contributory infringement : CAFC Alert

The Court Gives Roadmap to Patent Trolls on How to Obtain Lucrative Settlements from Customers without Declaratory Judgment Recourse from Manufacturers.

Stephen Parker | April 11, 2014

Microsoft v. DataTern, Inc. and SAP v. DataTern, Inc. (Precedential Opinion).

April 4, 2014

Before Chief Judge Rader, Prost and Moore.  Opinion by Moore.  Opinion dissenting-in-part by Rader.

Summary

DataTern, Inc., a company established to exploit IP opportunities (aka patent troll), sued hundreds of customers of Microsoft and SAP alleging infringement of its’ patents for a software product that facilitates interfacing of object-oriented applications with relational databases, seeking lucrative settlements from consumers disinterested in combating a full patent lawsuit without suing Microsoft and SAP.  Despite DataTern’s effort to avoid litigation with Microsoft and SAP, who as manufacturers of the products were well equipped and interested to seek legal recourse, Microsoft and SAP successfully filed declaratory judgment actions in New York district court and were awarded summary judgments for non-infringement.  DataTern appealed to the CAFC.   Although the CAFC affirmed the district court’s decision, as explained in the dissenting-in-part opinion of Chief Judge Rader, the CAFC’s opinion “creates a roadmap [for patent troll’s] to avoid declaratory judgment” actions by taking steps to ensure that their claim charts presented to allegedly infringing customers reference only customer activity and not activity of the product manufacturers.


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Liability for Induced Infringement of a Method Claim No Longer Requires Proof of Direct Infringement

Cindy Chen | September 14, 2012

Akamai Technologies, Inc. and MIT v. Limelight Networks, Inc.

McKesson Technologies, Inc. v. Epic Systems Corp.

August 31, 2012

Panel: Rader, Newman, Lourie, Bryson, O’Malley, Linn, Dyk, Prost, Reyna and Wallach (en banc)

Per curiam opinion, joined by Rader, Lourie, Bryson, Moore, Reyna, and Wallach.  Dissent by Linn, joined by Dyk, Prost, and O’Malley.  Dissent by Newman.

Summary

In a 6-5 en banc decision, the Federal Circuit rejected precedents and relaxed the standard of proof for finding induced infringement under 37 USC §271(b).  Traditionally, induced infringement requires a two-pronged showing of (1) knowing inducement to infringe and (2) actual direct infringement of the patent.  In fact, direct infringement had long been held as the sine qua non of indirect infringement liability. The court’s new standard, however, eliminates the direct infringement requirement. Now, in cases involving method claims, inducement liability follows if the accused infringer (1) had knowledge of the patent, (2) induced others’ performance of the steps of the method claims, and (3) the steps were actually performed. Liability also follows if the accused infringer performed some of the steps of the claims and then knowingly induced another to perform the remaining steps.


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CAFC pointers on proving lack of “substantial non-infringing uses” in pleading contributory infringement

Le-Nhung McLeland | June 20, 2012

Toshiba Corporation v. Imation Corp.

Jun 11, 2012

Panel:  Dyk, Schall, and Moore.  Opinion by Moore.  Dissent by Dyk.

Summary:

(1)   Grant of summary judgment of non-infringement as to contributory infringement of ‘751 patent affirmed because plaintiff did not meet burden of proof that there was a lack of substantial non-infringing uses.

(2)   Grant of summary judgment of non-infringement as to induced infringement of ‘751 patent vacated because district court erred as a matter of law in holding that the existence of a substantial non-infringing use precludes a finding of induced infringement.

(3)   Grant of summary judgment of non-infringement of ‘966 patent vacated because it was based on erroneous claim construction.

(4)   No clear “take away” on claim construction from discourse between majority and dissent.


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