Finding the Patent Infringement "Mastermind": The "Control or Direction" Standard for "Joint" Infringement
Jaasma, Keith, Santa Clara Computer & High Technology Law Journal
Under 35 U.S.C. [section] 271(a), "whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent." (1) Usually, the "whoever" accused of directly infringing a patent is a single individual or entity accused of performing all of the steps of a patented method or making, using, or selling a product with all of the elements of a patented apparatus. (2) However, when a patent has network-related claims, such as business method patents covering ways of conducting business over the internet, there can be multiple actors that potentially perform steps of a patented method or control parts of a patented system: consumers who use their home computers to access the internet, internet service providers who give consumers access to the internet, and content providers who provide information or services to internet users. Until recently, courts have varied greatly in how they analyze patent infringement claims when multiple entities are alleged to have performed the steps of a patent claim. (3)
In BMC Resources, Inc., v. Paymentech, L.P., (4) the Federal Circuit attempted to clarify the law regarding liability for direct patent infringement under section 271(a) where the steps of a patent claim are performed by more than one party. As the court pointed out, "Direct infringement is a strict-liability offense, but it is limited to those who practice each and every element of the claimed invention." (5) The BMC Resources court held that a defendant is not responsible for steps in a patent claim performed by a third party, and consequently is not liable for direct patent infringement, where the defendant did not "control or direct each step of the patented process." (6) However, the Federal Circuit provided only limited guidance regarding how to determine whether a defendant has exerted sufficient control or direction over a third party such that the defendant could be liable for the acts of the third party.
Shortly after its BMC Resources decision, the Federal Circuit may have introduced some unintended confusion into the joint infringement analysis in Muniauction, Inc. v. Thomson Corporation, by stating that the plaintiff had failed to identify a legal theory where the defendant "might be vicariously liable for the actions of" the third parties that performed some of the steps of the patented methods. (7) At least one court since has read the holding of Muniauction as requiring a patentee to prove that a defendant is vicariously liable for the actions of a third party in order to satisfy the "control or direction" test. (8)
This article discusses the state of the law of "joint" infringement prior to the BMC Resources and Muniauction decisions and those decisions themselves, as well as district court cases that have attempted to apply the "control or direction" standard to a myriad of business relationships. Specifically, this article analyzes the requirement that where multiple actors perform the steps of a patent claim, one party must be the "mastermind" of the patent infringement. This article also examines a range of business arrangements that have been found to be sufficient to show "control or direction" of one actor by another, in contrast to other relationships, such as where the defendant's customer is the third party that allegedly performed one or more steps of the claim, which do not involve sufficient control or direction to support direct patent infringement claims.
Lastly, this article suggests that cases involving acts performed by a defendant's customers should be viewed differently from cases involving other business relationships, such as those between a defendant and suppliers, subcontractors, or other vendors. Rarely will a defendant be found to assert sufficient "control or direction" over its customers such that steps performed by customers will support an infringement claim against the defendant. …