Issue of Joint Patent Infringement Creates Divided Ruling

By Joseph Mandour on May 13, 2011

courthouse-thumb-200x121-33967 California – In April, the Federal Circuit decided the case of McKesson Technologies Inc. v. Epic Systems Corp., ruling that to show infringement of a patented method, the performance of all the steps of the method must be attributable to a single party. The decision, which included a majority opinion, a concurrence, and a dissent, illustrates the division in the court in dealing with interactive method patents and new technologies.

McKesson’s patent described a method involving personalized web pages in order to facilitate the communication between doctor and patient. Epic Systems manufactures a software product called MyChart, which it licensed to software providers and allows medical providers to associate a patient’s medical records with a personalized web page. None of the providers require the patient to use the MyChart software; the patient must initiate the communication. “Initiating a communication” is an essential step in McKesson’s patented method, and it is around this step where most of the argument lies.

Writing the majority opinion, Judge Linn based his holding on three previous cases: BMC Resources v. Paymentech LP, Muniauction v. Thomson, and Akamai Technologies v. Limelight Networks Inc. In order for McKesson to successfully allege induced infringement, there must first be direct infringement, which for a method patent, according to BMC, requires the performance of each step in the method by a single party. When multiple parties come together to perform the steps of the method, it is only directly infringed if one party exercises “control and direction” over the entire process. Muniauction held that the “control and direction” element would be satisfied when the accused direct infringer could be found to be vicariously liable for the acts committed by the other parties. Akamai stated that for the actions of one party to be attributable to another, there must be an agency relationship or contractual obligation between the parties.

Finding no such relationship between the medical providers and the patients, as the patients were neither agents of the providers nor contractually obligated to use MyChart, Judge Linn found that no direct infringement had occurred as the performance of the method could not be attributed to a single entity under the “control and direction” test.

Judge Newman’s dissent asserted that creating an absolute “single-entity rule” was an unacceptable enlargement of the holding in BMC, and that none of the cases the majority cited “turned on whether different entities independently or interactively perform different steps of the method claim.” Instead, the existence of joint liability needed to turn on “participation, collaboration, or other relevant facts.” Newman wrote that the majority holding, by limiting infringement for interactive method patents, “eliminates the patent incentive” for such methods, by making them “open for infringement without redress.”

Judge Bryson’s short concurrence opinion stated that decision was correct in light of BMC, Muniauction, and Akamai, but questioned whether the three cases were themselves correct, and expressed the opinion that an en banc review might be needed to resolve the issue.

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Posted in: Patent Infringement