Three Lessons

Submitted by patentadmin on Wed, 08/18/2010 - 13:00

One would have thought that it is now well settled that joint infringement of a method claim, i.e. infringement where some of the steps are performed by one party and the remaining steps are performed by another party, can only occur when one of the parties exercises “control or direction” over the entire infringing process. Well, apparently not. (Golden Hour Data Systems, Inc. v. emsCharts, Inc. and Softtech LLC.)

Golden Hour owns a patent directed to computerized systems for dispatching emergency medical transport and – apparently assuming that the patient survives – billing for the service. emsCharts produces medical charting software. Softtech produces flight dispatch software. emsCharts and Softtech formed a “strategic partnership” to jointly market their software products, whereupon Golden Hour sued them for patent infringement.

The jury found the patent-in-suit valid and infringed. The trial judge, undaunted, rejected the verdict, granting judgment as a matter of law (that’s a JMOL to us patent professionals) on the grounds that no single party had performed each of the steps of the asserted process claims. On the same grounds, he went on to find the system claims were also not infringed. Then, to wrap matters up, he found the patent-in-suit invalid for inequitable conduct. Needless to say, Golden Hour appealed.

Judge Newman of the Court of Appeals for the Federal Circuit (C.A.F.C.) held that “[a] collaborative effort as here, a ‘strategic partnership’ to sell the infringing system as a unit, is not immune from infringement simply because the participating entities have a separate corporate status.” Unfortunately for Golden Hour, this was the dissenting opinion.

Writing for the majority, Judge Dyk followed precedent, “(w)here the combined actions of multiple parties are alleged to infringe process claims, the patent holder must prove that one party exercised ‘control or direction’ over the entire process …” Okay, that explains the non-infringement of the process claims of the patent-in-suit, but what about the system claims? Golden Hour argued that emsCharts was, in any event, liable for infringement of the system claims because it had sold its software together with Softtech’s software and the combination met all of the system claim limitations.

The problem here was that, by agreement, the system claims were only submitted to the jury on a joint infringement theory. Yes indeed, folks, plaintiff’s counsel goofed, big time. Therefore, the jury’s verdict “can only be sustained if there was control or direction of Softtech by emsCharts.” Finding no such control, the JMOL was proper.

On appeal, the question of infringement – or, as it turned out, non-infringement – was secondary to the question of inequitable conduct. It seems that, while prosecuting the patent-in-suit, the applicants came into possession of a competitor’s brochure describing a related system. The brochure was undated. On its cover was a product description which lacked a feature of the claimed invention. The applicants made reference to this product in their application, but – because the brochure was undated – chose to consider it not to be prior art and did not provide a copy to the Examiner.

However, inside the brochure was a more detailed description which showed that the competitor’s product did include the said feature. The C.A.F.C. held, by a clear 2-1 majority, that failure to provide a copy of the brochure, whose contents contradicted the statements made by the applicants, would constitute inequitable conduct – IF the applicants had read it. Since there was no finding on this point, the issue of inequitable conduct was remanded to the trial judge.

THE LESSONS TO BE LEARNED: (1) A “strategic partnership” does not necessarily make for joint infringement; (2) be careful what theories you present to a jury; and (3) if you quote from a document, READ THE WHOLE THING.

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