Discusses the state of the law on this issue prior to the Federal Circuit's decision in Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012).

1. 11
DIVIDED INFRINGEMENT OF
METHOD CLAIMS:
A TOUGH SELL
by: Michael A. Ciceroby: Michael A. Cicero
CPTCLA Spring MeetingCPTCLA Spring Meeting
May 1, 2009May 1, 2009

2. 22
Topics AddressedTopics Addressed
• What is “Divided” Infringement of a Method
Claim?
• The “Direct or Control” Requirement to
Establish Joint Direct Infringement
• Litigation and Patent Prosecution Lessons
Learned

3. 33
Authorities DiscussedAuthorities Discussed
• BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d
1373 (Fed. Cir. 2007);
• Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318
(Fed. Cir. 2008), cert. denied, ___ S.Ct. ___, 2009
WL 578715 (U.S. Mar. 9, 2009);
• Emtel, Inc. v. Lipidlabs, Inc., No. H-07-1798, 2008
WL 4450310 (S.D. Tex. Sept. 30, 2008);
• Global Patent Holdings, LLC v. Panthers BRHC,
LLC, 586 F.Supp.2d 1331 (S.D. Fla. 2008);

4. 44
Authorities DiscussedAuthorities Discussed – (cont’d)
• Friday Group v. Ticketmaster, No.
4:08CV01203, 2008 WL 5233078 (E.D. Mo.
Dec. 12, 2008);
• Golden Hour Data Systems, Inc. v. emsCharts,
Inc., 2009 WL 943273 (E.D. Tex. Apr. 3, 2009);
and
• NTP, Inc. v. Research In Motion, Ltd., 418 F.3d
1282 (Fed. Cir. 2005).

5. 55
What is “Divided Infringement” of aWhat is “Divided Infringement” of a
Method Claim?Method Claim?
Claim 1Claim 1:: Recites Steps A, B, C, D, & E.Recites Steps A, B, C, D, & E.
DefendantDefendant:: Performs Steps A-C.Performs Steps A-C.
Third PartyThird Party:: Performs Steps D & E.Performs Steps D & E.

6. 66
How can Defendant be Liable forHow can Defendant be Liable for
Divided Infringement of Claim 1?Divided Infringement of Claim 1?
1. Joint Direct Infringement: Must establish that
Defendant is vicariously liable for the Third Party’s
performance of Steps D & E.
BMC at 1379; Muniauction at 1330.

7. 77
How can Defendant be Liable forHow can Defendant be Liable for
Divided Infringement of Claim 1?Divided Infringement of Claim 1?
2. Indirect Infringement (Inducement under § 271(b)):
Must establish:
a. Act of direct infringement;
b. Defendant’s actions induced infringing act; and
c. Defendant knew or should have known his actions
would induce actual infringement.
Dynacore Holdings Corp. v. U.S. Phillips Corp., 363
F.3d 1263, 1272 (Fed. Cir. 2004); DSU Med. Sys.
Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1306 (Fed. Cir.
2006).

8. 88
BMC Resources, Inc. v.BMC Resources, Inc. v.
Paymentech, L.P.Paymentech, L.P., 498 F.3d 1373, 498 F.3d 1373
(Fed. Cir. 2007)(Fed. Cir. 2007)

9. 99
Facts inFacts in BMC ResourcesBMC Resources
BMC’s patents claim a method for telephonically processing
debit transactions without a PIN.
Payee or payee’s
agent telephonically
enters access code,
acct. #, debit card #, &
payment amount.
data
Remote
Payment
(ATM)
Network
Card-
issuing
Financial
Institution
data
Paymentech marketed similar system, though parties agreed
that Paymentech did not itself perform every step of BMC’s
claimed method.

10. 1010
Holdings inHoldings in BMC ResourcesBMC Resources
• BMC threatens; Paymentech files a DJ action; BMC
counterclaims for both direct and indirect infringement;
both parties move for SJ on the infringement issue.
• District CourtDistrict Court:: Grants Paymentech’s motion as to both
direct and indirect infringement, on ground that
Paymentech did not direct or control the behavior of the
financial institutions who performed the claimed method
steps that Paymentech did not perform.
• CAFCCAFC: Affirmed.

