Federal Circuit Finds Noninfringment of System Claim Since No Single Entity Owns Each Element of Claim

In McKesson Tech, Inc. v. Epic Systems Corp., 98 USPQ2d 1281 (Fed. Cir. 2011), McKesson is the owner of U.S. Patent No. 6,757,898 (the ‘898 patent).  The ‘898 patent is directed to a communication method between doctors and patients in which patients are able to access webpages with customized content specific to the doctor and patient, such as allowing appointments and providing prescription refill requests. 

Epic is a software company which provides MyChart, which allows healthcare providers to provide a personalized webpage including their medical records, treatment information, scheduling information, etc.  Epic does not actually use or host the MyChart software, and instead licenses the software to third parties such as healthcare providers.

McKesson sued Epic in the Northern District of Georgia alleging induced infringement of claim 1, which recites, among other features, a method including “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.”  Epic moved for summary judgment since neither party disputes that Epic’s customers (i.e., the healthcare providers) do not perform this initiating operation, which is instead performed by patients of the customers.  As there was no direct infringement by the customers, the District Court granted this motion as there could not be inducement under 35 U.S.C. §271(b).

On appeal, the Federal Circuit noted that in order to support a claim of induced infringement, there must be evidence of direct infringement by the party being induced.  Where it is undisputed that no single party is infringing each element of the claim, the Federal Circuit noted that there can be liability should there be evidence that a controlling party exercises “control or direction” of other parties performing the remaining features of the claim such that each step of a claimed method is being performed or directed by the controlling party. BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed.Cir.2007).  Further, the Federal Circuit noted that this control or direction standard is generally met “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.”  Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 130 (Fed.Cir.2008).  Expanding on this theory, the Federal Circuit noted that in Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed.Cir.2010), the Federal Circuit found that such vicarious liability is found in situations where there was evidence of an agency between the controlling and controlled party, but would not be found in the absence of such an agency relationship. 

In reviewing the facts of the case, the Federal Circuit found that no such agency relationship existed between a doctor and a patient.  While acknowledging that there is a special relationship between a doctor and a patient as argued by McKesson, this relationship is still at an arms length and does not automatically evidence a contractual-style obligation by the patient to perform the initiating operation as required under the claims.  Instead, the Federal Circuit found that, since the MyChart patients where using the system for their own convenience, their initiating of the contact to the MyChart system was not performed under the control of the health care provider as would be required to show liability.

While McKesson had argued that the requirement for a contractual-style obligation is contrary to tort liability and copyright theories which result in joint liability, the Federal Circuit held that it was bound by prior panel decisions on the subject.  Moreover, the Federal Circuit that any theories relating to joint infringement are accounted for in statute under 35 U.S.C. §271(b) and (c).  Lastly, the Federal Circuit noted that patent law is unique as compared to other areas of tort law in that the patent owner can define their rights in advance, and thus can prevent such issues while providing notice to the public about the scope of patent rights.  As such, the Federal Circuit affirmed the District Court’s grant of summary judgment of noninfringement.

Significance for Patent Applicants

McKesson highlights the complexity of protecting entire systems using method claims.  As highlighted in McKesson, where a method claim is used, all elements need to be performed by a common person or someone acting on that person’s behalf.  This is in contrast to system claims, where a system can protected by drafting a claim including all elements of the system, but claiming the interactions to vary which element puts the entire system into service.  See Centillion Data Systems v. Qwest Communications International, 631 F.3d 1279; 97 U.S.P.Q.2D  1697 (Fed. Cir. 2011) (discussed in Stein McEwen Newsletter, Vol. 7, Issue 1 (March 2011).  Thus, when protecting entire systems, such as internet-related inventions where the system includes clients and servers and it is not possible to claim elements individually, it is important to ensure that the claims include system claims or software claims as opposed to relying purely on method claims will likely prove ineffective where multiple independent entities are involved in the claimed method.

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