Source: http://www.ipwatchdog.com/2011/01/26/a-new-doctrine-of-equivalents-cafc-defines-use-under-%C2%A7271/id=14647/
Timestamp: 2017-07-27 18:57:12
Document Index: 441297409

Matched Legal Cases: ['§271', '§271', '§ 271', '§ 271', '§ 271', '§ 271', '§ 271', '§ 271', '§ 271', '§ 271', '§ 271']

A New Doctrine of Equivalents? CAFC Defines "Use" Under §271 - IPWatchdog.com | Patents & Patent Law
A New Doctrine of Equivalents? CAFC Defines “Use” Under §271 By Gene Quinn
January 26, 2011	4	Print Article
Last week the United States Court of Appeals for the Federal Circuit issued a precedential opinion in Centillion Data Systems, LLC v. Qwest Communications International, Inc., in which the district court was affirmed in part and reversed in part. Of particular note here is the determination of the meaning of “use” as that term is used in 35 U.S.C. 271(a). The Federal Circuit, per Judge Moore (with Judges Lourie and Linn joining) acknowledged that the Court has never directly addressed the issue of infringement for “use” of a system claim that includes elements in the possession of more than one actor, thereby making the specific issue a question of first impression.
The patent at question in this case was U.S. Patent No. 5,287,270, which discloses a system for collecting, processing, and delivering information from a service provider, such as a telephone company, to a customer. Centillion conceded that the claim includes both a “back-end” system maintained by the service provider and a “front-end” system maintained by an end user. In reaching the underlying determination the district court did not perform an element by element comparison between the allegedly infringing device and the patent claim, but rather, jumped to the question of whether Qwest could be liable for infringement of a system claim that requires both a back office portion as well as a personal computer operated by a user. The district court determined that no single party practiced all of the limitations of the asserted claims under its accepted definition of “use” and, therefore, Qwest could not possibly be infringing.
The infringement aspects of this case turn on what constitutes “use” of a system or apparatus claim under § 271(a). Centillion argued that the district court adopted an overly narrow interpretation and that “use” simply means “the right to put into service any given invention.” Centillion further argued that use does not require that a party “practice” every element, only that it use the system as a collective. Essentially Centillion argued that operation of one component of an invention may “put into service” the invention even if the accused infringer does not directly interact with other components.
Qwest responded that the district court was correct, that to “use” a system under § 271(a), an accused infringer must exert control over or “practice” each claimed element. It further argued that the Federal Circuit should require “use” of the entire system, practicing each element, by a single entity and should never look to the conduct of more than one party to determine “use.”
The seminal case to provide guidance to the Federal Circuit panel was NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005). In that case the claims and the accused product involved a handheld device operated by a customer as well as a number of relays operated by a service provider. Of particular importance is the fact that one of these relays was located outside the United States, so it was necessary for the Federal Circuit to determine whether a “use” by a customer of the entire system amounted to a “use” within the United States. The Court in NTP explained that the term “use” has always been construed broadly and specifically means “the right to put into service any invention.” Applying that rule to the fact in NTP, the CAFC held that customers located in the United States who sent messages via the accused product used the overall system within the United States.
While not an identical case, once the teachings of NTP are understood it was not a stretch at all for the Federal Circuit to hold that to “use” a system for purposes of infringement, a party must put the invention into service, or in other words control the system as a whole and obtain benefit from it. Therefore, the district court did correctly determined that this definition from NTP was the proper one to apply, but the district court’s application of the facts of the Centillion-Qwest dispute to the proper definition was wanting.
The Federal Circuit ruled that the district court erred by holding that in order to “use” a system under § 271(a), a party must exercise physical or direct control over each individual element of the system. Judge Moore explained that the “control” contemplated in NTP is the ability to place the system as a whole into service. In NTP the customer remotely “controlled” the system by simply transmitting a message. The customer clearly did not have possession of each of the relays in the system, nor did it exert the level of direct, physical control that the district court required Centillion to demonstrate. Therefore, if the Federal Circuit were to accept the district court’s interpretation of “use” it would effectively overturn NTP because the predicate “use” in that case would no longer fall under the definition of “use” that would emerge from this present case.
Having defined the term “use” under § 271(a), the Court turned to whether there was a use. The Federal Circuit held as a matter of law that the on-demand operation of a system is indeed “use.” The customer puts the system as a whole into service, controls the system and obtains benefit from it. It makes no difference that the back-end processing is physically possessed by Qwest.
The Federal Circuit stopped short of saying that there was infringement or there was not infringement because the district court concluded as a matter of law that no single party could be liable for “use” of the patented invention and did not compare the accused system to the claim limitations. In short, the district court disposed of the case on summary judgment and there are genuine issues of material fact that still remain after the proper resolution of the meaning and application of the term “use.” The Federal Circuit, therefore, declined the invitation to for the first time on appeal determine whether the accused products satisfy the “as specified by the user” claim limitation. Similarly, the Federal Circuit was not about to determine in the first instance whether any individual customer actually installed the Qwest software, downloaded records, and analyzed them as required by the claims.
The Federal Circuit also held, as a matter of law, that Qwest does not “make” the patented invention under § 271(a) as a matter of law because the customer, not Qwest, completes the system by providing the personal computer data processing means and installing the client software. Similarly, the Federal Circuit determined that Qwest is not vicariously liable for the actions of its customers because their customers do not act as Qwest’s agents, nor are they contractually obligated by Qwest to act.
