One Hand Taketh Away, the Other Giveth: For Method Claims, It’s Tough to Prove Joint Infringement, But for System Claims, It’s Easier

By Kerry Timbers. Co-Chair of our Litigation Practice Group

February 2011 IP Update

Just two months ago, patent owners had cause for concern over the tightening of the standard for proving joint infringement of  a “split” claim, one for which no single entity directly performs all the steps of the claim.

As we reported, the Federal Circuit held, in Akamai v. Limelight Networks, that where a method claim requires two actors to perform the method, there can be no infringement unless one of the actors controls the other, either under an agency theory or by contract.

Exactly one month later, the Federal Circuit went in the opposite direction with split claims for systems, making it much easier to prove infringement. The court’s opposing outcomes for method vs. system claims cannot help but encourage patent applicants to use different types of claims in describing their inventions. (A method claim seeks protection for a series of steps for performing a function or achieving a result.  A system claim seeks protection for a combination of interacting components.)

In Centillion Data Systems, LLC. v. Qwest Communications Int’l Inc., the court addressed a system that provided telephone billing information to customers.  The claimed system included a back-end computer system maintained by Qwest, and a front-end system, a computer program running on the customer’s own computer.  The customer could install software provided by Qwest and “subscribe” to obtain monthly billing reports automatically generated by the back-end system, or could seek specific reports generated by the back-end system.

The court had never addressed the question of what represents “use” of a system claim where elements of that system are in the possession of more than one actor.  While agreeing that Qwest itself did not use the entire system — it used only the back-end system, and did not control the customer — the court held that the customer used the entire system merely by putting the system into service, both by subscribing and by ordering specific reports.  “[B]ut for the customer’s actions, the entire system would never have been put into service.”

In coming to this conclusion, the court did not acknowledge the strange result: It is now very difficult to prove infringement of split claims reciting a method, but very easy to prove infringement of split claims reciting a system.  In discussing a customer’s use of a system, the court took note of, but did not rely upon, Akamaiand its influential predecessor,  BMC Resources, Inc. v. Paymentech, L.P (Fed. Cir. 2008), cases that dealt with split method claims.

Instead, the court looked exclusively to a precedent defining “use” of a system in the context of territoriality, specifically, whether use took place in the U.S. when Blackberry owners in the U.S. sent messages using equipment located both in the U.S. and outside the U.S.  NTP, Inc. v. Research in Motion, Ltd. (Fed. Cir. 2005).  That case had taken a very broad view of use, holding that a person “uses” the entire system — even the parts located outside the U.S. — merely by placing the system into use by sending a message from a Blackberry in the U.S.

The result in NTP was not surprising, as the court was conspicuously loath to allow persons to circumvent U.S. patent law merely by placing some portion of the system outside the U.S., even though all the benefit to the user took place in the U.S.  However, the broad definition of “use” in the context of territoriality dictated the result in Centillion.

The court felt it had no choice but to use the same rationale in the context of split claims, as to do otherwise would conflict with NTP.  Thus, split claims are now very easy to infringe in the use of a system, while similar claims written in the form of a method are exceedingly difficult to infringe.

Patent practitioners should perhaps not expect consistency throughout the wide expanse of patent law, but attorneys who routinely write parallel system and method claims for the same invention might be forgiven their surprise that split claims could be treated so differently depending solely on whether they are method or system claims.

However, forewarned is forearmed.  The Federal Circuit has surely motivated patent applicants to make sure that different types of claims are used to protect inventions, and provided another reason to think twice about whether more than one actor is required to make or use the entire claimed invention.