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A divided ruling by the U.S. Court of Appeals for the Federal Circuit illustrates the fragility of the court’s recent precedent for joint infringement. At issue is when a defendant has enough control over an infringer to be liable as a joint infringer. The Federal Circuit’s April 12 ruling in McKesson Technologies Inc. v. Epic Systems Corp., which relied on recent precedent, is remarkable for Judge William Bryson’s two-sentence concurring opinion disputing that precedent and a vehement dissent filed by Judge Pauline Newman. Judge Richard Linn wrote the majority ruling, upholding a summary judgment finding of noninfringement by Chief Judge Jack Camp of the Northern District of Georgia from September 2009. “Because McKesson is unable to attribute the performance of all the steps of the asserted method claims to a single party — namely, Epic’s healthcare-provider customers — this court affirms the finding of non-infringement,” Linn wrote. Although it left several questions up in the air, the Federal Circuit’s 2007 ruling in BMC Research Inc. v. Paymentech LP held that joint infringement requires that “one party exercise…’control or direction’ over the entire process such that every step is attributable to the controlling party.” The court’s 2008 ruing in Muniauction Inc. v. Thomson Corp. deemed that control or direction is determined when “the law would traditionally hold the accused direct infringer vicariously liable for the acts committed by another party.” Last December, in Akamai Technologies Inc. v. Limelight Networks Inc., the court held that there must be an agency relationship between parties for one entities’ infringing acts to be attributed to the other. The recent ruling concerned numerous claims of a McKesson patent for “an electronic method of communication between healthcare providers and patients involving personalized web pages for doctors and their patients,” according to the Federal Circuit opinion. Epic, a healthcare software development company, makes MyChart software, the accused product, and licenses it to health providers. MyChart enables patients to communicate with their health providers online and to access their own medical information online. The district court agreed with Epic’s arguments that no single party directly infringed McKesson’s patent. Epic noted that its customers did not perform a certain step of the patent claims that involved “initiating a communication.” Epic also argued that the customers did not control or direct any another party who performed that step. Linn wrote that ‘Nothing indicates that MyChart users are performing any of the claimed method steps as agents for the MyChart providers.” “McKesson has identified no viable legal theory under which the actions of MyChart [patient] users may be attributed to Epic’s customers,” Linn wrote. “Without an agency relationship or contractual obligation, the MyChart users’ actions cannot be attributed to the MyChart providers, Epic’s customers. Thus, McKesson has failed to demonstrate that any single party directly infringes the…patent. Absent direct infringement, Epic cannot be liable for indirect infringement.” Newman’s dissent stated that the majority ruling limiting infringement of a patent for an interactive method such as McKesson’s “eliminates the patent incentive from such interactive procedures, rendering McKesson’s new method, and all such interactive methods, open for infringement without redress.” “Interactive methods that meet all of the conditions and requirements of the Patent Act are fully entitled to participate in the patent system,” Newman wrote. “The court’s removal of interactive methods from the purview of the patent system, through its newly minted and now enlarged ‘single-entity rule,’ is contrary to law and policy. Conflicts in precedent require resolution, not enlargement, for inconsistent precedent is as much a deterrent to innovation as is elimination of the patent right entirely.” Bryson’s concurrence referenced the three prior Federal Circuit decisions that require the defendant to exercise a high degree of control over an infringer in order to face infringement allegations: “I agree that the decision in this case is correct in light of this court’s decisions in BMC Resources, Muniauction, and Akamai Technologies. Whether 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. Newman wrote that five Federal Circuit cases cited for support in BMC Resources and Muniauction “do not deal with the form of interactive situation to which they are now being applied.” “I am surprised at my colleagues’ holding that these cases require an absolute ‘single-entity rule’ of infringement, for none of these cases turned on whether different entities independently or interactively perform different steps of a method claim,” Newman wrote. Newman addressed another Federal Circuit ruling that supported McKesson’s theory that, because Epic induced MyChart users’ direct infringement, the patent was directly infringed jointly. “Questions of joint liability turned on participation, collaboration, or other relevant facts, as courts applied the experience of the common law in a variety of factual situations,” she wrote. “The state of the law of joint infringement was summarized in a jury instruction in [the Federal Circuit's 2006 ruling in] On Demand Machine Co. v. Ingram Industries Inc.“ Newman also asserted that the court’s 2011 ruling in Centillion Data Systems LLC v. Qwest Communications International Inc. opposes Akamai.:” [C]entillion held that, unlike a claim to an interactive ‘method,’ direct infringement of a claim to an interactive ‘system,’ wherein elements of the system are physically controlled by different entities such as an independent ‘user,’ is not subject to a ‘single-entity rule.’” McKesson’s lawyers at Atlanta’s King & Spalding referred questions to the company. McKesson spokeswoman Megan Hawkins said the company “does not comment on pending litigation.” Epic’s lawyers at Atlanta-based Kilpatrick Townsend & Stockton also referred questions to the company, which did not respond to a telephone call. Harold Wegner, a patent partner in the Washington office of Foley & Lardner, who isn’t involved in the case, said that Bryson’s concurrence is the most notable part of the McKesson ruling because joint infringement liability has been a settled area of patent law. “The surprising concurrence by Judge Bryson indeed leaves open the possibility of an en banc review of this seemingly settled point of law,” Wegner said. Sheri Qualters can be contacted at [email protected].

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