Medgraph v. Medtronic (Fed. Cir. 2016)
Medgraph’s claims are directed to a set of methods “for improving and facilitating diagnosis and treatment of patients.” See U.S. Patent 5,974,124 and U.S. Patent 6,122,351. The problem is that the claims require actions by both the computer system and also a patient/doctor. This claim structure directly runs headlong into traditional requirement for direct infringement of a patent – that all steps of the claim be performed-by or attributable-to a single entity.
In its 2015 decision, the district court ruled that Medtronic could not be liable for infringement because there was no “showing that Medtronic itself directly infringed the method claims or that it acted as a ‘mastermind’ by controlling or directing anyone else’s direct infringement.” Citing Akamai Techs., Inc v. Limelight Networks, Inc., 786 F.3d 899 (Fed. Cir. 2015) (decision on remand from SCT).
Following the district court’s decision in this case, the Federal Circuit issued a per curiam en banc decision broadening the scope of potential attribution. Akamai Techs., Inc. v. Limelight Networks, Inc., 797 F.3d 1020 (Fed. Cir. 2015). In this most recent en banc decision, the court held that the “single entity” theory of direct infringement can also be extended “when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.”
On appeal here, Medgraph argued for remand to allow the district court to consider infringement under this broader theory. However, the Federal Circuit rejected that suggestion. The court held instead that Medgraph’s case fails on any and all theories of direct infringement because Medgraph failed to produce evidence that the missing steps were actually performed by the patient and doctor. In addition, Medgraph failed to identify evidence fitting within the new broader attribution guidelines.
“The district court also correctly concluded that Medtronic was not liable under a theory of indirect infringement, because indirect infringement is predicated on direct infringement. That rule was also unaffected by Akamai V, so the outcome would, again, not change if we were to vacate and remand. ”
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I was curious how the patentee here thought it might win without proving infringement of each element. In its reply brief, Medgraph explained that (1) Medtronic instructed users to practice the claim steps; and (2) Medtronic ‘admits’ that about 20% of patients used the system in an infringing manner. This admission came from Medtronic’s appeal brief that stated “the record shows that approximately 80 percent of customers in fact use the system in this non-infringing way.” This evidence coupled with its expert testimony are, according to Medgraph, enough to prove infringement. See Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317 (Fed. Cir. 2009) (circumstantial evidence sufficient); Moleculon Research Corp. v. CBS, Inc., 793 F.2d 1261, 1272 (Fed. Cir. 1986) (“[c]ircumstantial evidence is not only sufficient, but may also be more certain, satisfying and persuasive than direct evidence.”).
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Although the Federal Circuit’s most recent Akamai decision loosened the knot a bit on the strict single-entity requirement, it remains a tough requirement. Here, for instance, it does not appear to be enough that an accused infringer instructed its customers on how to use its system in a way that infringes. Rather, liability under Akamai will only be created if the alleged infringer requires that those steps be followed or receives some benefit upon their performance.