Step By Step – It’s All About Control

Submitted by patentadmin on Mon, 03/16/2009 - 14:42

A “process” or “method” patent is one directed (not surprisingly) to a process or method for doing something. The claims of such a patent set forth a number (a “plurality” in lawyerspeak) of steps. Infringement of a process or method occurs when a single party (known as an infringer or “slimeball”), without permission, performs all of the steps of at least one of the claims of the patent. The question remains, however, whether the patent is infringed when some of the steps are performed by one party and the remaining steps are performed by another party. In other words, when all of the claim steps have been performed by unlicensed parties but all of the steps were not performed by a single party, is the patent infringed? The answer, as the reader may have guessed, is “it depends.”

The applicable legal principle (yes, lawyers, or at least some of them, have principles) is that a defendant cannot avoid liability for infringement by having someone else carry out one or more of the claimed steps on its behalf. Accordingly, where the actions of multiple parties combine to perform every step of a claimed method, the claim is infringed only if one party exercises “control or direction” over the entire process such that every step is attributable to the controlling party. The controlling party is known – not surprisingly – as the “mastermind” (this is the legal term – I am not making this up). Mere “arms-length cooperation” (another legal term) will not give rise to infringement by any party. Is that clear? The question, therefore, is what constitutes “control or direction.”

Fortunately, the reader need not lie awake at night pondering this question. The Court Of Appeals For The Federal Circuit (the patent appeals court, known to us insiders as the C.A.F.C.) has recently given us the answer in Muniauction, Inc. vs. Thomson Corporation, 532 F.3d 1318; 2008 U.S. App. LEXIS 14858; 87 U.S.P.Q.2D (BNA) 1350. “The control or direction standard is satisfied in situations where the law would traditionally hold the accused infringer vicariously liable for the acts committed by another party that are required to complete performance of a claimed method.” Is that clear? Hopefully, it is, because the Supreme Court has declined to hear an appeal of this decision. Hence, the foregoing (lawyers’ way to avoid repetition) is now the undisputed law on the issue.

Why should the reader care about this when there are truly important issues to consider, like the likelihood of increased taxes, resulting in higher prices for bourbon? Inventions of this type – where different process steps are performed by different parties – are particularly common with respect to processes or methods involving use of the internet, such as order processing, auctions, or providing for secure transactions between buyers and sellers or between clients and financial institutions. For the compulsively curious, or the truly masochistic, reproduced below is claim 1 from the Muniauction patent, which is directed to a method of selling bonds through an online auction. The parties performing the various claim steps are indicated thereon in brackets.

Claim 1. In an electronic auction system including an issuer’s computer having a display and at least one bidder’s computer having an input device and a display, said bidder’s computer being located remotely from said issuer’s computer, said computers being coupled to at least one electronic network for communicating data messages between said computers, an electronic auctioning process for auctioning fixed income financial instruments comprising:

[THE BIDDER] inputting data associated with at least one bid for at least one fixed income financial instrument into said bidder’s computer via said input device;

[THE AUCTIONEER’S SYSTEM] automatically computing at least one interest cost value based at least in part on said inputted data, said automatically computed interest cost value specifying a rate representing borrowing cost associated with said at least one fixed income financial instrument;

[THE BIDDER] submitting said bid by transmitting at least some of said inputted data from said bidder’s computer over said at least one electronic network; and

[THE AUCTIONEER’S SYSTEM] communicating at least one message associated with said submitted bid to said issuer’s computer over said at least one electronic network and displaying, on said issuer’s computer display, information associated with said bid including said computed interest
cost value,

[INDETERMINATE)] wherein at least one of the inputting step, the automatically computing step, the submitting step, the communicating step and the displaying step is performed using a web browser.

THE LESSON TO BE LEARNED: if you have invented a process of this sort, rather than worry about “vicarious liability” (however that may be defined), draft patent claims (or better yet, have your patent professional draft them) so that all of the steps recited in a given claim are performed by a single party.

Add new comment