Opinion ID: 183066
Heading Depth: 3
Heading Rank: 1

Heading: “Use” of a System Claim Under Section 271(a)

Text: This case turns on what constitutes “use” of a system or apparatus claim under § 271(a). Centillion argues that the district court adopted an overly narrow interpretation and that “use” simply means “the right to put into service any given invention.” Appellant’s Br. 22. It argues that use does not require that a party “practice” every element, only that it use the system as a collective. In other words, Centillion argues 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. It argues that we explicitly defined “use” under § 271(a) in NTP. It further argues that by introducing a requirement that an individual party practice every claim element, the district court introduced concepts of infringement that apply only to method claims. Finally, it argues that the district court did not need to apply the rules of vicarious liability when Centillion is arguing that there is a single “user” of the system. Qwest responds 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 argues that we should reject the application of vicarious liability to “use.” It argues that, although we have endorsed the notion of vicarious liability in the context of method claims, we should not extend this analysis to system or apparatus claims. It argues that we 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.” 7 CENTILLION DATA v. QWEST COMM Qwest further argues that public policy disfavors Centillion’s proposed definition of “use” under § 271(a). It argues that to allow direct infringement of a claim that includes both a front-end personal computer and a backend controlled by a service provider would subvert the statutory scheme for indirect infringement. It argues that if an end user can “put a system into service” even though it does not control back-end components, then there would be no need for the indirect infringement analysis. It also argues that the claims in this case are poorly drafted to require action by two distinct parties. It argues that we should not “remedy Centillion’s ill-conceived claims” by defining “use” to cover the accused products. Appellee’s Br. 52. We have never directly addressed the issue of in- fringement for “use” of a system claim that includes elements in the possession of more than one actor. However, we defined the term in a very similar scenario in NTP. In NTP, the issue was whether infringement occurred within the United States. Id. at 1313. 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. One of these relays was located outside the United States. We had to determine whether a “use” by a customer of the entire system amounted to a “use” within the United States. We stated that “courts have interpreted the term ‘use’ broadly.” Id. at 1316. Citing Bauer & Cie v. O’Donnell, 229 U.S. 1 (1913), we stated that the term use means “the right to put into service any invention.” NTP, 418 F.3d at 131617. We went further to distinguish use of a claimed method from that of a claimed system and to hold that “[t]he 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 CENTILLION DATA v. QWEST COMM 8 beneficial use of the system obtained.” Id. at 1317. Applying this rule to the facts of the case in NTP, we held that customers located in the United States who sent messages via the accused product used the overall system and the location of the use was in the United States. Turning to the instant action, although NTP dealt with the situs of infringement rather than the nature of the infringing act, it interpreted the definition of “use” under § 271(a). We hold that to “use” a system for purposes of infringement, a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it. NTP, 418 F.3d at 1317. The district court correctly determined that this definition from NTP was the proper one to apply. Opinion at 22. The district court erred, however 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. The “control” contemplated in NTP is the ability to place the system as a whole into service. In other words, the customer in NTP remotely “controlled” the system by simply transmitting a message. 418 F.3d at 1317. That 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 requires. To accept the district court’s interpretation of “use” would effectively overturn NTP because the predicate “use” in that case would no longer fall under the definition of “use.” We agree that direct infringement by “use” of a system claim “requires a party . . . to use each and every . . . element of a claimed [system].” In order to “put the system into service,” the end user must be using all portions of the claimed invention. For example, in NTP, the end user was “using” every element of the system by 9 CENTILLION DATA v. QWEST COMM transmitting a message. It did not matter that the user did not have physical control over the relays, the user made them work for their patented purpose, and thus “used” every element of the system by putting every element collectively into service.
