Cooperative Infringement: I Get by (Infringement Laws) with a Little Help from My Friends

A party should not be able to avoid infringement by merely bringing in a co-conspirator. Yet under current Federal Circuit law, when two or more parties perform acts that if performed by one party would constitute infringement of patented claims, the parties are likely to avoid any liability. They escape liability simply by dividing up the tasks. The Federal Circuit has held that when two or more parties cooperate and their combined acts would constitute infringement, there is no “joint infringement” unless the patent holder can “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.'” A recent decision explains that this requirement can be satisfied two ways: (1) by a principal-agent relationship, or (2) by a contractual obligation by one party to perform the steps not performed by the other. For example, under the current rule, two parties whose software programs together read on a patented claim can avoid infringement by jointly selling their programs to a third party as part of a package deal. The source of the current “control or direction” rule is BMC Res., Inc. v. Paymentech, L.P., which was decided on facts where the parties’ relationship was very distant. The court acknowledged and accepted that the “control or direction” standard it established would allow parties with a close relationship to avoid infringing by entering an “arms-length agreement,” but noted that the problem was solvable by proper claim drafting. The court’s prediction that its standard would not capture cooperative infringement has proved true. Yet this Note argues that proper claim drafting cannot solve the problem. This Note presents three possible ways in which the Federal Circuit might address cooperative infringement. “Solution One” suggests lowering the standard to the pre-BMC approach taken by district courts, which encompasses arms-length agreements but not relationships that are too attenuated. Typically, the indirect liability theories of inducement and contributory infringement (which hold one party responsible for the acts of another) cover infringement situations involving multiple parties, where there is some element of intent. This historical tendency supports addressing cooperative infringement under indirect liability doctrine rather than under joint infringement. The indirect liability doctrines, however, fail to capture the arms-length-division scenario because they require that one of the parties practice all elements of the patented claim (i.e. they require an “underlying act” of direct infringement). “Solution Two” proposes eliminating this requirement. “Solution Three” would leave intact the current joint and indirect infringement doctrines and create a new doctrine that would require intent without requiring a single underlying infringer. Part I of this Note explains the tort-based origins of multi-party infringement and details the case law leading up to the BMC decision. Part II explains the BMC decisions and its flaws. Part III proposes three solutions to the cooperative infringement problem.