Case Alert: Bmc Resources, Inc. V. Paymentech, L.P.
In BMC Resources, Inc. v. Paymentech, L.P. (September 20, 2007), the Federal Circuit defined the standard for finding direct infringement of a multi-step method or process patent claim under 35 U.S.C. § 271(a) where no single entity performs each and every step of the claim.
Generally, "a method or process claim is directly infringed [under § 271(a)] only by one practicing the patented method." Schumer v. Lab. Computer Sys., Inc., 308 F.3d 1304, 1309 n.3 (Fed. Cir. 2002). But the Federal Circuit has implied, in dicta, that "[w]hen the infringement is the result of the participation and combined action(s) of one or more entities, they are joint infringers and jointly liable for the infringement." On Demand Mach. Corp. v. Ingram Indus., Inc., 442 F.3d 1331, 1344-45 (Fed. Cir. 2006). BMC addressed the level of participation required for a "joint infringer" to be liable under § 271(a).
The patent in BMC claimed a multi-step method through which customers pay bills by telephone. Essentially, the customer calls the merchant (or the merchant’s agent), and enters an access code, account code, debit card number, and payment amount. That information is routed to a debit card network, and on to a financial institution to be authorized and paid. The claim, as drafted, required the combined actions of at least four different actors for infringement to occur.
Defendant Paymentech acts as the merchant’s agent, i.e., it collects payment information from the customer and forwards it to a debit network. Paymentech moved for summary judgment of non-infringement on the basis that it did not perform all steps of the claimed method, and that there was insufficient connection between it and the other actors to trigger joint liability under § 271(a). The district court agreed and granted Paymentech’s motion.
The Federal Circuit affirmed. The Court noted, first, that the statutory language and framework of § 271 require an accused infringer to perform each and every element of the patent claim to be liable under § 271(a). Nevertheless, citing fairness concerns, the Court further stated that § 271(a) cannot be avoided "simply by contracting out steps of a patent process to another entity."
The Court refused, however, to extend liability under § 271(a) to each of multiple, independent actors merely because their collective actions read on the claim. Doing so would "subvert the statutory scheme of indirect infringement [under §§ 271(b) and (c)]," which require knowledge and/or intent for liability. The Court reasoned that if participation alone triggered liability under § 271(a), then "a patentee would rarely, if ever, need to bring a claim for indirect infringement."
Instead, the Court agreed with the district court that for a party to be liable for joint infringement under § 271(a), it must "control or direct" the actions of others who are performing the step(s) the party itself is not performing. Even though parties may be able to avoid infringement of multi-step claims by acting cooperatively through arms-length transactions, the Court reasoned that patentees usually can draft claims to capture infringement by a single party. Having chosen to draft "ill-conceived" patent claims requiring the combined actions of multiple parties, the Court declined to "unilaterally restructure" those claims or the standards for joint infringement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.