Centillion argues that, under the correct definition of “use” from NTP, Qwest’s customers put the claimed system into service. It argues that a system is put into service “when it is engaged to accomplish the purposes for which it is intended.” Appellant’s Reply Br. 32. It argues that Qwest’s customers use the system by subscribing, thus causing the back-end portions of the system to act and then downloading the reports. It argues that this is sufficient to put the entire system into service. Qwest argues that its customers do not “use” the system because they do not control the back-end processing. It argues that Qwest performs the back-end processing and provides the result—not the processing itself—to the customer. It argues that the customer then chooses autonomously whether to download this information and whether to install and use the Qwest software. It argues that under Cross Medical, a customer could only be liable for use of the system if Qwest actually provided the backend processing hardware and software to the customer so that the customer could control it. There are two different manners of operation of the Qwest system relevant to this appeal. First, there is an on-demand function where a customer “seeks particular and specified information” by creating a query that the Qwest back-end system processes and provides a result for download (on-demand operation). Appellee’s Br. 44. Second, during the normal functioning of the system after a user subscribes, Qwest’s back-end systems create periCENTILLION DATA v. QWEST COMM 10 odic summary reports (standard operation) which are available for the user to download. We hold that the on-demand operation is a “use” of the system as a matter of law. 1 The customer puts the system as a whole into service, i.e., controls the system and obtains benefit from it. The customer controls the system by creating a query and transmitting it to Qwest’s back-end. The customer controls the system on a one request/one response basis. This query causes the backend processing to act for its intended purpose to run a query and return a result. The user may then download the result and perform additional processing as required by the claim. If the user did not make the request, then the back-end processing would not be put into service. By causing the system as a whole to perform this processing and obtaining the benefit of the result, the customer has “used” the system under § 271(a). It makes no difference that the back-end processing is physically possessed by Qwest. The customer is a single “user” of the system and because there is a single user, there is no need for the vicarious liability analysis from BMC or Cross Medical. We also hold that the standard operation is a “use” as a matter of law. The standard operation allows users to subscribe to receive electronic billing information on a monthly basis. Once a user subscribes, Qwest’s back-end system generates monthly reports and makes them available to the customer by download or other means. Qwest also makes available to customers software to load on their PCs to further exploit these monthly reports. Unlike the on-demand operation, this is not a one request/one response scenario. By subscribing a single 1 As we discuss below, this does not dispose of the issue of infringement because the district court did not compare the accused system to the asserted claims. 11 CENTILLION DATA v. QWEST COMM time, the user causes the back-end processing to perform its function on a monthly basis. Like the on-demand operation, the back-end processing in normal operation is performed in response to a customer demand. The difference though is that a single customer demand (the act of subscribing to the service) causes the back-end processing monthly. But in both modes of operation, it is the customer initiated demand for the service which causes the back-end system to generate the requisite reports. This is “use” because, but for the customer’s actions, the entire system would never have been put into service. This is sufficient control over the system under NTP, and the customer clearly benefits from this function. Because the district court concluded as a matter of law that no single party could be liable for “use” of the patented invention, it did not compare the accused system to the claim limitations. We note that, although the customers “use” the system as a matter of law, this does not settle the issue of infringement. We will not decide, as Qwest requests, whether the accused products satisfy the “as specified by the user” limitations for the first time on appeal. Likewise, we decline to determine for the first time on appeal whether any individual customer has actually installed the Qwest software, 2 downloaded records, and analyzed them as required by the claims. 3 Because the issue has not been raised on appeal here, we 2 Centillion concedes that in order to infringe, the customer must install Qwest’s client software. Appellant’s Br. 31. 3 For purposes of its indirect infringement case, Qwest also asks us to determine that the accused products have substantial noninfringing uses. The district court did not address this issue in its opinion and we decline to perform this factual inquiry for the first time on appeal. CENTILLION DATA v. QWEST COMM 12 make no comment on whether Qwest may have induced infringement by a customer.
