In Ricoh Company, Ltd. v. Quanta Computer, Inc., 2007-1567, (Fed. Cir. 2008), Quanta sold computer drives having various components. For the purposes of this case, one of those components was specially designed to infringe Ricoh’s patent. Although the computer drive itself did not directly infringe the Ricoh patent, Ricoh contends that Quanta should be held liable under a theory of contributory patent infringement in that Quanta is assisting others to directly infringe the Ricoh patent by providing the specially designed component. (35 USC Section 271(c)).
This case dealt with the issue of whether liability for contributory liability should be viewed with respect to the computer drive (i.e., system level) in which case Quanta would not be liable for contributory patent infringement or at the component level in which case Quanta would be liable for contributory patent infringement.
The Court held that viewing liability for contributory patent infringement at the system level would allow any competitor to merely add different parts having non-infringing uses to a component specifically designed to infringe a patent to avoid liability for contributory infringement. For this and other reasons, the Court held that liability for contributory infringement can be found at the component level.
For a brief explanation between direct and indirect infringement, read Avoiding Patent Infringement.