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CAFC Affirms Noninfringement Ruling Where No Single Defendant Performed All Steps of Patented Method

April 12, 2011

The U.S. Court of Appeals for the Federal Circuit on Apr. 12  agreed that a method of facilitating communications between healthcare providers and patients was not infringed because the plaintiff was unable to show that any single party directly infringes the patent by performing all of the claimed steps (McKesson Technologies Inc. v. Epic Systems Corp., Fed. Cir., No. 2010-1291, 4/12/11).

Affirming a summary judgment of noninfringement, the court ruled that the defendant could not be liable for indirect infringement since its software customers, physicians, do not perform the step of “initiating a communication,” the first step of the claimed method, nor do they control or direct whether patients using the accused software take this initiating step.

However, the ruling drew a dissenting opinion from Judge Pauline Newman, who argued that this decision conflicts with the Patent Act and case law and should be addressed by the Federal Circuit en banc. Newman insisted that the decision here makes it so that interactive methods can never be infringed, and, in doing so, removes them “from the purview of the patent system.”

Electronic Method of Health Care Communication.

Below, the district court granted a summary judgment that Epic Systems Corp. did not infringe a patent 6,757,898 of McKesson Technologies Inc. directed to “a communication system for providing automated, electronic communications between at least one health-care provider and a plurality of users of the health-care provider.”

Epic licenses the accused MyChart software, which allows healthcare providers to associate medical records with a patient’s personalized web page and enables allows patients to communicate with their healthcare provider online through these personalized MyChart web pages.

Claim 1 of the ‘898 patent requires:

- initiating a communication by one of the plurality of users to the provider for information, wherein the provider has established a preexisting medical record for each user;
- enabling communication by transporting the communication . . . ;
- electronically comparing content of the communication . . . ;
- returning the response to the communication automatically . . . ;
- said provider/patient interface providing a fully automated mechanism for generating a personalized page or area within the provider’s Web site for each user serviced by the provider; and
- said patient-provider interface service center for dynamically assembling and delivering customer content to said user.

The district court agreed with Epic’s argument that because its customers neither directly perform the “initiating a communication” step of the asserted method claims nor exercise control or direction over another who performs this step, McKesson failed to show that a single party directly infringes the ‘898 patent, and, thus, could not succeed on the indirect infringement claim.

McKesson appealed.

Single-Entity Infringement Rule Is Upheld.

The Federal Circuit affirmed the district court’s ruling.

The sole issue here, Judge Richard Linn said, is whether the relationship between Epic’s customers (MyChart providers) and the MyChart users is such that performance of the “initiating a communication” step may be attributed to the MyChart providers.

Induced infringement requires a direct infringer, and a method claim is directly infringed only if each step of the claimed method is performed by a single party, Linn observed, citing BMC Resources Inc. v. Paymentech L.P., 498 F.3d 1373 (Fed. Cir. 2007). He noted that BMC and Muniauction Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008), both involved the scenario where the actions of multiple parties combined to perform the steps of a claimed method, but no single party performed every step of the claimed method. Citing BMC, Miniauction said that “where the actions of multiple parties combine to perform every step of a claimed method, the claim is directly infringed only if one party exercises ‘control or direction’ over the entire process such that every step is attributable to the controlling party.” Again relying on BMC, Miniauction stated that  “the ‘control or direction’ standard is satisfied in situations where the law would traditionally hold the accused direct infringer vicariously liable for the acts committed by another party that are required to complete performance of a claimed method.”

Further, Linn found support in Akamai Technologies Inc. v. Limelight Networks Inc., 629 F.3d 1311 (Fed. Cir. 2010), which ruled that a website content delivery service patent was not infringed because the defendant performed all but the claimed “tagging” and “serving” method steps. Akamai held “there can only be joint infringement when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps.”

Applying the rationale of those cases, Linn explained why there was no infringement liability here:

In this case, nothing indicates that MyChart users are performing any of the claimed method steps as agents for the MyChart providers. Nor does McKesson argue an agency relationship existed here. Indeed, McKesson faulted the district court for applying this court’s control or direction test as one “that is satisfied only . . . through an employment or other agency relationship, such that the other acts out of obligation rather than consent.” . . .  . McKesson instead argues that the special nature of the doctor-patient relationship is something more than a mere arms length relationship and is sufficient to provide attribution, because “[t]he phrase ‘doctor’s orders’ says it all” and because of the existence of a doctor-patient privilege. . . . . This argument misses the mark. A doctor-patient relationship does not by itself give rise to an agency relationship or impose on patients a contractual obligation such that the voluntary actions of patients can be said to represent the vicarious actions of their doctors.
Nor is there anything indicating that MyChart users were contractually obligated to perform any of the claimed method steps on behalf of the MyChart providers. These facts are undisputed. MyChart users choose whether or not to initiate communications with their providers and are under no obligation to do so. As in both Akamai and Muniauction, MyChart providers simply control the users’ access to MyChart. . . . . Here, as in Akamai, MyChart users “acted principally for their own benefit and under their own control.” . . . .

McKesson has identified no viable legal theory under which the actions of MyChart users may be attributed to Epic’s customers. Without an agency relationship or contractual obligation, the MyChart users’ actions cannot be attributed to the MyChart providers, Epic’s customers. Thus, McKesson has failed to demonstrate that any single party directly infringes the ’898 patent. Absent direct infringement, Epic cannot be liable for indirect infringement.

Linn was joined in the opinion by Judge William C. Bryson, who agreed that the ruling here is correct based on the decisions in BMC Resources, Muniauction, and Akamai Technologies. However, Bryson cautiously added that “[w]hether those decisions are correct is another question, one that is close enough and important enough that it may warrant review by the en banc court in an appropriate case.”

Newman: Single-Entity Rule Removes Interactive Methods ‘From the Purview of the Patent System.’

Judge Pauline Newman strongly dissented, arguing that the single-entity theory of liability is a fiction that conflicts with Federal Circuit and Supreme Court precedent and prevents owners of patents on interactive methods from seeking infringement relief.

“For infringement of a process invention, all of the claimed steps of the process must be performed,” Newman observed, quoting EMI Group North America Inc. v. Intel Corp., 157 F.3d 887 (Fed. Cir. 1998). However, the ruling today, contrary to statute and precedent, “concludes that the claims can never be infringed, although the patent meets every requirement of patentability and every step of the claimed method is practiced,” Newman wrote. The Patent Act at 35 U.S.C. §154(a)(1) plainly states that the patentee has the right “to exclude others from making, using, offering for sale, or selling the invention,” and Bloomer v. McQuewan, 55 U.S. 539 (1852) is equally clear that “[t]he franchise which the patent grants, consists altogether in the right to exclude every one from making, using, or vending the thing patented, without the permission of the patentee,” Newman said, quoting those authorities. She argued that a patent that enjoys no “right to exclude” can never be infringed is not a patent in the definition of the law.

Newman insisted that the conflict between this case and other precedent should be resolved by the Federal Circuit en banc, writing:

Interactive methods that meet all of the conditions and requirements of the Patent Act are fully entitled to participate in the patent system. The court’s removal of interactive methods from the purview of the patent system, through its newly minted and now enlarged “single-entity rule,” is contrary to law and policy. Conflicts in precedent require resolution, not enlargement, for inconsistent precedent is as much a deterrent to innovation as is elimination of the patent right entirely.

The district court’s summary judgment of noninfringement was affirmed.

McKesson was represented by Paul D. Clement of King & Spalding, Washington, D.C.

Epic was represented by Steven D. Moore of Kilpatrick Stockton, Atlanta.

 


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