11. 1111
Holdings inHoldings in BMC ResourcesBMC Resources (cont’d)(cont’d)
• “Direct infringement requires a party to perform or use
each and every step or element of a claimed method or
product.”
• “Indirect infringement requires, as a predicate, a finding
that some party amongst the accused actors has committed
the entire act of infringement.”
• “[T]he 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.”

12. 1212
Holdings inHoldings in BMC ResourcesBMC Resources (cont’d)(cont’d)
• “The concerns over a party avoiding infringement by arms-
length cooperation can usually be offset by proper claim
drafting. A patentee can usually structure a claim to capture
infringement by a single party.”
• “In this case, for example, BMC could have drafted its
claims to focus on one entity. The steps of the claim might
have featured references to a single party’s supplying or
receiving each element of the claimed process. However,
BMC chose instead to have four different parties perform
different acts within one claim.”
• Court will not redraft “these ill-conceived claims.”

13. 1313
Holdings inHoldings in BMC ResourcesBMC Resources (cont’d)(cont’d)
• “Applying these standards to BMC’s charges against
Paymentech properly results in a finding of no
infringement.”
• Paymentech’s having provided customer data (debit card #,
etc.) to the debit networks, without directions as to use of
the data, was insufficient to establish Paymentech’s control
over debit networks.
• Evidence of Paymentech’s control over financial
institutions “was even scarcer.” There was no evidence of
any contractual relationship between Paymentech and those
institutions.

14. 1414
Muniauction, Inc. v. Thomson Corp.,Muniauction, Inc. v. Thomson Corp.,
532 F.3d 1318 (Fed. Cir. 2008532 F.3d 1318 (Fed. Cir. 2008),), cert.cert.
denieddenied, ___ S.Ct. ___, 2009 WL 578715, ___ S.Ct. ___, 2009 WL 578715
(U.S. Mar. 9, 2009)(U.S. Mar. 9, 2009)

15. 1515
Facts inFacts in MuniauctionMuniauction
• Claims directed to methods for conducting municipal bond
auctions over an electronic network.
• Asserted claim recited, inter alia:
• Bond issuer’s computer and a bidder’s computer
coupled to at least one electronic network;
• Step of inputting bid data into bidder’s computer;
• Step of communicating message associated with bid to
issuer’s computer.
• Performance of all claimed steps through use of web
browser.

16. 1616
Facts inFacts in MuniauctionMuniauction (cont’d)(cont’d)
• Thomson (accused infringer) ran a central server that
enabled many of the same auction services claimed in
plaintiff’s patent.
• “Thomson neither performed every step of the claimed
methods nor had another party perform steps on its behalf.”
• RESULT: CAFC reverses judgment of infringement by
Thomson.

17. 1717
Holdings inHoldings in MuniauctionMuniauction
• “[D]irect infringement requires aa singlesingle partyparty to perform
every step of a claimed method.”
• “Accordingly, where the actions of multiple parties
combine to perform every step of a claimed method, the
claim is directly infringed only ifonly if one party exercises
“control or direction” over the entire process such that
every step is attributable to the controlling party, i.e., the
“mastermindmastermind.”
• Issue turned on whether Thomson sufficiently controlled or
directed other parties such that “Thomson itself can be said
to have performed every step of the asserted claims.”

18. 1818
Emtel, Inc. v. Lipidlabs, Inc.Emtel, Inc. v. Lipidlabs, Inc.,,
No. H-07-1798, 2008 WL 4450310No. H-07-1798, 2008 WL 4450310
(S.D. Tex. Sept. 30, 2008)(S.D. Tex. Sept. 30, 2008)

19. 1919
Holdings inHoldings in EmtelEmtel
• “[T]o raise a fact issue as to direct infringement under the
direction-or-control standard, the alleged infringer must
cause third parties to perform steps of the claimed method
in accordance with specific instructions andspecific instructions and
requirementsrequirements.”
• “Giving instructions or prompts to the third party in its
performance of the steps necessary to complete
infringement, or facilitating or arranging for the third
party’s involvement in the alleged infringement, are not
sufficient.”

20. 2020
Holdings inHoldings in EmtelEmtel (cont’d)(cont’d)
Use of Agency LawUse of Agency Law
• “[A] contracting party is not vicariously liable for the
actions of an independent contractor unless that party
controls the details of the independent contractor’s work to
the extent that the contractor cannot perform the work as
he chooses.”
• “‘There must be such a retention of a right of supervision
that the contractor is not entirely free to do the work in his
own way.’”
• “The control must also ‘relate to the activity that actually
caused the injury.’”

