In this patent infringement action, the district court issued a sua sponte order requiring plaintiff to show why its inducing infringement claims should not be dismissed as a matter of law. After addressing the United States Supreme Court's recent decision in Limelight, the district court noted that no single party performed all of the steps of the method in the patent-in-suit.
As noted by the district court, "[e]ach of the method claims presented by the '835 and '740 patents specifies that some method steps are to be performed by the 'assisted user,' while other steps are to be performed 'at the relay.' Conceding that no single party actually performs every step of the claimed methods, plaintiffs seek to establish that defendants' customers (the 'assisted users') direct and control defendants in performing those steps to be performed 'at the relay' such that the performance of all of the steps of the method can be attributed to the assisted users."
The district court explained that the plaintiffs alleged that each customer was a direct infringer and reied on an inducement theory " to make defendants liable for the acts of direct infringement, asserting that defendants induced the assisted users to become direct infringers by encouraging and instructing them to initiate captioned calls."
The district court then found that the plaintiffs lacked sufficient evidence to raise a triable issue of fact regarding the assisted users' control over defendants. "Plaintiffs' theory of 'direction and control' is that CaptionCall's relay system is designed in such a way as to 'always and automatically' generate and transmit captions whenever any new call is initiated by a user. That the defendants allegedly lack control to decline to provide captioning to incoming calls, however, is not the same as showing that assisted users exercise the necessary control or direction over the performance of the method steps such that 'every step is attributable to [the users].' Notably, plaintiffs do not allege that the assisted users control CaptionCall's servers or have any influence over the operation of its call centers. They do not allege that the assisted users provide any instructions or directions to CaptionCall about how it should generate captions and they do not allege that the assisted users receive any portion of the payments received by CaptionCall for providing its relay service. In fact, plaintiffs do not even allege that the customers have any knowledge whatsoever of where, how or by whom captions are generated. The assisted users, in other words, are clueless masterminds."
Therefore, the district court concluded that there was no evidence in this case that the assisted users exercised any control over how defendants provide captioning service, "much less that they know how the captioning service works. Under this scenario, there is simply no basis on which to find that the law would traditionally hold the [assisted users] vicariously liable for the acts committed. The district court also rejected the argument that the inducing infringement claims based on a method could be analogized to system claims. "Here, although the assisted users arguably can be said to have used plaintiffs' patented systems for captioning calls merely by performing the initiating step of pressing the 'captions on' button on their CaptionCall phones, this logic does not extend to the method claims, which 'necessarily involve[ ] doing or performing each of the steps recited.' There being no evidence that the assisted users either perform each of the steps of the method or direct and control defendants in the performance of those steps such that the users can be found vicariously liable for the acts of defendants, as a matter of law plaintiffs cannot establish the direct infringement necessary to support their inducement claims with respect to the '835 and '740 patents."
Accordingly, the district court dismissed the inducing infringement claims.
Ultratec, Inc. v. Captioncall, LLC, Case No. 3:13-cv-00346-bbc (D. Wisc. Oct. 1, 2014)