Alerts and Updates
Federal Circuit Alert
September 2005
Method Claims Are Not Infringed Where One Step Is Practiced Outside United States Territory
NTP, Inc. v. Research-in-Motion LTD, No. 03-1615
In a clarification issued on August 2, 2005, a three-judge panel of the Federal Circuit withdrew an earlier opinion and reversed the District Court's finding of infringement of method claims, stating, "[w]e therefore hold that a process cannot be used 'within' the United States as required by section 271(a) unless each of the steps is performed within this country." The Federal Circuit reaffirmed that infringement of system claims is not precluded if a required component of the claim is not located within the United States.
NTP sued Research-in-Motion (RIM) in the Eastern District of Virginia for infringement of several NTP patents related to a wireless e-mail system. NTP alleged that RIM's BlackBerry system infringed both system and method claims of its patents. RIM, a Canadian corporation, sells the accused BlackBerry system that allows out-of-office users to continue to receive and send e-mail with a wireless device. The asserted method claims included an "Interface" or "Interface switch," which corresponded to a relay component located in Canada in the accused system. The jury found RIM liable for direct infringement and inducing and contributory infringement for all the asserted claims, including both the system and method claims. RIM appealed.
In addition to addressing a number of claim construction, evidentiary and procedural issues, the Federal Circuit specifically addressed the applicability of 35 U.S.C. § 271(a) to system and method claims where one of the claim limitations is met outside the United States. Section 271(a) states:
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 therefore infringes the patent.Drawing from Decca, Ltd. v. U.S., 544 F2d. 1070, 1083 (U.S. Ct. Cl. 1976), the Court held that the use of a claimed system under section 271(a) "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." Because RIM's customers who use the BlackBerry devices in the United States control transmission of the e-mail and benefit from the use of the claimed system, the Federal Circuit concluded that the location of the relay component limitation outside the United States did not, as a matter of law, preclude infringement of the asserted system claims. Thus, the Court found the jury's findings of infringement based on the system claims were proper.
The Federal Circuit reached a different conclusion with regard to the asserted method claims, noting that the concept of "use" of a patented method or process is fundamentally different from that of a patented system. The Court described a method claim as the sequence of actions of which it is comprised; the practice of the method necessarily involves doing or performing each of the steps recited. As one of the steps of the claimed method was performed by RIM's relay component in Canada, the Federal Circuit concluded that the claimed method was not used in the Unites States and thus the customers' use of RIM's BlackBerry system could not infringe the method claims.
Furthermore, in a question of first impression, the Court addressed the issue of whether "a sale [under 35 U.S.C. § 271(a)] of a claimed method can occur in the United States, even though the contemplated performance of that method would not be wholly within the United States." The Federal Circuit, first noting the difficulty in applying the concept of a "sale" to method claims and guided by Congress's view that infringement of method claims under section 271(a) were limited to use of the patented process, held:
[W]e conclude only that RIM's performance of at least some of the recited steps of the asserted method claims as a service for its customers cannot be considered to be selling or offering to sell the invention covered by the asserted method claims. The sale or offer to sell handheld devices is not, in and of itself, enough.Thus, the Federal Circuit concluded, as a matter of law, that RIM did not sell or offer to sell the invention covered by NTP's method claims within the United States. However, the Court was careful to point out it was not holding "that method claims may not be infringed under the 'sells' and 'offers to sell' prongs of section 271(a)."
For the full opinion, see: http://fedcir.gov/opinions/03-1615r.pdf
Misrepresentation of a Submission to the Patent Office Can Constitute Inequitable Conduct Rendering a Patent Unenforceable
Frazier v. Roessel Cine Photo Tech, Inc., et al., Nos. 04-1060 and -1092
In an August 2, 2005, decision, the Federal Circuit affirmed a finding of inequitable conduct by the U.S. District Court for the Central District of California based on the submission of a misleading video during prosecution of the patent in suit. Conversely, the Federal Circuit reversed the District Court's finding of inequitable conduct based on an advertisement that was not disclosed to the Patent Office during prosecution because the District Court "clearly erred" in finding the advertisement was material to prosecution of the patent in suit.
Frazier, a photographer and film maker, brought suit against Roessel Cine Photo Tech, Inc. ("Roessel") and others for infringement of U.S. Patent No. 5,469,236 ("the '236 patent"), a patent directed to a camera lens that, according to Frazier, achieved increased depth of field, i.e., permitted an object close up and a background at a distance to both appear to be in focus.
During prosecution of the '236 patent, the claims of the application were rejected a number of times based on prior art. Frazier repeatedly emphasized that the importance of the increased depth of field with the claimed invention distinguished it over the prior art. In response to a fourth rejection, Frazier submitted an instructional video purported to be taken with the camera lens "in the interests of demonstrating to the Examiner the features and uniqueness of the optical system of this patent application." As a result of the submitted video, multiple rejections were traversed and the '236 patent issued. However, Frazier later admitted that some of the images on the video were not taken with the lens of the invention, but rather with another lens used by Frazier. In addition, an advertisement predating the application showing a similar lens was placed in an internal file, but the advertisement was not disclosed to the examiner. As a result of the video submission and the failure to disclose the advertisement, the District Court found the patent unenforceable for inequitable conduct and awarded attorneys fees as an exceptional case.