21. 2121
Holdings inHoldings in EmtelEmtel (cont’d)(cont’d)
Suggestions for Rewriting Asserted Claims to Focus Solely onSuggestions for Rewriting Asserted Claims to Focus Solely on
Videoconference System Provider and Not PhysiciansVideoconference System Provider and Not Physicians
• “[D]iagnosing a medical condition” “receiving in a
central video conferencing station a physician’s diagnosis”
• “[P]roviding instructions via said videoconferencing system
to said first medical caregiver” “transmitting that
diagnosis to the satellite medical care facility”

22. 2222
Global Patent Holdings, LLCGlobal Patent Holdings, LLC
v. Panthers BRHC, LLCv. Panthers BRHC, LLC,,
586 F.Supp.2d 1331586 F.Supp.2d 1331 (S.D. Fla. 2008)(S.D. Fla. 2008)

23. 2323
Facts inFacts in Global Patent HoldingsGlobal Patent Holdings
• Plaintiff owned patent for “Remote Query Communication
System.”
• Boca Resort (Defendant) alleged to have performed step (a)
in Claim 17 by supplying remote users “Javascript programs
and html-based web page material.”
• Boca Resort moved to dismiss under Rule 12(b)(6), arguing
that Plaintiff did not allege that Boca Resort performed every
step of Claim 17, and that Plaintiff did not allege sufficient
“direction or control” over third-party “joint infringers”.

24. 2424
Analysis inAnalysis in Global Patent HoldingsGlobal Patent Holdings
• MOTION GRANTED. Action dismissed with prejudice.
• Quotes Supreme Court’s 2007 Twombly decision: “Factual
allegations must be enough to raise a right to relief above
the speculative level.”
• “The parties agree that the ‘341 patent requires two
individuals or entities to complete all of the method’s
steps ... a remote computer user, and the website server.”
• Plaintiff has, in no way, alleged that remote users are
contractually bound to visit the website . . .”

25. 2525
Friday Group v. TicketmasterFriday Group v. Ticketmaster, No., No.
4:08CV01203, 2008 WL 52330784:08CV01203, 2008 WL 5233078
(E.D. Mo. Dec. 12, 2008)(E.D. Mo. Dec. 12, 2008)

26. 2626
Facts inFacts in Friday GroupFriday Group
1. Providing an opportunity to purchase a recording of a live
event at a point-of-sale of tickets before the event occurs.
2. Conducting the live event.
3. Recording at least a portion of the live event.
4. Manufacturing copies of the recording.
5. Distributing the manufactured copies to those who preordered
the recording.
Patent: “Method of Selling and Distributing ArticlesPatent: “Method of Selling and Distributing Articles
Associated with Live Event”Associated with Live Event”

27. 2727
Facts inFacts in Friday GroupFriday Group – (cont’d)
• Patentee sues Ticketmaster + 5 other defendants for actionsPatentee sues Ticketmaster + 5 other defendants for actions
related to its selling and distributing of articles associatedrelated to its selling and distributing of articles associated
with live events, “for example, the Bonnaroo Music andwith live events, “for example, the Bonnaroo Music and
Arts Festival, Dave Matthews Band, the Police, The WhoArts Festival, Dave Matthews Band, the Police, The Who
and the Rolling Stones.”and the Rolling Stones.”

28. 2828
Friday Group: Global Déjà VuFriday Group: Global Déjà Vu
• CitingCiting Global Patent HoldingsGlobal Patent Holdings, Defendants move to, Defendants move to
dismiss. Motion GRANTED without prejudice.dismiss. Motion GRANTED without prejudice.
• ““Plaintiff's Complaint, however, does not allege that anyPlaintiff's Complaint, however, does not allege that any
single defendant performed all of the steps of the method orsingle defendant performed all of the steps of the method or
that any defendant was the ‘mastermind’ behind thethat any defendant was the ‘mastermind’ behind the
operation.operation. See EmtelSee Emtel . . . . Absent the allegation that one. . . . Absent the allegation that one
of these defendants was the one that directed or controlledof these defendants was the one that directed or controlled
the method, Plaintiff fails to state a claim for directthe method, Plaintiff fails to state a claim for direct
infringement.”infringement.”

