Submitted by patentadmin on Tue, 03/22/2011 - 16:41

As we have written many times, a method claim including steps which are performed by different actors can only be infringed if one of the actors, known as the “mastermind,” controls the actions of all of the others. The reader will note the emphasis on “method claim.” Does this rule also apply to system claims? If the various structural components of a patented system are owned and operated by different parties, is anyone infringing the claim by “using” the system? Centillion Data Systems, LLC v. Qwest Communications International, Inc. et al.

Centillion sued Qwest for infringement of a patent directed to a system for collecting, processing and delivering information in an electronic format. Centillion alleged that Qwest was using this system to deliver billing information to its customers.

Essentially, the asserted patent claims recite “a system for presenting information … to a user … comprising: (1) storage means for storing transactions, (2) data processing means for generating summary reports as specified by the user from the transaction records, (3) transferring means for transferring the transaction records and summary reports to a user, and (4) personal computer data processing means adapted to perform additional processing on the transaction records.” Centillion conceded that the claim includes both a “back-end” system provided by the service provider (claim elements 1, 2 and 3) and a “front-end” system provided by an end user (claim element 4).

The district court, which only considered infringement by “use,” determined that no single party practiced all of the limitations of the asserted claims. “Qwest does not control the ‘personal computer processing means’ … [and] although Qwest provides the [necessary] software, it does not require customers to load the software or perform the additional processing required by the asserted claims.” On that basis, the court granted a summary judgment of noninfringement. Centillion appealed.

As stated by the appellate court, the “case turns on what constitutes ‘use’ of a system.” This being a question of first impression, the court harkened back to a case from 1913, when an abacus was cutting edge technology, wherein it had held that “the term use means ‘the right to put into service any invention’.” Expanding on that, it went on “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. In order to ‘put the system into service,’ the end user must be using all portions of the claimed invention.”

Applying this definition of “use” to the facts of the case, the appellate court determined that “[i]f the user did not make the request, then the back-end processing would not be put into service. By causing the system as a whole to perform this processing and obtaining the benefit of the result, the customer has ‘used’ the system … it is the customer initiated demand for the service which causes the back-end system to generate the requisite reports. This is ‘use’ because, but for the customer’s actions, the entire system would never have been put into service.” So, Qwest was not “using” the system, but its customers were.

The court went on to hold that, as a matter of law, Qwest did not “make” the system. Left open and to be decided on remand to the district court, was the question whether Qwest induced or contributed to its customer’s infringement.

THE LESSON TO BE LEARNED: The “multiple actors” defense may have limited applicability to system claims.

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