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Divided Infringement Leads to a Finding of No Infringement

In a recent case from the United States District Court for the District of Delaware, the district court held that the defendant was not liable for patent infringement based on the doctrine of divided infringement. The district court based its ruling on the Federal Circuit’s decision in Centillion Data Sys., LLC v. Qwest Communications Int’l, Inc., 631 F.3d 1279 (Fed. Cir. 2011).

In Centillion, the Federal Circuit analyzed a patent that disclosed a system for collecting, processing, and delivering information from a service provider, such as a telephone company, to a customer. The Federal Circuit focused its decision on the word “use” — agreeing that “direct infringement by ‘use’ of a system claim ‘requires a party … to use each and every … element of a claimed [system.]” Id. at 1285. The Federal Circuit also stated that “to use’ a system for the purposes of infringement, a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it.”

After stating these rules, the Federal Circuit found that Qwest’s customers put the claimed invention into service even though they used their own computers to trigger processing in Qwest’s servers. As the Federal Circuit explained, “[t]his is ‘use’ because, but for the customer’s actions, the entire system would never have been put into service. This is sufficient control over the system … and the customer clearly benefits from this function.” Id. The Federal Circuit then declined to consider for the first time on appeal whether Qwest induced its customers to use the system because the district court had not yet had an opportunity to analyze this issue.

In contrast to the analysis regarding Qwest’s consumers, however, the Federal Circuit found that Qwest itself did not itself put the invention into service because Qwest only operated the back end processing. Therefore, Qwest did not use the system because it did not control the system and obtain benefit from it. “While Qwest may make the back-end processing elements, it never ‘uses’ the entire claimed system because it never puts into service the personal computer data processing means. Supplying the software for the customer to use is not the same thing as using the system.” Id. at 1286.

Relying on Centillion and in particular the analysis pertaining to Qwest, the district court found that the defendant here, Taleo Corporation, was like Qwest, i.e., it made the back end processing elements, but it never used the entire claimed system. As the district court found in analyzing Centillion, Qwest did not infringe “because it never puts into service the personal computer data processing means. Similarly, Taleo makes the back end processing elements, but it never ‘uses’ the entire claimed system because it never puts into service the display of said source data stream. The user must click on a hyperlink in order to display said stream.”

The district court therefore granted summary judgment in favor of Taleo and did not change its analysis on a motion to reconsider.

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As the district courts and the Federal Circuit continue to address issues of divided infringement, it will be worth watching to see if the Federal Circuit changes the field of play with its upcoming decision in Akamai v. Limelight, which will be decided by the Federal Circuit en banc. Given the number of patents that implicate the use consumers make of various programs and devices, this will remain an important issue to follow in terms of divided infringement.

Kenexa BrassRing Inc. v. Taleo Corporation, Case No. 1-07-cv-00521 (D. Del. May 26, 2011).
The authors of are patent litigation lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or