29. 2929
Friday Group: Global Déjà VuFriday Group: Global Déjà Vu
• ““Plaintiff has merely alleged that any of the six defendantsPlaintiff has merely alleged that any of the six defendants
directed or controlled the operations of the other fivedirected or controlled the operations of the other five
defendants and, thereby, infringed the Patent ‘428. Such andefendants and, thereby, infringed the Patent ‘428. Such an
indefinite and nebulous pleading does not meet the standardindefinite and nebulous pleading does not meet the standard
defined indefined in Bell Atl. Corp. v. TwomblyBell Atl. Corp. v. Twombly or the requirements asor the requirements as
set forth inset forth in BMC ResourcesBMC Resources.”
• ““Here, it appears that the patentee may have beenHere, it appears that the patentee may have been
overreaching with respect to the breadth of its claim,overreaching with respect to the breadth of its claim,
particularly when it attempted to include a ‘liveparticularly when it attempted to include a ‘live
performance’ as part of its method claim.”performance’ as part of its method claim.”

30. 3030
Golden Hour Data Systems, Inc.Golden Hour Data Systems, Inc.
v. emsCharts, Inc.,v. emsCharts, Inc.,
No. 2:06 CV 381, 2009 WLNo. 2:06 CV 381, 2009 WL
943273943273 (E.D. Tex.(E.D. Tex.
Apr. 3, 2009)Apr. 3, 2009)

31. 3131
Facts inFacts in Golden HourGolden Hour
1. A computerized integrated data management system for
tracking a patient incident, comprising:
a first module capable of dispatchingdispatching an emergency transport
crew specific to a patient incident requiring emergency
medical care by the emergency transport crew, wherein
transportation tracking information relating to the dispatch is
recorded; and
a second module capable of receiving information from the first
module and billing the patient appropriately for costs
indicative of the patient incident, including transportation
costs.

32. 3232
Facts inFacts in Golden HourGolden Hour – (cont’d)– (cont’d)
15. A computerized methodmethod of generating a patient encounter
record, comprising the steps of:
collecting flight information relating to an emergency transport
crew dispatch;
collecting patient information from a clinical encounter
associated with a patient incident requiring emergency
medical care by the emergency transport crew;
and integrating the patient information with the flight
information to produce an encounter record indicative of the
patient's clinical encounter.

33. 3333
Facts inFacts in Golden HourGolden Hour – (cont’d)– (cont’d)
• Golden Hour sues both emsCharts and Softtech for joint
infringement of Claims 1, 15, and dependent claims.
• Softtech files cross-claim against emsCharts, alleging breach
of fiduciary duty for intentionally infringing Golden Hour’s
patent.
• “There is no dispute that neither emsCharts nor the
emsCharts.com software product dispatches. Softtech's
Flight Vector system, however, dispatches.”

34. 3434
Procedural History inProcedural History in Golden HourGolden Hour
• Jury returns verdict of joint infringement against emsCharts
and Softtech.
• emsCharts moves for JMOL, arguing there was insufficient
evidence at trial of the requisite “control” needed to find
joint infringement.
• Motion GRANTED – “no legally sufficient basis to find that
emsCharts and Softtech jointly infringe . . . .”

35. 3535
Analysis inAnalysis in Golden HourGolden Hour
• “[O]ne of the companies needed to control or direct the other
to be joint infringement.”
• Nonexclusive distributorship agreement between emsCharts
and Softtech expressly stated it was not creating “agency,
partnership, joint venture, or employee/employer
relationship.”
• “emsCharts did not direct Softtech submit the bid. The two
companies discussed and agreed to submit the bid.”
• Fact that Softtech asserted breach of fiduciary claim against
emsCharts not sufficient to show that one actually existed.

36. 3636
Result inResult in Golden HourGolden Hour
Neither method nor system claims infringed due to lack ofNeither method nor system claims infringed due to lack of
sufficient “control.”sufficient “control.”
BUT – was this result correct as to theBUT – was this result correct as to the systemsystem claims? Was itclaims? Was it
correct to treat the system claims like the method claims?correct to treat the system claims like the method claims?

