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PillarsThe Federal Circuit issued another opinion yesterday reinforcing the standard for establishing joint infringement in method patent cases where more than one party performs the steps of an asserted method claim.  In McKesson Technologies, Inc., v. Epic Systems Corporation, Case No. 2010-1291, the Federal Circuit again held that in such situations, there can only be joint infringement when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps.

The patent at issue in McKesson is directed to an interactive electronic method of communication between healthcare providers and patients involving personalized web pages for doctors and their patients that, among other things, allows patients to access visit-specific content online following every doctor visit.

The first step of the asserted method claims requires “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.”  The parties did not dispute that Epic’s customers, i.e., the healthcare providers, did not directly perform the first step of the asserted method claims.  Rather, the healthcare providers’ patients performed the first “initiating a communication step.”

The Federal Circuit, affirming the district court’s grant of summary judgment of non-infringement, reinforced that “[w]ithout an agency relationship or contractual obligation” the users’, i.e., the patients’, actions could not be attributed to the providers, i.e., the healthcare providers.  Because no one party performed each step of the claimed method, there was no direct infringement and consequently, no induced or indirect infringement, which required a direct infringer.

The Federal Circuit rejected McKesson’s invitation to depart from its precedents, explaining that ‘[p]atent law is a creature of statute and ‘expanding the rules governing direct infringement to reach independent conduct of multiple actors would subvert the statutory scheme for indirect infringement.”

Judge Bryson issued a concurring opinion, finding the court’s decision correct in light of the court’s precedent, but further commenting that “[w]hether those decisions are correct is another question, one that is close enough and important enough that it may warrant review by the en banc court in an appropriate case.”

Judge Newman issued a dissenting opinion, arguing that the court was departing from the “prior panel rule,” encouraging en banc resolution of the issue, and commenting that the court’s decision essentially “eliminates the patent incentive for such interactive procedures, rendering McKesson’s new method, and all such interactive methods, open for infringement without redress.”

 

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Yesterday, the Senate passed the America Invents Act, S.23, a/k/a the Patent Reform Act of 2011.   The version of the bill that passed the Senate, which is distinctly different than earlier versions of the bill from this and previous Congresses, contains provisions that affect various aspects of patent law, including:  First inventor to file (Sec. 2), Inventor's oath and declaration (Sec. 3), defenses and evidentiary requirements (Sec. 4), Post-grant review (Sec. 5), Establishment of a Patent Trial and Appeal Board (Sec. 6), Pre-issue third party submissions (Sec. 7), Venue (Sec. 8), PTO fee-setting authority (Sec. 9), Supplemental examination (Sec. 10),  Residency of Federal Circuit Judges (Sec. 11), Creation of Micro-entities (Sec. 12), Changes in funding agreement percentages (Sec. 13), Tax strategies deemed to be in the prior art (Sec. 14),  Best mode requirement (Sec. 15), and a Transitional program for Covered Business Method Patents (Sec. 18), which provides an administrative procedure for challenging business method patents.  For a copy of the Act as passed yesterday, click here.  The House of Representatives must consider the issue next, either by adopting, in whole or in part, S. 23 or proposing its own version of patent reform.

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Today, the Senate Judiciary Committee approved Patent Reform Bill S. 23 with amendments.  Most notably, the committee deleted proposed amendments clarifying the standard for awarding enhanced damages for willful infringement (ALB11066), changed the effective date of the amendments from one year after enactment to 18 months, and added provisions related to the removal of patent actions and requiring the mandatory remand of claims not falling within the original or supplemental jurisdiction of the federal courts (GRA11079).    In addition, the amendments added a provision requiring the Federal Circuit to transfer appeals that do not involve a patent or plant variety protection claim to the appropriate circuit court (GRA11079).

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