Every patent lawyer knows unauthorized use of a patent is infringement. Use, therefore, may sound simple enough, but it’s not. Just what does constitute infringing use may vary, depending on whether a method/process or system/apparatus claim is involved. Plus, use may affect the damages a patent owner can recover. Savvy patent litigators must understand the sometimes-subtle differences to properly position a claim or defense.
Statutory Infringement by “Use”
By statute, a patent owner has the “right to exclude others from making, using, offering for sale, or selling” a patented invention.1 As a consequence, 35 U.S.C. § 271(a) (2000) provides that, “[W]hoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefore, infringes the patent.”
Courts Define “Use”
Case law appears obvious: “[T]he use of a patented invention, without either manufacture or sale, is actionable.”2 The statute does not define use, so its meaning has become a matter of judicial interpretation.3 The Federal Circuit’s definition of use is “to put into action or service.”4
Historically, however, courts have interpreted use broadly.5 “‘The inventor of a machine is entitled to the benefit of all the uses to which it can be put, no matter whether he had conceived the idea of the use or not.’”6 But at least one Federal Circuit opinion concludes, “[T]he word “use” in section 271(a) has never been taken to its utmost possible scope.”7
Meaning of “Use” Depends on Nature of Claim-in-Suit
Importantly, rules governing use infringement depend on the nature of the claim-in-suit. Infringing use of a patented method or process is fundamentally different from infringing use of a patented system or device.8 For example, a rule that governs infringement of a method claim may not govern infringement of an apparatus claim.9 The critical factor for determining which type of use infringement has occurred is whether the patent claim covers a process and not the apparatus itself used to implement that process.10
Distinguishing Types of Patents
Understanding differences in use infringement requires a basic understanding of how courts view differences between types of claims:
- There is a “distinction between a claim to a product, device, or apparatus, all of which are tangible items, and a claim to a process, which consists of a series of acts or steps.”11
- “[A]pparatus claims cover what a device is, not what a device does.”12 Any use of a device that meets all of the limitations of an apparatus claim clearly infringes.13 Mere possession of a product covered by a subsequently issued patent, however, does not infringe that patent until the product is used, sold or offered for sale.14
- A process, however, is a different kind of invention. It consists of acts or steps, rather than tangible things. A process, therefore, has to be carried out or performed.15 Thus, a process/method claim is directly infringed only if each step of the claimed method is performed.16
- Importantly, the sale of an apparatus capable of performing the patented method is not a sale of the method. A method claim is directly infringed only by the entity usurping the patented method.17
“Use” Infringement of Method/Process Patents
Two Federal Circuit opinions reinforce that use infringement of method or process patents is more limited in scope than use infringement of a system or apparatus patent.
In Joy Technologies, Inc. v. Flakt, Inc.,18 the patent owner argued that making or selling to a third party an industrial plant designed to use the patented system could constitute a sale within the meaning of § 271(a).19 Rejecting this argument, the Federal Circuit cited the rule that a process claim is directly infringed only when the process is performed and held that the sale of equipment necessary to perform a process is not a sale of the process within the meaning of § 271(a).20 Simply put, when the patent is on a process, “It does not give the [patent owner] a monopoly in the appliances by which the process is operated.”21
In NTP, Inc. v. Research in Motion, Ltd.,22 (NTP) the Federal Circuit rejected claims of method use infringement. The court distinguished a method claim from a system claim, observing that, while earlier precedent focused on the whole operable assembly of a system claim for infringement, there is no corresponding focus when a method/process claim is at issue. Because a process or method is merely a sequence of actions, such a claim is infringed only when every operative step is performed.23 Thus, “[A] process cannot be used ‘within’ the United States as required by section 271(a) unless each of the steps is performed within this country.”24 In NTP, one step of the asserted method claim was performed outside the United States, and thus it could not be infringed merely by use of the system.25 “Use” Infringement of a System Claim Two recent Federal Circuit cases clarify rules relating to use infringement of a system claim.
In NTP, the Federal Circuit also addressed issues related to system use infringement and came out a different way. A system comprises multiple distinct components that are effective only when used as a whole.26 Addressing whether an infringing use of the accused system occurred in the United States, the court wrote, “The use of a claimed system under section 271(a) is the place at which the system as a whole is put into service, i.e., the place where control of the system is exercised and beneficial use of the system obtained.”27
Finding infringement, the court concluded that use of the system as a whole occurred when the defendant’s customers sent and received messages in the United States.28 Unlike method claims, courts analyze the invention as a whole to determine where the claimed system as a whole is put into service, and do not focus on the situs of use of each claimed element within the claimed invention.29
Centillion Data Systems, LLC v. Qwest Communications Int’l, Inc.,30 turned on what constitutes use of a system or apparatus claim under § 271(a). The court had never directly addressed the issue of infringement for use of a system claim that includes elements in the possession of more than one actor. The court defined the term, however, in a very similar scenario in NTP.31 Relying on NTP, the court decided that use of a system required the infringing party to put the invention into service, i.e., control the system as a whole and obtain benefit from it.32 The court held that on-demand operation was use of the system as a matter of law.33
“Use” Infringement of Apparatus Claims
There is generally no reason to differentiate between the legal definition of use relating to a system as opposed to use when it relates to a device/apparatus with components used as a whole.34 But use of a patented apparatus presents a few twists:
- An accused device may infringe if it is reasonably capable of satisfying claim limitations, even though it may also be capable of non-infringing modes of operation.35
- A defendant may be found liable for direct infringement when he “intended to finesse [the patentee] out of a sale of a machine on which [the patentee] held a valid patent during the life of that patent.”36
- A patent owner can recover for ongoing unauthorized use of a patented apparatus reasonable royalty damages that exceed lost profit damages which would have resulted from a sale of the same device. In Powell v. Home Depot U.S.A., Inc., the court considered a “use-based reasonable royalty.”37 Defendant had an infringing saw guard made for its use, then used the device in its stores. Eschewing lost profit damages, the plaintiff patent owner sought and recovered reasonable royalty damages for each use the defendant made of the infringing devices. The court rejected arguments that a reasonable royalty cannot exceed lost profits, finding that the jury’s award was supported by substantial evidence.38 As a consequence, damages based on use of the patented apparatus far outstripped damages recoverable for making (or implicitly selling the devices). That the sale of a patented apparatus carries an implied license to use the device and exhausts the patent rights is well established.39 In effect, the result in Powell converts an apparatus patent to a method patent. This result appears to be at odds with the Federal Circuit’s observation in an earlier case that “[i]n the present case, the patent contains only method claims, which . . . are directly infringed only when the method is practiced. [The patent owner] is basically seeking to convert its method claims into apparatus claims.”40
Here are five practical pointers to consider regarding use infringement claims:
- To avoid limitations on use infringement of method claims, assert infringement of method and system/apparatus claims whenever possible.
- Don’t miss opportunities when defending use infringement claims. Determine early the nature of the claims asserted and whether only method claims are asserted. In Advanced Software Design Corp. v. Fiserv, Inc.,41 the district court did not analyze the difference between making and using a claimed system. The parties did not raise the issue on appeal, so the Federal Circuit did not address it.
- Patent owners should analyze potential benefits from seeking reasonable royalty damages based on infringing use of an apparatus patent as opposed to lost profit damages from the sale of infringing products.42
- Defendants should be mindful of risks posed by use-based reasonable royalty damages from infringement of apparatus claims and be prepared to defend against those claims.
- Be aware of potential indirect infringement issues even if direct infringement is not present.43