1. IP ISSUES IN CLOUD SERVICES: PATENT STRATEGY AND THE CLOUD Theodore C. McCullough Senior IP Counsel Hewlett-Packard Company
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3. Claim Drafting: Players in the Cloud PROVISIONING THE CLOUD HOST WITH A METHOD OR SYSTEM USE OF METHOD OR SYSTEM BY END USERS
4. Claim Enforcement: Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010) PROVISIONED W/ TAGGED OBJECTS FOR WEB PAGE
5. Claim Enforcement: McKesson Technologies, Inc. v. Epic Systems Corporation, 2011 U.S. App. Lexis 7531 PROVISION THE CLOUD WITH “MYCHART SOFTWARE”
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7. The issues on en banc appeal in Akamai and McKesson suggest that in the future a vicarious liability analysis may be applied to apportion liability based upon claim language
Editor's Notes
A technical and legal framework for understanding patent infringement and the cloud:The technical framework-Cloud host- the party providing PAAS, IAAS, SAAS, examples include Amazon™, and Salesforce™ Cloud consumer- the party providing the software that is to be implemented as PAAS, or SAAS, or functionality implemented via IAASEnd user- the customers of the cloud consumer, examples include anyone as indicative of PAAS or SAAS is the seemless nature of PAAS, SAASThe legal framework-Requirement for Infringement:35 U.S.C. § 271(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 patent invention during the term of the patent therefor, infringes the patent.”Method claims and “use”- direct infringement of a method claim limited to “use”. SeeNTP, Inc. v. Research In Motion, LTD, 418 F.3d 1282, 1319 (Fed. Cir. 2005) (“Congress has consistently expressed the view that it understands infringement of method claims under section 271(a) to be limited to use.”) (emphasis in the original) System claims and “use”- “Infringing Use” defined as put the invention into service, i.e., control the system as a whole and obtain benefit from it. SeeCentillion Data Systems, LLC v. Qwest Communications, Inc., 631 F.3d 1279, 1284 (Fed. Cir. 2011) (“We hold that to ‘use’ a system for purpose of infringement, a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it.”). Further, it is a customer who benefits from the execution of a system. See Id. at 1285 (“We hold that the on-demand operation is a ‘use’ of the system as a matter of law. The customer puts the system as a whole into service, i.e., controls the system and obtains benefit from it.”)Requirements for Direct Infringement and Indirect Infringement:“Direct infringement requires a party to perform or use each and every step or element of a claimed method or product.” BMC Resources, Inc. v. Paymentech. L.P., 498 F.3d 1373, 1378 (Fed. Cir. 2007) (citing Warner-Jenkinson Corp. v. Hilton Davis Corp., 520 U.S. 17, 117 S. Ct. 1040, 137 L. Ed. 2d 146 (1997)). Further, “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”. Id. at 1379 (emphasis added). Recent Fed. Cir. cases raise for the bar for what is required to show vicarious liability by introducing the requirement of an agency relationship. See e.g., Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010) (finding defendant Limelight Networks not liable for patent infringement where an agency relationship was not found to exist with customers); McKesson Technologies, Inc., v. Epic Systems Corporation, 2011 U.S. App. Lexis 7531 (finding defendant Epic Systems not liable for induced infringement arising from a theory of direct infringement, the direct infringement involving vicarious liability based upon the actions of end users).Requirements for Induced Infringement:35 U.S.C. § 271(b)- “Whoever actively induces infringement of a patent shall be liable as an infringer”“Induced infringement” defined as “knowledge that the induced act constitutes patent infringement.” Global Tech, Inc., v. SEB S.A., __U.S.__, 131 S.Ct. 2060, 2068 (2011).“Indirect infringement requires, as a predicate, a finding that some party amongst the accused actors has committed the entire act of direct infringement. BMC Resources, Inc. 498 F.3d at 1379 (citing Dynacore Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263, 1272 (Fed. Cir. 2004)).”Which of the players should your claims read upon?:Cloud host implementing the patented system or method-Makes- N/A to method claims, and but questionable whether they make the infringing system**Uses- they may use an infringing method, and but questionable whether they benefit from the use of the infringing system Offers to sell- N/A to method claims, and N/A to system claims because they are not offering for sale the infringing system Sells- N/A to method claims, and N/A to system claims because they are not selling the infringing system Imports- N/A to method claims, and N/A to system claims because they are typically not importing the infringing systemAdditional considerations for the Cloud Host- Pro- easiest way to draft the claims, Cloud Host has deep pockets Con- the Cloud Host is more than likely not your competitor, and may be someone you might want to have a business relationship with in the futureCloud consumer implementing the patent system or method-Makes- N/A to method claims, and questionable whether making an infringing system, rather renting the infringing systemUses- they more than likely do not perform every step of the method claim, and questionable whether they benefit from the use of the infringing system Offers to sell- N/A to method claims, and they more than likely are not selling the infringing system as they are merely renting the infringing system from the Cloud host. No transfer of property intended. Sells- N/A to method claims, and they more than likely are not selling the infringing system as they are merely renting the infringing system from the Cloud host. No transfer of property intended. Imports- N/A to method claims, and N/A to system claims because they are typically not importing the infringing systemAdditional considerations for the Cloud consumer-**Pro- this is the competition**Con- any commercialimplementation (e.g., “use”) of the claimed method or system by the Cloud Consumer will necessarily involve a Cloud Host and/or End User (as we shall see,this can make things tricky), resulting