Contributory Patent Infringement: New Light on a Murky Doctrine

 

By Jeffrey Klayman

 

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ne problem many patent owners face when trying to enforce their patents is that it can be relatively easy for companies to avoid direct infringement of patents, especially those based on method claims. In many cases, patent owners must enforce their patents under theories of indirect infringement, such as contributory infringement, that impose liability upon the seller of a product that is later used in an infringing manner. 

The recent Federal Circuit decision in Ricoh Company, LTD. v. Quanta Computer Inc. should make it easier for patent owners to hold sellers liable for contributory infringement. The court held that if a device that has noninfringing uses nonetheless contains a component with no noninfringing use, the seller of the device may be held liable for contributory infringement. Liability arises from selling either the device or the component. Moreover, the company will not escape liability merely because infringement does not literally occur until a |customer uses the device.

The doctrine of contributory infringement, which is  codified in 35 U.S.C. 271(c), imposes patent infringement liability on a company that knowingly sells either a special-purpose component of a patented device or a special-purpose device used to practice a patented method, provided the component or device is not “a staple article or commodity of commerce suitable for substantial noninfringing use.”

For there to be contributory infringement, there must be an underlying direct infringement by a third party for which the company is held liable. However, the seller of a general-purpose product capable of substantial non-infringing uses usually is not a contributory infringer even if a third party uses the general-purpose product to infringe the patent, because otherwise the patent would usurp the right of the public to employ the product in noninfringing ways.

Ricoh has patents that include method claims relating to writing data to an optical disc drive. Quanta sells optical disc drives that presumably perform Ricoh’s patented write methods and computers equipped with these disc drives. (Since this case is an appeal from a grant of summary judgment, no actual infringement has yet been proven).

The disc drives include specialized hardware and software components that perform the patented write methods and that have no noninfringing uses. The disc drives also include components that perform other functions, including reading data and sometimes even writing data using a noninfringing write method. The disc drives therefore practice both patented and unpatented methods and perform the patented write methods only part-time.

A method claim is not infringed unless and until the method is performed. Thus, the products sold by Quanta do not directly infringe Ricoh’s method claims because the infringing write methods are not performed until the disc drives are in use. Any direct infringement of Ricoh’s patented write methods would be by the end-users of the products, typically consumers who purchase computers equipped with disc drives.

Since each performance of a patented method may be considered a separate infringement, these end-users technically may be liable for enormous patent infringement damages even though they had no idea that the disc drive infringes, had nothing to do with the creation and purchase of the disc drive itself, and in fact may not even know that they are using the disc drive. Generally speaking, “innocent infringement” is not a defense to patent infringement, even though it can theoretically ensnare anyone who uses an everyday product (e.g., computer, telephone, television, automobile) that is the subject of patent litigation.

Although the end-users are the direct infringers, Ricoh cannot realistically enforce its patents against them. Rather, Ricoh seeks to enforce its patents against Quanta, who arguably put all of the pieces into place for infringement of the patents and who is likely in the best position to pay hefty infringement damages by virtue of its profits from selling the disc drives and computers. Quanta contended that it was not guilty of contributory infringement of Ricoh’s method claims because the disc drives perform numerous noninfringing functions, including noninfringing disc reads and writes, and therefore, Quanta reasoned, they are staple articles of commerce. Quanta also argued that it does not sell infringing components as specified in 271(c) but instead sells unpatented disc drives and computers equipped with disc drives.

The trial court agreed with Quanta, but the appellate court did not. In essence, the Federal Circuit ruled that Quanta cannot escape liability for contributory infringement merely by embedding special-purpose components adapted to perform a patented method into a larger product with components that perform other functions. Otherwise, it would be too easy for companies to avoid both direct and indirect infringement, contrary to the fundamental purpose of imposing liability for contributory infringement, as explained by the Supreme Court in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).

Thus, the court ruled that 271(c) applies not only to the bare sale of an infringing component but also to the sale of that component as part of a larger product. In essence, the court treats the sale of the larger product as a de facto sale of the components of that product. Thus, if sale of the infringing component alone would constitute a contributory infringement, so would the sale of the larger product that includes that component.

The statute provides that liability for contributory infringement may be imposed only where there is knowledge that the device is especially made or adapted for an infringing use. In Ricoh, the court seemed to endorse a presumption that one who sells a product containing a component with no substantial noninfringing uses does so with knowledge that the component has been made or adapted for an infringing use. [1]

In the end, the Federal Circuit remanded Ricoh’s claim for contributory infringement to the trial court for further inquiry into whether Quanta’s drives contain components that have no substantial noninfringing use other than to execute Ricoh’s patented methods.

While it seems that the Federal Circuit reasonably concluded that Quanta can be held liable for contributory infringement of Ricoh’s method claims, its reasoning may open the decision to attack. Part of the problem is that the court fixed its analysis on the “sale of a component” prong of 271(c), which forced it to address issues that it could have avoided by focusing on the “apparatus for use in practicing a patented process” prong.

Rather than trying to characterize sales of the disc drives as sales of the infringing components themselves, the court could simply have found that the disc drives perform the patented write methods and, for that reason, constitute apparatus for use in practicing a patented process. Furthermore, the court easily could have found that the noninfringing functions performed by the disc drives are inherently covered by the claims.

In any case, the Federal Circuit has made it easier for patent owners to prove contributory infringement. The sale of a product containing an infringing component now may constitute an implied sale of the infringing component. The Ricoh decision highlights the importance of drafting different types of patent claims, including both method and apparatus claims, so that infringement can be asserted on multiple grounds.

 

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