Whose Use Is It Anyway?

Posted on | January 11, 2010 | 1 Comment

2010-1110, 1131 Centillion Data v Qwest
SD/IN 04-cv-0073
Judge Larry McKinney

Both sides appeal from the summary judgment order of Judge Larry McKinney finding that Centillon's patent 5,287,270 is not invalid but is also not infringed.  The '270 patent is directed to billing systems that may be utilized by a service customer to manipulate usage and cost information from a service provider, such as a credit card or telecommunications company.  The accused Qwest systems include its Logic, eBill Companion, and Insite products.

The asserted claims were written to cover systems with a central storage and processing component and a local, personal computer component.  In reality, different entities or users would control and operate the two components-a fact that saved the claims from invalidity but also precluded a finding of direct infringement against Qwest. 

Infringement:  Because different entities controlled the two components, no single entity practiced each element of the claims.  Thus, whether Qwest was a direct infringer turned on whether the actions of a third party were imputed or attributed to it.

The court began by analyzing the meaning of the term "use" under
§ 271(a).  Analyzing the Federal Circuit's decisions in NTP v. RIM, 418 F.3d 1282 (Fed. Cir. 2005), Cross Medical Products v Medtronic, 424 F.3d 1293 (Fed. Cir. 2005) and BMC Resources v. Paymenttech, 498 F.3d 1373 (Fed. Cir. 2008) (Order, pp. 17-24), the court concluded that the Federal Circuit had defined "use" broadly and allowed direct infringement even where some elements are practiced by a third party:

Therefore, the Court concludes that under BMC, CMP and NPT, a party is liable for direct infringement for the “use” of a system claim under § 271(a) if it, by itself or in combination with a third party directed by it, put each and every element of the system claim into service, i.e. exercised control over, and benefited from, the application of each and every element of the system claim. BMC, 498 F.3d at 1378-81; CMP, 424 F.3d at 1311; NTP, 418 F.3d at 1316-17.

Order, p. 24.  Unfortunately for Centillion, the court then concluded that there was no evidence that Qwest so directed its customers:

Centillion must demonstrate a genuine issue of material fact as to whether Qwest sufficiently “directed” its customers to “adapt [their personal computers] to perform additional processing on said individual transaction records.” ‘270 Patent, col. 31, ll. 67-68, col. 32, ll. 59-60. However, Centillion cannot meet this burden. Centillion admits Qwest’s customers are not obligated or contractually bound to perform additional processing on individual transaction records provided by Qwest. Rather, Qwest’s customers independently determine whether or not to perform additional processing on individual transaction records by Qwest. Moreover, Qwest does not control whether its customers load the Logic or eBill Companion client applications on their personal computers. Therefore, the Court concludes that Centillion has failed to raise genuine issues of material fact regarding whether Qwest directly infringed independent claims 1 and 8, and dependent claims 10 and 46.

Order p. 33.

Validity: Qwest pointed to an earlier billing system from NYNEX, called COBRA/TRACE, as invalidating the asserted claims under § 102(a) or (b).  The issue boiled down to whether the COBRA/TRACE system "allowed NYNEX’s customers to select, or make specific, the character of the collection of analyzed and/or reorganized data the customers received from NYNEX as subscribers of COBRA/TRACE."  Order, p. 26.

The court found no evidence that it did.  Interestingly, while NYNEX created a video that appeared to describe just such a capability, the court found that it merely showed only that NYNEX "may have anticipated allowing customers" to make such a selection, there was no evidence that any "NYNEX customers actually" did so.

[The court also mentions that there was no evidence that the video was ever shown to customers.  Perhaps this is why there is no suggestion that the COBRA/TRACE system coupled with the video invalidated the claims under § 103.]

2010-1110 Order re SJ

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