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SoCal IP Institute :: October 27, 2014 :: Divided Infringement of System Claims and Pleading Inequitable Conduct

Our weekly SoCal IP Institute meeting on Monday, October 27, 2014 will be a discussion of two older cases. The first is a 2011 Federal Circuit case regarding divided infringement of a system claim and the second is a district court case on the requirements of pleading inequitable conduct after Therasense.

Centillion Data Systems, LLC v. Qwest Corp. Int’l et al., No. 2010-1110, 01131 (Fed. Cir. Jan 20, 2011) (available here).  Here, Centillion appealed a decision finding that there was no direct infringement of a system claim by Qwest.  In particular, Centillion’s claims included “backend” and “frontend” computer components such that the claims relied upon user’s computers to cause the backend components (servers, etc.) to begin to function.

On appeal, while discussing “use” infringement under 271(a), the Federal Circuit held “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.”  Qwest, as a matter of law, cannot use its own system that is reliant upon the personal computers of its users.  However, in this case, Qwest’s customers did use the system and were the direct infringers. However, Qwest did not vicariously infringe because “Qwest in no way directs its customers to perform nor do its customers act as its agents. While Qwest provides software and technical assistance, it is entirely the decision of the customer whether to install and operate this software on its personal computer data processing means.”

Cutsforth v. LEMM Liquidating, 2013 U.S. Dis. LEXIS 79385 (June 6, 2013) (available here).  Here, a defendant answered with a counterclaim of inequitable conduct and the plaintiff filed a motion to strike from the complaint.  The district court here found that LEMM Liquidating had adequately pled inequitable conduct where Cutsforth had previously asserted two patents during the pendency of a third and been presented with invalidity charts identifying several references that allegedly invalidated the patents.  That earlier case was soon thereafter dismissed prior to even an early meeting of counsel in the case.  Cutsforth submitted the references identified by that defendant in the then-pending patent, but did not provide the invalidity charts provided by that defendant to the PTO.  On that basis, the district court here found this withholding of the invalidity charts sufficient to meet the Therasense requirements at least at the pleading stage.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, October 27, 2014 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.

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