37. 3737
NTP, Inc. v. Research In Motion, LtdNTP, Inc. v. Research In Motion, Ltd.,.,
418 F.3d 1282 (Fed. Cir. 2005)418 F.3d 1282 (Fed. Cir. 2005)

38. 3838
Facts inFacts in NTPNTP
• NTP patents claim both an e-mail systemsystem and related
methodsmethods.
• Method claim limitations recite steps of “transmitting . . .
from the interface switch,” “receiving at the interface,” and
“receiving the originated electronic mail at the interface.”
• Preamble for an exemplary system claim: “A system for
transmitting originated information from one of a plurality of
originating processors in an electronic mail system . . . .”
• RIM’s wireless system for the Blackberry®
device used a
relay component located in Canadarelay component located in Canada.

39. 3939
CAFC’s Analysis inCAFC’s Analysis in NTPNTP
• Under U.S. patent law, “the concept of ‘use’ of a patented
method or process is fundamentally different from the use of
a patented system or device.”
• To infringe a method claim, infringer must perform every
step of that claim in the United States.
• With systems, “the components are used collectively, not
individually,” and “[t]he use of a claimed system . . . is the
place at which the system as a whole is put into service, i.e.,
the place where control of the system is exercised and
beneficial use of the system obtained.”

40. 4040
CAFC’s Holding inCAFC’s Holding in NTPNTP
Canada location of RIM’s relay component negatedCanada location of RIM’s relay component negated
infringement of the method claims,infringement of the method claims, but not thebut not the
system claimssystem claims, which were infringed because users, which were infringed because users
of the Blackberryof the Blackberry®®
system were located in the U.S.system were located in the U.S.

41. 4141
Lessons Learned from CasesLessons Learned from Cases
DiscussedDiscussed

42. 4242
1. Discovery: These cases set a very high bar to successfully
assert divided infringement of a method claim. Detailed
discovery must be made into the relationship between
Defendant and the Third Party.
2. Pleadings: Ensure that any allegations of divided
infringement are set forth with enough specificity to show
the requisite level of control by the alleged “mastermind.”
Litigation LessonsLitigation Lessons
3. Infringement Contentions: Determine which, if any,
claims avoid the divided infringement problem. If some
exist, then consideration should be given to focus any action
for infringement on those claims.

43. 4343
Litigation Lessons – (cont’d)Litigation Lessons – (cont’d)
4. Markman: Don’t let system claim get lumped together
with method claim. Remember distinction preserved in
Blackberry®
case, and avoid Golden Hour result! Put
another way:
= good = bad

44. 4444
5. Alternative Forums: Investigate whether dispute lends
itself to bringing action in either: (1) the ITC, for importation
of infringing items into the U.S.; and (2) the U.K., for
infringement of any method patent claims obtained there.
Litigation Lessons – (cont’d)Litigation Lessons – (cont’d)
6. Inducement & Joint Direct Infringement Theories Now
Rise or Fall Together: “[A] finding of indirect
infringement requires a ‘predicate finding of direct
infringement,’ which thus requires a finding that one
party practiced each element of the patented process.”
Global Patent HoldingsGlobal Patent Holdings, 586 F.Supp.2d at 1334 (, 586 F.Supp.2d at 1334 (quotingquoting
BMCBMC).).

45. 4545
1. When drafting claims, ensure the patent application includes
product and system claims whenever possible.
2. Draft any method claims to ensure that the claim can be
infringed by only one single person.
Patent Prosecution LessonsPatent Prosecution Lessons
3. If a patent issues having only method claims presenting a
“divided infringement” problem, and if the patent is less
than 2 years old, consider filing a reissue to redraft such
claims such that only one single person is needed to
perform all steps. See discussions in BMC and Emtel.

46. 4646
Patent Prosecution Lessons – (cont’d)Patent Prosecution Lessons – (cont’d)
4. Consider obtaining a British patent along with other
needed patents if there are no viable alternatives to
claiming an invention other than with a divided method
claim. In the U.K., “many of the problems with litigating
divided infringement claims in the United States may
simply not arise under U.K. law.” Mark A. Lemley,Mark A. Lemley, et al.et al.,,
Divided Infringement Claims,Divided Infringement Claims, 33 AIPLA Q.J. 255, 28033 AIPLA Q.J. 255, 280
(Summer 2005).(Summer 2005).

47. 4747
QUESTIONS?QUESTIONS?