. Infringement checklist • Single entity? • Perform infringing act? • In US?

19. Contributory Infringement • Start with the Aro case in the Supreme Court

20. Aro Mfg.

22. Aro I – Direct and Indirect Infringement • Claims included (1) convertible top and (2) car itself • Convertible Top Replacement Co. sued Aro Co., a “replacement top company” • Car owners are DIRECT infringers • Aro was (at most) a contributory infringer

23. Aro I - issues • “Reconstruction and repair” doctrine • For owners of LICENSED cars only (GM cars) “Repair” is ok, reconstruction is not • Includes an implied license notion: purchasers implicitly have right to maintain what they buy

24. Aro I: What About Ford Car Owners? • Their repair of convertible tops IS an infringing act • No “implied license” to repair convertible tops; never paid patentee for use of patented invention

25. Aro II • Ford customer sales: unlicensed • Even “repair” is infringing here • Not a question of exhaustion • Customers infringe: repair “perpetuates the infringing use” - p. 971

26. This case, Aro II • Aro is back in court for alleged infringement of CTR’s patent – by virtue of repair of tops on Ford Cars • BUT:Aro cannot be a direct infringer; so the suit is for CONTRIBUTORY INFRINGEMENT

27. Aro II: 271(c) • 271(c) “knowledge” • Knowledge: of both patent and infringement • See p. 912 n 8

28. Exhaustion: Implicit in Aro II • At issue in LG v Quanta case from Supreme Court last term • Who is liable in the “chain of possession” of a patented item? When does liability cut off?

29. Infringement checklist • Single entity? • Perform infringing act? • In US?

30. CR Bard Aorta Coronary Artery

32. Process claim • Use of apparatus in unclogging arteries

33. 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 an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.

34. Substantial noninfringing uses? • Claim specifies catheter opening location • Are there noninfringing uses of the defendant’s catheter?

35. Casebook, p. 918 [O]n this record a reasonable jury could find that, pursuant to the procedure described in the first of the fact patterns (a noninfringing procedure), there are substantial noninfringing uses for the ACS catheter.

36. 35 U.S.C. § 271(g) Additional Protection for Product Made By Process Patents: Import Into the United States or Offer to Sell, Sells or Uses Within the United States a Product Which is Made By a Process Patent. • Importation Must Occur During Term of Patent • Product Made by Process Not Considered As Such After (i) materially changed by subsequent process, or (ii) becomes trivial and nonessential component of another product

37. Infringement checklist • Single entity? • Perform infringing act? • In US?

38. Brown • Territorial limits of patent rights

39. Chief Justice Taney

42. Page 925 If P wins, patents laws “would confer a power to exact damages where no real damage had been sustained, and would moreover seriously embarrass the commerce of the country with foreign nations.”

43. Microsoft v. AT&T

44. 271 USC (f)(1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

45. Software as component • Overseas supply

46. (2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

47. P. 927 [U]uninstalled Windows software does not infringe AT&T’s patent any more than a computer standing alone does; instead, the patent is infringed only when a computer is loaded with Windows and is thereby rendered capable of performing as the patented speech processor.

48. The question before us: Does Microsoft’s liability extend to computers made in another country when loaded with Windows software copied abroad from a master disk or electronic transmission dispatched by Microsoft from the United States? Our answer is “No.”

49. P. 928 Abstract software code is an idea without physical embodiment, and as such, it does not match § 271(f)’s categorization: “components” amenable to “combination.”

50. Other complexities • Components imported into US • 271(g)