On appeal, the Federal Circuit first reiterated the standard for determining if a patent is unenforceable for inequitable conduct as involving "underlying findings of materiality and intent to deceive based on clear and convincing evidence and an equitable determination of unenforceability based on those findings." In this case, the Federal Circuit rejected Frazier's contention that there was insufficient proof to show materiality since according to Frazier the claimed lens system was capable of producing the same footage shown in the video. The Federal Circuit noted this argument missed the point since the issue was not whether an alternative statement would have been truthful, but whether the applicant's actual statements were truthful. In addition, the Federal Circuit noted that "in the absence of a credible explanation, intent to deceive is generally inferred from the facts and circumstances surrounding a knowing failure to disclose material information." Thus, the Federal Circuit concluded that the District Court's finding of materiality and intent with respect to the video was not clearly erroneous.
With respect to the advertisement, the District Court articulated four bases for finding this prior art material, each predicated on a presumption that the advertisement could have been material. Each reason was found clearly erroneous by the Federal Circuit, as the advertisement did not depict the invention as claimed and its materiality was not readily determinable.
Since the determination of the case as exceptional was based in part upon non-disclosure of the advertisement, the award of attorney's fees was vacated and remanded back to the District Court. Bryson, in dissent, countered that the majority's position regarding the advertisement would only require disclosure of anticipatory art that was readily determinable.
For the full opinion, see: http://fedcir.gov/opinions/04-1060.pdf
Federal Circuit Finds Sufficient Evidence to Support Claim for Inducing Infringement
MEMC Electronic Materials, Inc. v. Mitsubishi Materials Silicon Corp., et al., Nos. 04-1396, and -1513
MEMC Electronic Materials, Inc. ("MEMC") brought suit in the U.S. District Court for the Northern District of California against several defendants (collectively "SUMCO") alleging direct infringement and inducement of infringement under MEMC's patent. The District Court granted summary judgment in favor of defendants, that as a matter of law they could not be liable for either direct infringement or inducement of infringement. MEMC appealed.
In an August 22, 2005, decision, the Federal Circuit affirmed the finding of no direct infringement but reversed and remanded on the issue of induced infringement.
SUMCO produced semiconductor wafers for sale to Samsung Japan, which in turn arranged for the direct shipment of the accused wafers to Samsung Austin based in the United States, at which point the transfer of title occurred. MEMC contended that Samsung Japan was an intermediary and that Samsung Austin was the intended and actual customer of SUMCO, noting that Samsung Austin: reviewed test data from SUMCO prior to authorizing shipment; supplied wafer specifications; and communicated directly with SUMCO on technical matters. The District Court found that despite the connections between SUMCO and Samsung Austin, SUMCO's contractual customer was Samsung Japan. Thus, sales of the accused wafers by SUMCO were outside the United States and, thus, could not be covered by a claim for infringement under 35 U.S.C. §271(a). The District Court also found that despite the interactions between SUMCO and Samsung Austin, no reasonable jury could conclude SUMCO induced infringement under 35 U.S.C. §271(b).
Upon noting the evidence that Samsung Japan controlled the purchase orders, designated the packaging company to transport the wafers to Samsung Austin, arranged for the packaging, labeling and shipping of the wafers and paid SUMCO after the wafers were delivered, the Federal Circuit concluded that "any 'sale' of the wafers took place between SUMCO and Samsung Japan, and the sale occurred in Japan where all of the essential activities took place." Here, because MEMC presented no evidence that SUMCO sells or offers to sell the accused wafers in the United States, the Court found no direct infringement under section 271(a).
The Federal Circuit, however, reversed and remanded the District Court's decision granting summary judgment of no infringement on MEMC's claim that SUMCO was liable for induced infringement. Under section 271(b), "[w]hoever actively induces infringement of a patent shall be liable as an infringer." To establish induced infringement, the Federal Circuit stated that "the patentee must show, first that there has been direct infringement," and "second, that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement." The Court then pointed to the evidence that SUMCO had knowledge of the patent in suit as well as Samsung Austin's potentially infringing activities, which is relevant for supporting proof of intent for inducement. The Court also noted that SUMCO provided substantial technical support to Samsung Austin, including site visits and provided wafers directly to Samsung Austin to address technical problems with previously supplied wafers. Coupled with Samsung Austin's policy requiring technical support from suppliers as a prerequisite to purchasing wafers, the Federal Circuit found that this enabled, if not encouraged, the use of SUMCO wafers by Samsung Austin. Given the above evidence, the Federal Circuit concluded there were genuine issues of material fact with regard to whether SUMCO was liable for induced infringement under section 271(b).
For the full opinion, see: http://fedcir.gov/opinions/04-1396.pdf
About Duane Morris
Duane Morris is a full-service law firm with over 550 attorneys and 16 offices in the U.S. and London.
The Intellectual Property Practice Group of more than 50 attorneys develops and executes strategies for our clients aimed at maximizing their intellectual property protection while minimizing their infringement risk.
Our experienced litigators in the Intellectual Property Litigation Practice Group understand the expense and risks of IP litigation, and seek the most cost-effective means of achieving the business objectives of our clients.
For Further Information
For more information, please contact any lawyer listed in our Intellectual Property or Intellectual Property Litigation Practice Groups or the lawyer in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.