in“every step[s] or element[s]” having to be performed by at least two parties for infringement to occur, or an indirect infringement (e.g., induced infringement) strategy to show infringement.Two theories of infringement:**Need to allege theory of vicarious liability (Cloud Consumer + Cloud Host or End User), or **Indirect infringement/inducement to infringe (Cloud Host induced by Cloud Consumer, End User induced by Cloud Consumer)Liable for each use of the infringing method by an End UserEnd user implementing the patented system or method-Makes- N/A to method claims**Uses- they both use the method, and benefit from use of the infringing systemOffers to sell- N/A to method claims, and they do not offer to sell the infringing systemSells- N/A to method claims, and do not sell the infringing systemImports- N/A to method claims, and do not import the infringing systemAdditional considerations for the End User-Pro- you could draft claims to read on the end user’s implementation of the patented method or systemCon- pockets are not deep, multiple litigations, not your competitors, but could be your customers
Example of Direct Infringement w/ Vicarious Liability:Facts-Limelight provides a service whereby a Content Delivery System (CDS) can be leveraged to expedite the delivery of certain objects in web pages, where Limelight’s customers tag these objects with an appropriate URL and them upload the tagged objects to Limelight’s CDN servers.Example, alleged infringed method claim 19 of U.S. Pat. No. 6,108,703 (‘703 patent) includes a limitation that states—“for a given page normally served from the content provider domain, tagging the embedded objects of the page so that requests for the page objects resolve to the domain instead of the content provider domain”. Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311, 1316 (Fed. Cir. 2010)Limelight contractually required its customers to perform the “tagging”, before using its service. Limelight did not perform the above limitation of claim 19. See Id. at 1317. Legal Analysis-Held:“This court therefore holds as a matter of Federal Circuit law that there can only be joint infringement when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps.” Id. at1320 (emphasis added)Basically, the court reasoned that absent the existence of an agency relationship between Limelight and its customers (i.e., the content providers responsible for tagging the objects), then no direct infringement under a theory of vicarious liability. Extends the reasoning of BMC and introduces an agency relationship requirement.Issue on en banc appeal-“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?” Akamai Technologies, Inc. v. Limelight Networks, Inc. 2011 U.S. App. LEXIS 8167
Example of Indirect Infringement w/ Vicarious LiabilityFacts-Epic sells Mychart software to doctors (MDs). Mychart software allows MD patients to privately communicate with their MDs via a private web portal that is specific to the patient. Each patient sees his/her own web page for the MDs, and can upload medial records, communicate etc.Example, alleged infringed method claim 1 of U.S. Pat. No. 6,757,898 (‘898 patent) includes a limitation that states—“initiating a communication by one of the plurality of users to the provider for information, wherein the provider has established a pre-existing medical record for each user” McKesson Technologies, Inc., v. Epic Systems Corporation, 2011 U.S. App. Lexis 7531, at 4.The claim requires the user (i.e., the patient) to initiate the communication. There was no agency relationship between the Mychart providers (i.e., the MDs) and the end-users (i.e., the patients).Legal Analysis-Held:“McKesson has identified no viable legal theory under which the actions of MyChart users may be attributed to Epic's customers. Without an agency relationship or contractual obligation, the MyChart users' actions cannot be attributed to the MyChart providers, Epic's customers. Thus, McKesson has failed to demonstrate that any single party directly infringes the '898 patent. Absent direct infringement, Epic cannot be liable for indirect infringement.” Id. at 11 (emphasis added)Judge Newman’s dissent:“Today's holding, and the few recent cases on which it builds, have the curious effect of removing from patent eligibility the burgeoning body of interactive computer-managed advances.” McKesson Technologies, Inc., v. Epic Systems Corporation, 2011 U.S. App. Lexis 7531, 38-39 (Newman J., dissenting)Issues on en banc appeal-“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? See Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565 (Fed. Cir. 1983).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?” McKesson Technologies, Inc., v. Epic Systems Corporation, 2011 U.S. App. LEXIS 10674Comments-Issue 1 seems to suggest that in cases where the divided infringement, vicarious liability may exist, the court may be willing to explore whether the persons practicing the infringed method are joint-tortfeasors. (See Id. at 37 (Newman J. dissenting)). Terms of use (TOU) for a cloud, and how they allocate such liability, becomes an important issue.
Notes:Cases like BMC and Centillion require that a theory of vicarious liability show the “control of conduct of another” (seeBMC Resources, Inc. v. Paymentech. L.P., 498 F.3d 1373, 1379 (Fed. Cir. 2007)) between alleged infringers. Had Akamai and McKesson not been vacated by the granting of en banc appeal in both cases, the standard for showing vicarious liability would be even higher. See e.g., Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311, 1317 (Fed. Cir. 2010) (“…there can only be joint infringement when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps.”).**Often times, the Terms of Use for the cloud service will shift liability for patent infringement from the Cloud Host to the Cloud Consumer.**
![Patent Issues and the Cloud ,[object Object],-Cloud Consumer ,[object Object],-It depends, but in light of the current law you should avoid a theory of vicarious liability **The views expressed in this slide deck and presentation are strictly those of the author and are not those of the Hewlett-Packard Company**](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)