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System claims describe the overall arrangement and interaction of different components within a system, protecting the “what” and “how they work together” of an invention.
Method claims focus on the specific steps to achieve a result, essentially protecting the “how” of an invention.
System claims define the components and their interactions within a system, while method claims detail the steps or actions taken to perform a function.

Using an example drawn from a simple google search and its generative AI, a method claim might be: “A method for cleaning a surface, comprising the steps of applying a cleaning solution, scrubbing with a brush, and rinsing with water.” A system claim might be: “A cleaning system including a spray nozzle, a brush attachment, and a water reservoir, wherein the nozzle is designed to deliver cleaning solution to the brush.”

Typically, method claims are considered easier to get, but more difficult to enforce, since all the steps of a method must be performed by a single entity in order to prove infringement, whereas system claims can be infringed by simply creating a system with the described components. But as usual, things are a bit trickier than that. Who is responsible for infringement when a system’s components are controlled by different agents?

The courts have decided that to “use” a system, a party had to “control the system as a whole and obtain benefit from it.” So in a case (Centillion Data Systems, LLC v. Qwest Communications International, Inc.) involving backend components operated by the service provider (Qwest), and front end components operated by customers, the courts decided it was the customers that used the system, therefore Qwest wasn’t liable for infringement.

A recent case, CloudofChange LLC v. NCR Corporation, involved a Point-of-Sale (PoS) system called NCR Silver. The claimed system in CloudofChange’s patents required both vendor-operated webservers and subscriber-operated PoS terminals. NCR operated the backend, while merchants controlled the frontend PoS terminals. NCR’s merchant users put the system into service because they initiate a demand for service at the POS terminal and benefit from the backend providing the service.

CloudofChange alleged direct infringement arguing NCR controlled and benefitted from each component of the claimed system, and the district court agreed with CloudofChange on the grounds that NCR’s merchant agreement required merchants to obtain and maintain internet access. This point, the court held, was fundamental in determining that NCR was directing its customers, and was therefore using the CloudofChange’s patented system. This differed from the previous Centillion case, where Qwest was determined to have in no way directed its customers to act as agents.

The Federal Circuit court, however, reversed that decision based on the same Centillion framework. The Circuit court noted that CloudofChange acknowledged NCR’s merchants used the system, not NCR, and simply requiring merchants get and keep internet access doesn’t rise to directing or controlling their use of the system as a whole. NCR doesn’t direct or control its merchants to subscribe to the NCR Silver system etc., the merchants take these actions of their own accord.

The Federal Circuit court said the District court had erred by focusing the liability analysis on control of a single element, internet access, rather than control over the use of the entire system. The court also distinguished between liability analysis for method claims versus system claims. For method claims, the defendant must control each step of the method. System claims describe a collection of components working together as a unified whole at a single point in time.

This fundamental difference between method and system claims directs how the Federal Circuit court thinks about liability. For a method claim, each step represents a distinct action performed by someone. If the steps are divided among multiple parties, it needs to be shown that one party is controlling or directing the performance of each step, otherwise no single party can be said to be ‘performing’ the complete method.

For system claims, the analysis focuses on control over the system as a whole, rather than individual components. The question there is does someone put the complete system into service and benefit from its collective operation. But in both cases, dividing the action among parties may result in no infringement.