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Federal Circuit clarifies standard for proving joint infringement
September 20, 2007

The Federal Circuit issued a decision today affirming a district court's finding of noninfringement when a defendant neither carried out all of the steps of a method claim nor was responsible for the actions of the parties that did carry out all steps to the method claim. In doing so, the court clarified the proper standard for joint infringement by multiple parties of a single claim.More detail of BMC Res., Inc. v. Paymentech, L.P. after the jump.BMC Resources (BMC) brought an infringement suit against Paymentech based on two patents to methods for processing debit transactions over a telephone line without a personal identification number. The claims encompassed a process where four different parties performed different acts in one claim. Paymentech was one party in a group of parties that allegedly performed the claimed method. BMC moved for summary judgment that Paymentech directly infringed its method patent, and Paymentech moved for summary judgment of non-infringement and invalidity. A magistrate judge recommended granting Paymentech's motion because Paymentech's process only performed one of the four steps of the patented method. The district court agreed, stating that "Paymentech would only infringe if the record showed that it directed or controlled the behavior of the financial institutions that performed those claimed method steps that Paymentech did not perform." The district court also stated that Paymentech did not jointly infringe the method claim because there wasn't even "some connection" between Paymentech and the other parties. Because there was no evidence of Paymentech's control over the other parties, the district court granted Paymentech's motion and BMC appealed. On appeal, the Federal Circuit first stated that in order to find indirect infringement liability, "a party amongst the accused actors [must have] committed the entire act of direct infringement." A party can be accused of direct infringement by a showing it "controlled the conduct of an acting party." BMC argued that a Federal Circuit case, On Demand Machine Corp. v. Ingram Industries, Inc., had found infringement when a person performed some of the steps of a claim if the invention can not be performed by one person. The Federal Circuit, however, found this to be simply dicta and that On Demand did not change the "connection" requirement regarding joint infringement. The Federal Circuit went on to state that "[c]ourts faced with a divided infringement theory have . . . generally refused to find liability where one party did not control or direct each step of the patented process." While recognizing that "requiring control or direction for a finding of joint infringement may in some circumstances allow parties to enter into arms-length agreements to avoid infringement," these potential issues were outweighed by "concerns over expanding the rules governing direct infringement."

Applying these standards to the case at hand, the court held that because Paymentech did not perform all of the steps of the method claim and did not control the parties performing the other steps, direct infringement could not be established. Moreover, no evidence had been presented to prove BMC's argument that Paymentech gave instructions to the other parties on how to perform their steps. Therefore, Paymentech's actions combined with the other parties' actions did not constitute joint infringement.To read the full decision in BMC Res., Inc. v. Paymentech, L.P., click here.

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