As for my feelings, I have never been a fan of the NTP decision because I am troubled by the fact that a step that occurs outside the United States, and is in fact required, supports a finding of infringement of a U.S. patent. I do understand that rationale, and without such a ruling it would be quite easy to avoid patent infringement of a U.S. system patent. Nevertheless, I just don’t see the statute allowing for such a ruling, no matter how “correct” that ruling may be. In our system it should be for Congress to determine, but we all know that they are practically absent without leave on patent matters, so I don’t harbor any ill feelings toward the Federal Circuit for the NTP ruling, yet I am troubled to some extent.
Similarly, I am troubled a little by this decision, although I do realize that this does seem to be the logical conclusion and next step forward from the NTP decision. I just wonder whether there were ways to claim the system so as to capture the specific approach employed by Qwest as infringing. I think there are ways that could have been accomplished without resorting to defining “use” as a matter of law under § 271(a).
Finally, I wonder why we are discussing the definition of “use” under § 271(a) at all. It would seem that the Federal Circuit is potentially broadening the definition of “use” under § 271(a) in a manner that expands direct infringement to start to include those types of things that normally would have been infringement under the doctrine of equivalents. Of course, the Supreme Court in Festo together with the Federal Circuit in Honeywell International Inc. v. Hamilton Sundstrand Corporation have eviscerated the doctrine of equivalents to the point of its non-existence. Perhaps Centillion v. Qwest, NTP and other cases yet to come will breathe new life into the theory under the guise of a direct infringement “use” of a system under § 271(a).
Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. Gene is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.	Tags:CAFC, centillion data systems, direct infringement, doctrine of equivalents, Federal Circuit, Judge Alan Lourie, Judge Moore, Judge Richard Linn, ntp, patent infringement, qwest communications, US Patent No. 5287270, use, vicarious infringement	Posted In:IPWatchdog.com Articles
EG January 26, 2011 4:32 pm
DOE wouldn’t have helped in Centillion. DOE only addresses whether corresponding elements are functional equivalents or whether a slight variation from the claimed feature is close enough. As the Federal Circuit noted, the direct infringer here was the customer user of the system, not Qwest, the provider of the system. That’s not a DOE issue, but whether there is a direct infringement to make Qwest liable for inducing or contributory infringement.
I’m not as bothered by the NTP case as you and others are regarding the definition of “use” relative to a claimed system. See my article at: http://jolt.richmond.edu/v14i1/article1.pdf where i discuss the NTP (and other cases) in the context of transnational technologies that straddle geographic borders. In my opinion, the “control and benefical use” test of NTP properly how a claimed system is being “used,” and where is the impact of the “use,” especially in the context of transnational technologies that straddle geographic boarders.
In the Centillion case, the Federal Circuit has simply applied this NTP definition of “use” in the context of claimed systems generally, whether those systems are entirely within or partially without the U.S. Even when applying the NTP “use” test, the court must still find at least one entity directly infringed the entire claimed system by “using” all elements of it. That’s all the Federal Circuit held had happened in Centillion, even though the direct infringer was the customer user of the Qwest system. In fact, the Federal Circuit opinion specifically says Qwest’s customers used “every element of the system by putting every element collectively into use.”
Gene Quinn January 26, 2011 4:51 pm
I agree with your doctrine of equivalents position. My view was that what the Federal Circuit did here could be characterized as equivalent direct infringement. To do so they defined, as a matter of law, the term “use.” So it seems to me that NTP and Centillion together offer a new and or enhanced flavor of infringement that isn’t technically direct infringement, isn’t contributory infringement, isn’t inducement and isn’t DOE. I am not sure I agree with where this is heading, but I do like the outcome. After so many decisions that are anti-patent it is nice to see a pro-patent decision. Go Judge Moore! -Gene
Patentology (Mark Summerfield) January 26, 2011 7:28 pm
Is there, perhaps, a legitimate distinction to be drawn here between ‘use’ (of a system) and ‘infringement’ (of a patent)? If I read you correctly, your concerns are based on an assumption that an expansive definition of ‘use’ necessarily expands the scope of acts that would constitute actionable infringement.
It seems to me, however, that this decision only really establishes a threshold test. For there to be an infringing use, there must first be a ‘use’ in some relevant sense. Clearly the system was ‘used’ in this case (otherwise what would be the commercial or practical purpose for its existence), and the District Court’s finding that no ‘use’ had occurred was therefore, from that perspective at least, quite absurd. To approach from a different angle, the word ‘use’ surely cannot mean one thing when the hardware and software itself is distributed and owned and/or operated by multiple parties, and another when it all happens to fit into a neat box that sits under the telephone in the customer’s home. Either way, the customer ‘uses’ the system.
However, we are not yet talking about whether there has been an infringing use of a ‘patented invention’, which involves a factual inquiry (as the Federal Circuit has pointed out) as to whether the use actually results in the practice of all of the claim limitations. Even if this is so, the direct infringer will be the end customer, which does not necessarily provide much assistance to Centillion, which will still have to prove the direct infringement under this definition of ‘use’, before turning (presumably) to 271(b) and/or (c) in its case against Qwest.
This decision is interesting to me, because of the similarity between the wording of the US statute, and the Australian Patents Act, under which I practice. Our law provides the patentee with the exclusive right to ‘exploit’ a patented invention, and defines ‘exploit’ permissively, as follows:
I am not aware of an Australian case with an analogous fact pattern to this one. However the word ‘use’ has always been interpreted expansively, and in a ‘plain meaning’ fashion, in the Australian (and earlier British) authorities, so I am inclined to think that an Australian court would reach a similar conclusion. The Australian Federal Court has also shown a willingness to refer to US Federal Circuit and Supreme Court decisions with approval, if this happens to support the court’s opinion!
blue January 27, 2011 3:15 am
its the opposite of KSR.