The U.S. Court of Appeals for the Federal Circuit vacated-in-part, reversed-in-part and remanded a district court’s summary judgment determination of non-infringement, finding factual issues as to whether the defendant “used” a claim invention, even where some steps were allegedly performed by its customers over whom the defendant did not exert control. Centillion Data Systems, LLC v. Qwest Communications International, Inc. (Fed. Cir., Jan. 20, 2011) (Moore, J.).

Centillion Data Systems sued Qwest Communications for infringement of a patent, relating to a system for collecting, processing and delivering information from a service provider to a customer. Centillion conceded that three claim elements were directed to a “back-end” system maintained by the service provider, but argued that the fourth element (involving a personal computer) was directed to a “front-end” system maintained by an end user. The district court concluded that under BMC Resources (see IP Update, Vol. 10, No. 10) Qwest could not be liable for infringement because it did not “use” every element of the claim, nor did it direct or control every element of the claim. The district court also concluded that Qwest’s customers similarly did not “use” the system or direct or control every element of the claim. Centillion appealed.

The Federal Circuit, focusing on the meaning of the word “use” in §271(a) as it relates to system claims, concluded based on the definition of the term “use” in §271(a) in accordance with its decision in NTP v. RIM, (see IP Update, Vol. 8, No. 8), that Qwest’s customers do in fact “use” the system. In NTP, the Federal Circuit had held 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.” While the district court had correctly identified this definition, the Federal Circuit concluded that it was applied incorrectly. Specifically, “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 re-applying the definition to the present facts, the Federal Circuit determined that although Qwest itself does not “use” the system, the end-users of the systems do in fact “use” it. The Court reasoned that when a customer initiates a demand, the system is put into operation which causes the back-end system to generate the requested reports: “This is ‘use’ because, but for the customer’s actions, the entire system would never have been put into service.” Applying the same reasoning, the Federal Circuit also determined that Qwest cannot “use” the system because it never “puts into service the personal computer data processing means.” The Court explained that “[s]upplying the software for the customer to use is not the same as using the system.” Rather because Qwest’s customers make the decision to install and operate the personal computer portion of the claim, Qwest is free from any vicarious liability that would result from the customers’ use of its system.

Practice Note: This decision reinforces the importance of careful claim drafting to ensure that the proper target “uses” and practices the claim limitations.