The Court of Appeals for the Federal Circuit ruled last week that to “use” a system for purposes of infringement under 35 U.S.C. § 271(a), “a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it.” Centillion Data Sys., LLC v. Qwest Commc’ns Int’l et al., Nos. 04-CV-0073 and 04-CV-2076, slip op. at 8-9 (Fed. Cir. Jan. 20, 2011). Because this determination is made without regard to whether the user has physical control or ownership over all of the claimed elements, it is possible for joint infringement issues to be avoided even when more than one actor is arguably involved.
The system claims at issue required both a “back-end” system maintained by a service provider and a “front-end” system maintained by an end user. In this case, the service provider, Qwest, made software available for its customers to download. Once the customers downloaded the software and subscribed to the service, Qwest’s back-end systems processed the relevant data. The Federal Circuit ruled that the district court erred by holding that a party must exercise physical or direct control over each claimed element in order to “use” a system. Despite the fact that Qwest’s customers did not physically possess the back-end systems, the Federal Circuit found that the customers “used” the system under the Patent Act because “but for the customer’s actions, the entire system would never have been put into service.” Qwest, on the other hand, did not “use” the system because “[s]upplying the software for the customer to use is not the same as using the system.”
The Federal Circuit held the customer to be a single “user” of the system and applied the standard prescribed by Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1328-29 (Fed. Cir. 2008) and BMC Res. Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) for determining vicarious liability for purposes of infringement of method claims. To be liable for another party’s infringement of a system claim vicariously, that party must control or direct the actions of the other. Holding that Qwest was not vicariously liable for its customers’ actions, the Court reasoned that Qwest “in no way direct[ed] its customers to perform nor did its customers act as its agents.” The Federal Circuit also noted that “[w]hile 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.”
Finally, the Court held that Qwest did not “make” the claimed system under § 271(a) because Qwest only manufactured part of the system. The Court further declined to find Qwest vicariously liable for the actions for its customers with respect to “making” because Qwest’s customers neither acted as Qwest’s agents nor were contractually obligated by Qwest to act.
The practical consequence of this decision is both to clarify what it means to “use” a system for purposes of gauging patent infringement liability and to give better guidance to parties who hope to avoid coming within the claims of a systems patent. Entities employing systems may no longer rely on the fact that physical control is required to come within the definition of infringement. Thus, some entities that have depended on this distinction may have to re-evaluate the propriety of their business processes.