Bottom line: The claims of a patent should, if possible, be specifically and separately directed to each one of several entities within a distribution chain such as the end user, supplier, component supplier or manufacturer so that each of these entities can be held liable for direct patent infringement. This may be difficult and not possible to accomplish but it should be a goal during patent prosecution.
The reason for such claim strategy is illustrated by the holding in JVC v. Nero (Fed. Cir. 2015) which limits a patent owner’s ability to collect damages from an entity within the distribution chain, for indirect patent infringement. Hence, separate independent claims should be directed to each one of the different entities within the distribution chain so that each entity within the distribution chain can be separately held liable for direct patent infringement.
Under JVC and speaking in broad terms, a patent owner cannot sue an entity for indirect infringement for providing a key, non-staple component of a patented product or for inducing the infringement of another if that other person is a licensee of the patent owner. More specifically, the Federal Circuit affirmed the District Court’s decision to grant summary judgment of non-infringement for Nero who provided software to copy media on Blu-ray and DVD licensed discs. Simply put, JVC could not license its patents to disc manufacturers then turn around and sue others for providing software for use with the licensed discs. The reason stated by the court is that indirect patent infringement requires identification of a direct infringer. Licensees are not direct infringers. Hence, no indirect patent infringement.
Indirect infringement comes in two different causes of actions, namely, contributory patent infringement or inducement of patent infringement. In both actions, the defendant being sued for indirect infringement has not practiced the patent but has provided either a key component to another to practice the patent or by its actions has induced another to practice the patent.
In JVC, JVC held a number of pioneering patents related to the operation and use of DVD and Blu-ray players as well as their optical discs. JVC licensed these pioneering patents to all device manufacturers and optical disc manufacturers, and thus these patents became a part of the standard for DVD and Blue-ray devices and related optical discs.
Nero provided unlicensed software to end-users so that the DVD and Blu-ray players could be used to copy media onto licensed optical discs. JVC in turn sued Nero for indirect infringement. JVC alleged that the end users of the Blu-ray and DVD discs when using the Nero software necessarily practiced the claims of the patents by virtue of compliance of the DVD and Blu-ray discs to existing standards which comply with the JVC pioneering patents.
In other words, JVC stressed that:
“its theory of infringement is that end-users of Nero’s software, when used with DVD and Blu-ray disc, comply with the DVD and Blu-ray standards to which the JVC patents are essential, whereby the end-users ‘must necessarily’ infringe the patents.”
In response, the District Court observed that:
“licensees cannot be infringers.” “Without specific allegations and evidence showing use of unlicensed optical discs [with the software], Nero has established a complete defense to all of JVC’s allegations of infringement under their patents.”
For this reason, where practical, it is preferred that the claims not be drafted to capture a potential defendant as an indirect infringer and instead that separate independent claims be drafted, each claim directed to one of the potential entities within a distribution model or technology ecosystem. However, this goal may be difficult to obtain based on a variety of factors such as whether a method or apparatus claim is being sought, what the examiner will allow, whether there is basis in the patent application for a claim directed to each of the entities up-and-down a distribution chain or within a technology ecosystem and whether the inventor can bear the costs associated with drafting and prosecuting the claims.
I invite you to contact me with your patent questions at (949) 716-8178. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.