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Court of Appeals Upholds Summary Judgment on Grounds of Divided Patent Infringement
- 4/28/2011

On April 12, 2011, the Court of Appeals for the Federal Circuit ("CAFC") issued its Decision in McKesson Technologies, Inc. v. Epic Systems Corporations.  The case regards a charge of patent infringement even though no single entity performed all of the steps in the claimed method.  The CAFC upheld summary judgment on the grounds of divided infringement.  

Epic is a licensor of software called “MyChart,” which was accused of infringing McKesson’s patent.  The licensees are healthcare providers who offer the software as an option to their patients.  If a patient wishes to use the software, the patient must initiate a communication with the MyChart web page.  The asserted patent claims require a party to initiate a communication, which in this case is performed by the patients and not the licensed healthcare providers.

At trial, Epic argued that McKesson failed to demonstrate that any single party directly infringes because the healthcare providers do not perform or exercise control or direction over the step of initiating a communication.  The district court agreed and granted Epic's motion for summary judgment.

The only issue on appeal was whether the healthcare providers directly infringe though their patients’ acts of initiation of communication..  The CAFC cited to Akamai v. Limelight, which held that patented steps performed by two or more parties can infringe “only if one party exercises ‘control or direction’ over the entire process such that every step is attributable to the controlling party.”  In Akamai, Limelight did not control or require its customers to perform the steps of the claimed method and the Federal Circuit decided in that case that there was no infringement.

In McKesson, the court found no agency or contractual obligation between the healthcare providers and the patients, and upheld the district court’s determination of non-infringement.  The doctor-patient relationship, by itself, was insufficient to be characterized as an agency relationship or as forming a contractual obligation to perform the missing step.  The MyChart users “acted principally for their own benefit and under their own control.”   There was no contractual obligation to perform the remaining step of McKesson’s patent, that is to initiate communication, and thus there was no joint infringement.

In McKesson, Circuit Judge Bryson concurred with the majority on the grounds that the CAFC was following its own precedent, but questioned whether the decisions it was following were correct.  
Accordingly, on April 20, 2011 the CAFC has since ordered an en banc rehearing of Akamai, and will address the issue of what circumstances lead to direct infringement when separate entites perform separate steps of a method claim.  The CAFC will also consider relative degrees of liability under such circumstances.  Oral argument in the case had not yet been scheduled, although amicus briefs are now being accepted.
We will monitor developments in this important case and will report updates on the Ostrolenk Faber website and Facebook pages.   
Click here for a copy of the CAFC order for rehearing en banc.