Divided Infringement
Understanding System and Method Claims
System claims describe the overall arrangement and interaction of different components within a system. They protect 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.
Example:
- Method claim: “A method for cleaning a surface, comprising the steps of applying a cleaning solution, scrubbing with a brush, and rinsing with water.”
- System claim: “A cleaning system including a spray nozzle, a brush attachment, and a water reservoir, wherein the nozzle delivers cleaning solution to the brush.”
Enforcing Method vs. System Claims
Typically, method claims are easier to obtain but more difficult to enforce. To prove infringement, all steps must be performed by a single entity.
System claims, by contrast, can be infringed by creating a system with the described components.
However, questions arise when different agents control different components of a system. Who is responsible for infringement in such cases?
Legal Precedent on System Use
Courts have held that to “use” a system, a party must “control the system as a whole and obtain benefit from it.”
For example, in Centillion Data Systems, LLC v. Qwest Communications International, Inc., backend components were operated by the service provider (Qwest), and front-end components by customers.
The court ruled that customers, not Qwest, were using the system. Qwest was therefore not liable for infringement.
Case Study: CloudofChange LLC v. NCR Corporation
A recent case involved a Point-of-Sale (PoS) system called NCR Silver. CloudofChange’s patents claimed a system requiring vendor-operated webservers and subscriber-operated PoS terminals. NCR controlled the backend, while merchants controlled the frontend.
CloudofChange alleged direct infringement, arguing that NCR controlled and benefitted from each component. The district court sided with CloudofChange, noting that the merchant agreement required merchants to maintain internet access. The court held this demonstrated that NCR was directing the merchants and thus using the patented system.
Federal Circuit Reversal
The Federal Circuit reversed the decision based on the Centillion framework. The court emphasized that NCR’s merchants, not NCR, used the system. Simply requiring merchants to maintain internet access does not constitute directing or controlling the system’s use as a whole.
The court also highlighted the difference in liability analysis between method and system claims:
- Method claims: A party must control each step of the method. If steps are divided among multiple parties, no single party can be said to perform the complete method.
- System claims: Liability depends on control over the entire system, not individual components. The focus is whether someone puts the complete system into service and benefits from it.
Key Takeaways on Divided Infringement
- For method claims, divided actions among parties may result in no infringement unless one party directs all steps.
- For system claims, control over the system as a whole is the key factor.
- Dividing the action among multiple parties can avoid liability in both cases, but the analysis differs depending on claim type.
Related articles to method or system claims: Jazz Loses the Tune: Courts Strike a Sour Note on System Patents
Generic Drug Label Doesn’t Induce Patent Infringement Just by Listing Optional Refrigeration
