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Yangaroo v. Destiny Media Tech (E.D. Wisc. 2010): Drafting Method Claims to Invoke the Benefits of Section 271(g) in Software Cases

On June 7, the U.S. District Court for the Eastern District of Wisconsin found that downloadable files produced by the following method do not constitute “products” under 35 USC Section 271(g):

1. A method of distributing content to a plurality of recipients over a distributed computer network, each recipient having a recipient terminal connected to the network, comprising the steps of:

(a) storing, in server, a user profile for each recipient, each user profile comprising login information and a unique identifier;

(b) receiving and storing, at the server, a content file, a release condition, a release state, and a distribution list associated with said content file, the receiving step being performed from a provider terminal connected to the network, wherein the distribution list contains unique identifiers of specific authorized recipients of the content file;

(c) receiving a request for access from one of the recipient terminals, the request containing login information;

(d) in response to the request for access; a. comparing the received login information to the stored login information to verify that the request came from one of the recipients, b. based on the comparing step, retrieving the stored unique identifier from the user profile, c. verifying that the distribution list includes said one of said recipients by comparing the retrieved unique identifier to the distribution list; and

(e) providing access to the content file at said one of the recipient terminals based on the release condition and the release state.

Using this method, a distributor of music, audio, video, or other content can encrypt and transmit such content in digital form to a server from which authorized recipients, such as radio station personnel, can decode and download the content pursuant to the predetermined terms and conditions of the distributor.

More specifically, Judge William C. Griesbach found :

“What is claimed in the ‘712 patent is “a method of distributing content” that already exists. The ‘712 patent claims no method or process for the creation of the content that Yangaroo argues constitutes the product that is essential to establish infringement under section 271(g). It therefore follows that Yangaroo’s infringement claim must fail.”

In his analysis, Judge Griesbach reiterated the following case law:

1.            In Bayer AG v. Housey Pharm., Inc., the Federal Circuit held that the statutory prohibition on the importation or sale of a product “made” by a patented process applies only to “physical products” that are “manufactured,” and does not extend to “information” produced by a patented process. 340 F.3d 1367, 1371-72 (Fed. Cir. 2003).  In Bayer the Federal Circuit reasoned that because section 271(g) appeared directed toward “tangible objects and not intangibles such as information,” the production of information did not fall with the scope of the processes of “manufacture” discussed in the statute. Id. at 1372.

2.            In NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005), in which NTP, Inc. (“NTP”) alleged that Research in Motion, Ltd.’s (“RIM”) BlackBerry™ system infringed NTP’s patents for a method of enabling mobile users to receive e-mail over a wireless network, the NTP court held that section 271(g) did not apply “[b]ecause the ‘transmission of information,’ like the ‘production of information,’ (in Bayer AG) does not entail the manufacturing of a physical product . . . .” 418 F.3d at 1323.

3.            In CNET Networks, Inc. v. Etilize, Inc., 528 F. Supp. 2d 985 (N.D. Cal. 2007), which concerned a patent that claimed methods and systems for automatically creating an electronic catalog of product information gathered from various internet websites, the district court rejected the defendant’s argument that under Bayer and NTP there could be no section 271(g) liability and denied the defendant’s motion for summary judgement because the infringing method in that case, the court held, was used to create a product, i.e., the catalogue, which was then imported into the United States.

4.            Likewise, in Ormco Corp. v. Align Technology, Inc., 609 F. Supp. 2d 1057 (C.D. Cal. 2009), the district court denied the defendant’s motion for summary judgment of noninfringement based on section 271(g), concluding that a three dimensional digital representation of teeth transmitted to recipients in the United States was a “‘creation’ produced by ‘practicing each step’ of a patented process.” 609 F. Supp. 2d at 1076 (footnote omitted).

From this case law, the District Court reasoned that “unlike the patents at issue in CNET and Ormco, however, the ‘712 patent does not claim a method of creating or manufacturing the digital content that is received in servers and then transmitted to authorized recipients. “  Instead, Judge Griesbach found that the sole method claim at issue in the ‘712 patent is “a method of distributing content” that already exists.”  As a result, the court found that the method did not produce a “product” as is essential to establishing  infringement under section 271(g).   This was found in spite of the fact that the actual process used an encryption process that encrypted the preexisting content for distribution.  This was no matter, however, because the court found that the ‘712 patent “does not claim such a process.”

So, what can patent attorneys drafting software cases learn from this case?  One lesson is that attorneys should always be looking for opportunities to invoke Section 271(g), and drafting claims that “make” a “program or data product” whenever possible.  While it is unclear from this case law whether merely encrypting a file before transmitting it would be good enough to constitute “making” of a data product under Section 271(g), certainly any steps in a method claim that at least transform the subject data in some way is better than none.  Moreover, if the invention can be honestly characterized at least in part as a method of producing a digital data file or program product, then this aspect of the invention should be fully explained in the specification to provide solid support for a corresponding claim.

Principal & Chief Innovation Officer

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