May 2011 Issue

The Federal Circuit Says

A method claim is directly infringed only if each step of the claimed method is performed by a single party.  In McKesson Technologies Inc. v. Epic Systems Corp., No. 2010-1291 (Fed. Cir. Apr. 12, 2011), the Federal Circuit found that Epic Systems Corporation (Epic) did not infringe McKesson Technologies Inc.’s (McKesson) patent because no single party performed every step of the asserted method claims.

Although McKesson conceded that neither Epic nor its customers performed the first step of the asserted claims, it accused Epic of indirect infringement by inducement.  However, the Court explained that a finding of indirect infringement still requires the existence of a direct infringer.  To this end, the Court noted that direct infringement of a method claim requires a single party to perform each step of the claimed method.

The asserted McKesson claims are directed to a method of communication between a healthcare provider (e.g., a doctor) and a number of users (e.g., patients) serviced by the provider.  Among other things, the asserted method requires “initiating a communication by one of the . . . users to the provider.”  The accused Epic product is the MyChart software.  The MyChart software allows healthcare providers and patients to exchange information and communicate through a personalized web page assigned to each patient.  While Epic does not use the MyChart software, it licenses the software to healthcare providers.  “These licensed healthcare providers choose whether to offer MyChart as an option for their patients’ use and none of these healthcare providers requires their patients to actually use the MyChart software.”  Slip op. at 3.  If a patient chooses to utilize the MyChart option, that patient “initiates a communication” to the provider.

Recognizing that neither Epic nor its customers performed the “initiating step,” McKesson attempted to attribute the actions of MyChart users to the MyChart providers (i.e., Epic’s customers).  In particular, McKesson argued that the special nature of the doctor-patient relationship was sufficient to provide attribution.  The Court, however, found that the doctor-patient relationship neither gives rise to an agency relationship nor imposes any contractual obligations on the patients.  That is, a patient is not required to follow a doctor’s orders.  The actions of the MyChart users can only be attributed to Epic’s customers if (1) Epic’s customers exercised “control or direction” over the MyChart users or (2) Epic’s customers imposed a contractual obligation on their patients.  Based on the evidence, the Federal Circuit found neither.

Relying on its previous ruling in Akamai Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010), the Federal Circuit concluded that the MyChart users acted principally for their own benefit, under their own control, and were in no way agents of Epic’s customers.  Thus, the Court found that the actions of MyChart users were not attributable to Epic’s customers and there was no single direct infringer.  Absent direct infringement, the Court held that Epic was not liable for indirect infringement.

To support its holding, the Federal Circuit reasoned that “in patent law, unlike in other areas of tort law, the patentee specifically defines the boundaries of his or her exclusive rights and provides notice to the public to permit avoidance of infringement.  This stands in sharp contrast to the circumstances surrounding a joint tort where the victim has no ability to define the injurious conduct upfront and where, absent joint liability, the victim would stand uncompensated as a consequence.”  McKesson, slip op. at 10.  Thus, the Court effectively advocated for better claim drafting as a potential solution to joint infringement scenarios.

Notwithstanding the McKesson decision, the Federal Circuit granted an en banc rehearing in the Akamai case on April 20, 2011.  In doing so, the Court requested the parties brief the following issue:  If separate entities each perform separate steps of a method claim, under what circumstances would that claim be directly infringed and to what extent would each of the parties be liable?

Arguments made by Judge Newman in her dissent in the McKesson case will likely be at the forefront of this rehearing.  In that dissent, Judge Newman argued that the rulings of the McKesson and Akamai cases contradict both statute and precedent by rendering claims requiring actions of multiple parties useless even though they otherwise meet statutory guidelines.  Judge Newman reasoned that a patent that can never be infringed is not a patent in the definition of the law because a patentee owning such patent does not have the “right to exclude.”

While the law may change at the en banc rehearing of Akamai, for now, applicants should carefully draft claims directed to only one entity’s activities to avoid joint infringement situations.  When dealing with patents that have already issued, a pending continuation application or a reissue application may be used to secure claims directed toward a single infringer.  Doing so will likely simplify the efforts needed to prove infringement.