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The U.S. Court of Appeals for the Federal Circuit has upheld a ruling that two co-defendant companies did not jointly infringe a patent because neither company controlled the entire infringing process. The court’s Aug. 9 ruling in Golden Hour Data Systems Inc. v. emsCharts Inc. upheld an U.S. District Court for the Eastern District of Texas post-trial judgment from April 2009. That judgment overturned a jury verdict finding that the two defendants jointly infringed 16 claims of a Golden Hour patent. The patent in the case is for computerized systems related to emergency medical transport. Golden Hour sued emsCharts, which makes a Web-based medical charting program, and Softtech LLC, which makes flight dispatch software, for joint infringement. Softtech and emsChart formed a strategic partnership, designed their products to work together and sold them as a unit. The Federal Circuit also vacated a March 2009 ruling by the district court that Golden Hour’s patent is unenforceable due to inequitable conduct, and it remanded that part of the case for additional findings on the company’s intent. The inequitable conduct doctrine determines when a lawyer’s conduct before a patent office can disqualify a patent or some of its claims. In the majority ruling, Judge Timothy Dyk cited the Federal Circuit’s 2008 ruling in Muniauction, Inc. v. Thomson Corp. and its 2007 ruling in BMC Res. Inc. v. Paymentech LP in upholding the district court’s ruling on joint infringement of the of the process claims of Golden Hour’s patent. “Where the combined actions of multiple parties are alleged to infringe process claims, the patent holder must prove that one party exercised ‘control or direction’ over the entire process such that all steps of the process can be attributed to the controlling party, i.e., the ‘mastermind,’ ” wrote Dyk. Dyk also extended those holdings to Golden Hour’s joint infringement claims for its systems claims. Dyk wrote that the jury verdict on the joint infringement of Golden Hour’s systems claims “can only be sustained if there was control or direction of Softtech by emsCharts.” “Under these circumstances, [the court's judgment] was properly granted as to the systems claims as well as to the process claims.” Judge Pauline Newman dissented. She wrote that the majority’s ruling that “there cannot be infringement when entities collaborate to practice a patented invention” is incorrect. “A collaborative effort as here, a ‘strategic partnership’ to sell the infringing system as a unit, is not immune from infringement simply because the participating entities have a separate corporate status,” Newman wrote. “The panel majority acknowledges that the defendants in collaboration infringed the claims, but without discussion overturns the jury verdict.” Newman also dissented on the majority’s decision to remand the inequitable conduct portion of the case. “Since intent to deceive was not established before the trial judge, and materiality is reasonably disputed, there is no basis for a second-bite ruling of inequitable conduct,” Newman wrote. At a minimum, Newman wrote the inequitable conduct part of the case should be stayed until conflicting precedent is resolved by the en banc rehearing of Therasense Inc. v. Becton, Dickinson & Co., slated for Nov. 9. In its en banc rehearing order, the Federal Circuit asked parties and amici to brief them on six questions about whether the standard for proving inequitable conduct should be updated or replaced. Neither Golden Hour nor its lawyer, Carter Phillips, the managing partner of Sidley Austin’s Washington office, returned calls for comment. Eric Weisblatt, an intellectual property and litigation partner at Washington’s Wiley Rein, said his clients emsCharts and Softech are very happy with the result. Yet he acknowledged that the ruling creates challenges for owners of systems patents. “There are a large number of patents where the introductory phrase is ‘a system for,’” Weisblatt said. “If you have more than one party combining to infringe, you have a mastermind issue and that’s a tough issue. No litigant wants tough issues.” The ruling creates a somewhat hyper-technical standard for determining patent infringement when there’s more than one infringing party, said Pete Corless, a partner at Boston’s Edwards Angell Palmer & Dodge, who wasn’t involved in the case. “It works to the detriment of a patent owner,” Corless said. “It’s a higher standard to prove infringement. Its’ very common that companies work together on all sorts of things.”

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