Intellectual Property Directions

“Here, take a bite of the apple” No, no, Snow White, don’t do it.

Inducement. It even sounds evil. Well inducing infringement isn’t very nice either. And now, after a recent court ruling, it’s harder to get away with.

Inducing infringement is just what it sounds like. You don’t actually infringe someone’s patent… you are just the enabler who makes it easy for someone else “do the crime”. For example, maybe you sell an almost complete device…and tell your customers where to get the missing parts and how to install them to make an infringing system.

A more typical induced infringement in today’s internet age involves so-called methods patents. To directly infringe a method claim, the infringer must perform each and every step described in the claim.

Up to now, if you had a web-based app that leaves it up to users to perform some of the steps to complete the method while you perform the remaining steps on your server, you essentially dodged the infringement bullet. The rule was that one party had to perform ALL the steps, or at least one party had to control the people performing all the steps (in other words, you couldn’t just contract out some of the steps and get out from under the infringement cloud). The users of a web site are not being agents – they’re not being controlled by the company who has the site. So there is no direct infringement. And if there is no direct infringement, the logic went, there cannot be inducement to infringe (after all, if no one infringed, then “no one” was induced to infringe).

With the Court of Appeals for the Federal Circuit’s ruling in Akaimai v. Limelight last week, that last bit of logic goes away. Basically the Court ruling said what was obvious on the face of it; infringement is taking place, just not under the control of one entity, so if that entity sets up the opportunity for innocent users to perform the final steps that complete the infringement, the company should be held liable for inducing infringement in the sense that were it not for the actions of the company, no infringement would have taken place.

According to Hamilton, Brook, Smith and Reynolds, the ruling says “inducing acts include causing, urging, encouraging, or aiding one or more steps of a claimed method to be performed”. Ultimately, of course, a judge and jury will have to figure out exactly where that line between innocent behavior and inducement lies. It’s very much like the question of when does a police sting turn into entrapment – but I expect it will be a lot more clear cut when a company sets up a web site where a user logs in and “finishes” the infringement. That would be a lot like the police holding and aiming the weapon that is used to commit a crime.

In any case, although this ruling is very favorable to patent holders with method claims, I would still advise working very hard to write your method claims from the perspective of having one entity perform all the steps, even if it sounds contorted. After all, we could probably nail that wicked witch with a claim to the steps of “offering a heroine a portion of a poison apple” and “allowing a heroine to bite said poison apple”.

“When I invented the 2-way wrist radio in 1946, I had bought a bundle of laughing stock.”

…while the patent broadly claims a class of anti-bodies that contain human variable regions, the specifica-tion does not describe a single antibody that satisfies the claim limitations.

The specification at best describes a plan for making fully-human antibodies and then identifying those that satisfy the claim limitations. But a “mere wish or plan” for obtaining the claimed invention is not sufficient.

While it’s not quite true that there’s “nothing new under the sun”, it is generally true that most technology developments are built on the foundations of prior art. For the inventor or product developer, this prior-art dependency has serious implications. No matter how innovative you are, no matter how carefully you consider your freedom to operate, the chances are that someone out there has a patent that arguably relates to your work. And argue they will if you represent a threat.

Consider the situation of Nova Biomedical. As described by Joe Kalinowski of Trilogy Associates in his enewsletter, Trilogy Tidings, Nova is getting beat over the head by the patent attorneys from the big guys, Abbott, Roche and Medtronic. Here’s the story as Joe describes it:

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Forbes.com recently published the fascinating story of Nova Biomedical. That company, a supplier of benchtop clinical lab analyzers and personal blood-glucose meters, has been in a fight for survival since 2003 when they were threatened by multiple lawsuits dealing with patent infringement and trade-secret appropriation by the likes of Abbott, Roche and Medtronic.

I was in the business, developing new products for Corning Medical (now part of Siemens Diagnostics), when Nova Biomedical came into being. From the start the company was very innovative, a disruptive force in the market for sure. Great scientists and engineers. Savvy marketers. Today the company’s sales revenues are about $165 million.

The trouble started when Nova invented and brought to market a blood-glucose meter and associated disposable test strip with performance superior to the incumbents in that $8 billion market. The incumbents did not take kindly to this upstart and unleashed their lawyer tribes, peppering the firm with multiple lawsuits. The good news for Nova is that they have prevailed in every instance in court and with the USPTO so far. The bad news? The owners of the firm have so far spent $31 million, laid off 60 employees, and taken out $15 million in bank loans defending the company. You have to admire their dedication, but some might question their sanity. Will it all be worth it in the end? Who knows?

One can second-guess Nova management’s decisions all day long. Should they have caved in, settled and partnered up much sooner? Should they have taken some short money early on and gone ahead to invent and commercialize other stuff? Should they have avoided such a large market with powerful competitors in the first place? Should they have been more considerate of their employees? The answer to every one of these questions might be yes.

Then there’s the principle of the thing! What would you have done?

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Yeah, Joe, good questions. What would/should one do in that situation.

Many years ago I owned a Mercury Sable with the cheaper of two optional sound systems. One day, retrieving it from the dealer after some sort of service, I was surprised that my radio was operating in a new mode – one that was part of the higher end option. Normally this would be a good thing, but since I had only purchased the low end system, my dashboard did not have a switch to exit this new mode. A trip back to the dealer restored my sound system to it’s old modus operandi. Clearly, the only difference between the high and low end sound systems was the operating controls on the dashboard. The guts of the system were identical and the extra cost of the premium system only changed what functions you had access to.

What happens when you build a system that has certain elements or functions that infringe a patent? Can you avoid an infringement suit by burying the infringing elements in the way Mercury denied me access to the advanced functions that were physically in the sound system in my Sable? Can you simply “turn off” infringement by turning off the infringing element.

In a recent Court of Appeals case, Secure Computing Corporation tried to make just that argument. Secure essentially sold software that used proactive scanning technology for computer security. They were successfully sued by Finjan, Inc. for infringing three patents. The patents include claims covering “systems”, “methods”, and “computer-readable storage media” – essentially a computer that is running the software, the steps performed by the software, and a tangible embodiment of the software.

Secure’s primary defense was that what they made and sold did not infringe because what they delivered to a user was not functional out of the box – each software module (there were eight) was locked and needed a separately purchased software key to unlock the module. It was the the end user, the entity that entered the software key and ran the software, who was infringing, not Secure, which only sold non-functional modules.

Neither the trial court nor the Court of Appeals was buying this line of thinking. Like my radio, Secure’s software was capable of operation and nowhere in Finjan’s system or media claims is there an indication that the claim was limited to operating software. Most system/apparatus claims protect the bits and pieces of the apparatus and how they are connected together and this protection does not depend on someone pressing the “ON” button.

Secure did win its point (on appeal) that it did not violate the method claims. Here it is true that only the end user is “performing” the method when he or she runs the software – but of course this win did not hinge on whether the software was locked or not.

For patent applicants the lesson is clear; watch what words your attorney uses in your claims. I faced this with one of my clients whose initial claim language called for a source “capable of generating” light in a certain wavelength band. The examiner objected because a source operating outside that band might be “capable” of generating the claimed band. He suggested we say “a source operating in” the wavelength band. Had we accepted his wording, our competition could happily make and sell a non-infringing device by simply not turning it on. We settled on “a source for generating”.

BTW, even if the language of the claim lets you get away with selling a non-operating or locked system you most likely will be guilty of inducing infringement or contributory infringement when your customer unlocks the system.