Divided Patent Infringement: The Federal Circuit Doubles Down on a New Standard

By Lawrence Green. A member of our Patent Practice Group

For over a decade, the courts have wrestled with the issue of “divided infringement,” where multiple parties share infringement by performing different steps of a method claim.  At various times, the requirements for proving divided infringement have been tightened, loosened and retightened, in part because of a decision by the U.S. Supreme Court.

In the most recent installment of this ongoing saga, the Federal Circuit now seems to have loosened the requirements for establishing divided infringement by no longer requiring that all of the steps in such method claims be performed by one central actor and by other parties who are controlled by that actor or are under some legal obligation to him.

The most recent chapter in this saga is set forth in Travel Sentry, Inc. v. David A Tropp, decided by a panel of the Federal Circuit on December 19, 2017.  The claims at issue are directed to methods of improving airline luggage inspection through the use of dual-access locks.  Claim 1 of the Tropp patent includes four steps, two of which are admittedly performed by the alleged infringer, Travel Sentry, while the last two steps are performed by a luggage screening entity.

Travel Sentry entered into a memorandum of understanding (MOU) with the Transportation and Security Administration (TSA), which screens airport luggage. The MOU sets forth certain responsibilities of both parties, but does not establish any kind of agency relationship, or other type of legal relationship, between the parties.

The district court held on summary judgment that Travel Sentry could be held liable as a direct infringer only if it controls the TSA’s performance of the last two claim steps.  The district court determined that there was no evidence at all that would morph the MOU into a contract that renders Travel Sentry vicariously liable for the TSA’s actions.  The district court stated that the MOU does not subject the TSA to any concrete or enforceable obligations, expressly absolves the TSA of liability, does not provide for any consequences for a failure to comply with the terms of the MOU, and can be unilaterally terminated by either party.

The district court found these facts to be analogous to those in a previous Federal Circuit decision, Muniauction, Inc. v. Thomson Corp., which held that a defendant is not liable for direct infringement when it merely controls access to its system and instructs third parties on its use.  The district court went on to hold that in the absence of a showing that any entity has directly infringed Tropp’s patents, any claim against Travel Sentry for indirect infringement fails as a matter of law because under the prevailing law, liability for indirect infringement can arise only in the presence of direct infringement.

This litigation paralleled and was intertwined with the extensive litigation in Akamai Technologies, Inc. v. Limelight Networks, Inc., in which very similar issues were raised.  We reported on that case in January 2011 and again in June 2014.

In January 2011, we reported that “mere directions or instructions to another entity – absent a legal obligation of that entity to perform the steps – is insufficient to establish infringement of a split claim.” In June 2014, we reported that the Supreme Court held in that “there is no infringement, direct or by inducement, unless one party performs every step of the method, either itself or through control of another, such as by contract.”  However, the Court declined to review the merits of Muniauction and its standard for direct infringement, stating that “on remand the Federal Circuit will have the opportunity to revisit” the direct infringement question “if it so chooses.” More...