Holistic Medicine - For Patents

January 26, 2009

We all like certainty - especially in the patent law.  But Ricoh Co. Ltd. v. Quanta Computer Inc. offers anything but bright lines in discussing § 271(b) inducement and § 271(c) contributory infringement claims. In a divided decision, the Court instructs us that the totality and context of relevant circumstances is the touchstone with respect to indirect infringement. 

In Ricoh, the district court concluded that no contributory infringement had occurred because the optical disk drives sold by Quanta could be used to read discs in a non-infringing manner, even though the process for writing to the disc was infringing.  But the Federal Circuit disagreed because contributory infringement applies not only to the sale of an  individual infringing component but also to the sale of infringing components that are part of a larger downstream device.  To hold otherwise would allow infringers to unfairly escape liability by using an infringing component in a larger product containing some additional, separable - but non-infringing - feature or capability.

On induced infringement, the Court was again pragmatic, if not holistic.  The district court had rejected any claim of induced infringement by relying in large part on the fact that there was no evidence of any communication between the defendant and the direct alleged infringer.  But the Federal Circuit said that intent to induce infringement can be inferred from circumstantial evidence - including defendant's knowledge of the patent and its control over the design or manufacturing of the product used for direct infringement to infer the requisite specific intent. Here, Ricoh showed that Quanta knew of the relevant patents, designed a similar separate write-only drive system and then made presentations to customers that touted the advantages of those drives.

Our prognosis?   It's about risks - not bright lines.  Litigants need to deal with the concept that the more the product seems to have a distinct component whose sole use is in practicing some portion of the patent, the more likely there will be contributory infringement.  And the more substantial the record that development of an accused product occurred outside a clean room, the more likely there will be legitimate inferences of intent to induce infringement.  Our prescription?  Read Ricoh and call us in the morning.