United States: Intellectual Ventures V. Motorola: Use = Benefit For The Purposes Of System Claims Infringement

On Sept. 13, 2017, the United States District Court for the Federal Circuit clarified the meaning of the term "use" as it applies to system claims in patent infringement actions. In doing so, the court held that an infringer must benefit from all elements of a system claim in order to infringe, reversing and remanding a finding of infringement.

Intellectual Ventures sued Motorola in the United States District Court for the District of Delaware for infringement of various claims of U.S. Patent Nos. 7,810,144 and 7,120,462. The '144 patent ("File Transfer System for Direct Transfer Between Computers") relates to the process of transferring computer files electronically from one computer to another, with claim limitations directed to a "communications device" capable of transmitting to an "authenticating device" and with the said authenticating device "configured to generate a delivery report that indicates a delivery event and a time of the delivery event."

Motorola allegedly directly infringed this claim through customers' use of the accused system to send text-plus-photo messages using multimedia messaging service centers (MMSCs). However, Motorola argued that Intellectual Ventures could not show Motorola's directly infringing "use" of the "authenticating device configured to ... generate a delivery report."

Motorola defended the suit on the grounds of noninfringement and invalidity. Three separate jury trials took place on the issue of infringement, but ultimately a jury returned a verdict that Motorola directly and indirectly infringed both patents and that Motorola failed to prove the asserted claims invalid. Motorola subsequently filed a motion for judgment as a matter of law, asking the court to overturn the jury's verdict regarding the validity of the claims of the patents on the basis that the decisions were not supported by substantial evidence. Motorola also moved for judgment as a matter of law that the jury's verdict of direct infringement of the '144 patent was not supported by substantial evidence. Although the court rejected Motorola's argument as to the validity of the '144 and '462 patents, it reversed and remanded on the issue of direct infringement of the '144 patent.

The court's analysis hinged on the use element of Intellectual Ventures' claim and ultimately held that an infringer must benefit from each and every element of a claim in order to actually "use" it. A patent is infringed when a person "without authority makes, uses or sells any patented invention, within the United States ... during the term of the patent." 35 U.S.C. § 271(a). The court acknowledged that previous precedent set in Centillion Data Systems, LLC v. Qwest Communications International, Inc., 631 F.2d 1279 (Fed. Cir. 2011) and NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005) established the meaning of use as putting the invention into service on behalf of an infringer. Service, in turn, requires both control of the system and the receipt of a benefit through exerting such control. The court argued that its logic was supported by the specific facts of Centillion and NTP.

Since Centillion held that each element of the claim must be in service to constitute use, the court extended this logic to reason that an infringer must control and benefit from each claim element, not generally from the system as a whole. In doing so, it found support from the specific factual instances in Centillion and NTP. In Centillion, customers directly infringed a patent because they controlled and benefited from back-end processing equipment by requesting service and particular reports, and caused to be produced a response from the back-end equipment. In NTP, customers of an accused infringer similarly controlled and benefited from the claimed relay equipment by exchanging messages, since the relay feature was part of what made the exchange of messages possible.

The court applied this logic and determined that although Motorola used a "communications device" and a "second device," there was no evidence that Motorola's customers were using an "authenticating device configured to ... generate a delivery report." As an initial matter, Intellectual Ventures failed to establish that Motorola customers actually generated a delivery report themselves. It skirted this issue by arguing that delivery reports were generated by customers' wireless service carriers when the customers used the accused phones through MMSCs. However, Intellectual Ventures did not demonstrate that Motorola customers themselves benefited from the reports, since the delivery reports were entirely generated and stored by he MMSCs themselves and not passed on to users. This was in spite of expert testimony claiming that these reports could be used to bill customers and could be used as an antifraud measure; the '144 patent's specification did not support that the delivery reports were used for such purposes. Therefore, absent a showing that Motorola's customers knew about the reports, let alone affirmatively took steps to alter the configuration of their phones to actually receive the reports, Intellectual Ventures' argument necessarily failed. The court applied the same reasoning to Motorola (although Intellectual Ventures did not raise this argument), since Motorola tested the accused phones on various carrier networks but did not receive the reports either.

A dissent issued by Judge Pauline Newman sided with the majority's noninfringement holding; however, Newman disagreed that an infringer must benefit from each and every individual claim element to infringe, and could instead benefit from the system as a whole to use a system claim under 35 U.S.C. § 271(a). Newman interpreted Centillion to read that use is simply causing a system as a whole to perform processing through which the infringer obtains a benefit. The commonsense holdings of Centillion and NTP established that one cannot infringe a claimed system when the last element of the claim does not accomplish a primary purpose of the invention, but Judge Newman found no support in extending this logic to the determination of use as the majority did. Since Centillion defines use as "but for the customer's actions, the entire system would never been put into service [on the infringer's behalf]," Judge Newman argued that the proper analysis is whether the system acted at the behest of Motorola when a delivery report was generated. Applying this analysis would not have changed the outcome of the matter, since there was no evidence that Motorola or its customers intended the generation of the delivery report to occur.

This decision underscores the importance of diligence during the claim-drafting process. A competitor may now take advantage of patented technology as a whole so long as it can show that it does not "benefit" from just a single system claim limitation. It may be worth eliminating a claim element during the drafting process if it will be difficult to show use in a clear, easy-to-prove fashion.

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.

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