Global Patent Holdings, LLC v. Panthers BRHC LLC, No. 9:08-cv-80013-KAM, August 12, 2008
Global Patent Holdings (GPH) sued Panthers for infringing U.S. Patent Number 5,253,341, known as the “Remote Query Communication System” patent (also known as the "JPEG patent"). In its complaint, GPH alleged that infringement takes place through the joint action of both Defendant and the website user, because Defendant’s website “controls and directs the performance of each of the method steps of claim 17 which are not performed” by Defendant itself.
The Panthers moved to dismiss the complaint as insufficient to state a claim for direct
infringement under FRCP 12(b)(6). Judge Marra granted the motion.
Read/download the opinion here (link)
[I]t appears that the level of “direction or control” the Federal Circuit intended was not mere guidance or instruction in how to conduct some of the steps of the method patent. Instead, the court indicates that the third party must perform the steps of the patented process by virtue of a contractual obligation or other relationship that gives rise to vicarious liability in order for a court to find “direction or control.” Without this kind of relationship, the Court does not believe that a finding of “joint infringement” is warranted under BMC Resources.
In this case, the patented process cannot start until the remote user visits Defendant’s website. Plaintiff has not alleged that these individuals visit Defendant’s website under Defendant’s “direction or control.” Therefore, the Court cannot conclude that Defendant and the remote users are “joint infringers” under BMC Resources. Since Plaintiff has not alleged sufficiently that Defendant is a joint infringer, and Plaintiff has not alleged that Defendant carries out all the steps of the patented method, Plaintiff’s claim for direct patent infringement must be dismissed as inadequate.
Hal Wegner has also just circulated a new paper addressing this issue titled "E-Commerce Claims: The Single Actor Direct Infringer." In the paper, Wegner states:
In view of Muniauction, recently granted patents with claims that do not have a single actor direct infringer should be resubmitted for reissue to fix the problem before expiration of the two year broadening deadline for a reissue and, of course, pending claims should be carefully considered for amendment.Download Wegner's paper, along with a copy of IPO's amicus brief for Muniauction here (link)