Centillion argues that there is a genuine issue of material fact regarding whether Qwest, by operating the back-end processing, “uses” the system under § 271(a). It argues that Qwest operates the back-end processing and provides the software to adapt the user’s personal computer. It argues that this effectively puts the system into service and should qualify as use under § 271(a). It argues that under our precedent, actual performance of claim limitations is not required to establish infringement of a system or apparatus claims, citing Fantasy Sports Properties, Inc. v. Sportsline.com, Inc., 287 F.3d 1108 (Fed. Cir. 2002). Centillion also argues that, in some instances, Qwest customer service representatives can log into the system on behalf of an end user and operate all parts of the claimed system. Qwest argues that, as a matter of law, it cannot “use” the system under § 271(a) because it does not control the claimed personal computer. Qwest argues that this case is analogous to Cross Medical where a third party assembled the complete system. Qwest asserts that, because it does not control the actions of its customers, it cannot meet the test of Cross Medical for vicarious liability. It further argues that the district court found that there was no evidence of Qwest customer service using the system as a whole on behalf of end users. We agree with Qwest that, as a matter of law, it does not “use” the patented invention under the appropriate test from NTP. To “use” the system, Qwest must put the claimed invention into service, i.e., control the system and obtain benefit from it. NTP, 418 F.3d at 1317. While Qwest may make the back-end processing elements, it 13 CENTILLION DATA v. QWEST COMM never “uses” the entire claimed system because it never puts into service the personal computer data processing means. Supplying the software for the customer to use is not the same as using the system. The only way that Centillion can establish “use” by Qwest is if Qwest is vicariously liable for the actions of its customers such that “use” by the customers may be attributed to Qwest. Our precedents on vicarious liability, BMC, Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1328-29 (Fed. Cir. 2008), Akamai Technologies, Inc. v. Limelight Networks, Inc., 2009-1372, 2009-1380, 20091416, 2009-1417, 2010 WL 5151337 (Fed. Cir. Dec. 20, 2010), and Cross Medical, analyze the circumstances in which the actions of one party ought to be attributed to a second party for purposes of direct infringement – vicarious liability. In BMC, we noted that “[f]or process patent or method patent claims, infringement occurs when a party performs all of the steps of the process.” 498 F.3d at 1378-79. However, we noted that in some instances, one party could be liable for infringement of a method claim even if it did not perform all of the steps. This vicarious liability arises when one party controls or directs the actions of another to perform one or more steps of the method. Id. at 1379. We confirmed this approach for method claims in Muniauction, 532 F.3d at 1328-29 and recently explained in Akamai Technologies that for infringement to be found when more than one party performs the steps of a method claim, an agency relationship or other contractual obligation to perform the steps must exist. See Akamai Techs., 2010 WL 5151337, at . In Cross Medical, we considered the issue of vicarious liability for making a claimed apparatus or system under § 271(a). The claim related to a medical device and, as properly construed, required contact between the device and human bone. 424 F.3d at 1310-11. In the particular CENTILLION DATA v. QWEST COMM 14 facts of that case, the accused manufacturer created the accused product, but did not perform surgeries to bring the device into contact with bone. We held that the manufacturer did not “make” the claimed apparatus. We held that if anyone made the claimed apparatus, it was the surgeon who implanted the accused device, possibly bringing it into contact with bone. Id. at 1311. We noted that the manufacturer would not be liable for the surgeon’s direct infringement unless the surgeon acted as an agent of the manufacturer. Id. Following our vicarious liability precedents, we conclude, as a matter of law, that Qwest is not vicariously liable for the actions of its customers. Qwest in no way directs its customers to perform nor do its customers act as its agents. While Qwest provides software and technical assistance, it is entirely the decision of the customer whether to install and operate this software on its personal computer data processing means. Centillion’s reliance on Fantasy Sports is misplaced because the issue in that case was whether the district court erred by only considering indirect infringement. 287 F.3d at 1117-19. In Fantasy Sports, we held that the district court should have considered whether the defendant directly infringed the claims because it housed all of the necessary software on its servers. 287 F.3d at 1119. This does not equate to a holding that in order to prove “use” of a patented invention, a patent owner must only show that the accused infringer makes software available. As discussed above, the entire system is not used until a customer loads software on its personal computer and processes data. Qwest clearly does not fulfill this claim requirement. 15 CENTILLION DATA v. QWEST COMM