Centillion Data v Qwest – More guidance from the CAFC on proper claim drafting…

My thanks to Greg Stark at Schwegman, Lundberg & Woessner, P.A., for this guest post:

 The Federal Circuit (CAFC) issued an interesting (precedential) opinion late last week in the Centillion Data System, LLC. V. Qwest Comm. Intl. Corp. case. The Centillion opinion provides interesting insight into the “use” of a system under §271(a) and questions of vicarious liability (joint infringement) of system claims.

 The district court in this matter decided summary judgment in favor of Qwest (defendant) based on an interpretation of “use” type infringement under §271(a). The claims asserted in this matter were all system claims that involved components controlled by a service provider and a user. The district court only considered infringement by “use” under 35 U.S.C. §271(a). The district court held that Qwest could not “use” the system under the CAFC’s NTP definition of use and §271(a) as Qwest did not control the end user’s system.

The CAFC held (reversing summary judgment and revising the district court’s interpretation of use) “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. NTP, 418 F.3d at 1317.” Slip Op. 8. The “control” contemplated in NTP is the ability to place the system as a whole into service. Id. “We (CAFC) agree that direct infringement by ‘use’ of a system claim ‘requires a party … to use each and every … element of a claimed [system].’” Id.

Thus, the CAFC held that Qwest’s customers put the claimed system into service (i.e. controls the system and obtains benefit from it), which constitutes a “use” of the system as a matter of law. The Court did not that “although the customers ‘use’ the system as a matter of law, this does not settle the issue of infringement.” Slip Op. 11.

In this case, while Qwest does not place the system as a whole into service, the end user does. Thus, summary judgment was inappropriate in this matter.

Regarding the question of vicarious liability, following recent CAFC cases, the Court held that Qwest is not vicariously liable for the actions of its customers. Slip Op. 13-14. Qwest in no way directs its customers to perform nor do its customers act as its agents. Id.

The CAFC continues to provide cautionary messages to all patent prosecution attorneys to carefully consider who can infringe your claims. Recent decisions, such as Akamai Tech. v. Limelight Networks, made it clear that asserting claims that implicate two parties is going to be a serious uphill battle (requiring an agency relationship or specific contractual obligations to perform the operations). This case highlights potential pitfalls in system claims that include components controlled or provided by multiple parties.

As an aside, the Court also touched on whether Qwest could be liable for “making” the claimed system under § 271(a), despite this issue not having been addressed by the lower court. Slip Op. 15. The Court held that Qwest does not “make” the patented invention under § 271(a) as a matter of law. A curious holding as there appeared to be evidence suggesting that Qwest produced the client side software and Qwest certainly would have had to test the entire system prior to deployment. However, the Court appears to seize on a finding that “[w]ith or without the [client side] software, [Qwest’s users] can still download and view their report [potentially infringing the claims].” Id. Thus, as Qwest does not control whether its users download and view the reports, Qwest cannot be vicariously liable.

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