No Patent Infringement Because No Direct Infringers Use Authenticating Device to Generate Report

The Court of Appeals for the Federal Circuit agreed with the trial court that there was no evidence of “use” by a single person or entity and therefore no direct infringement because no direct infringers “used” the claimed “authenticating device configured to . . . generate a delivery report.” Intellectual Ventures I LLC v. Motorola Mobility LLC, Case No. 2016-1785 (Fed. Cir. Sept. 13, 2017) (Available Here).

Intellectual Ventures (“IV”) sued Motorola for patent infringement over a network computer system for transferring files. The patent is titled “File Transfer System for Direct Transfer Between Computers” and broadly “relates to transferring computer files electronically from one location to another, and more particularly to electronic transfer of computer files directly between two or more computers or computing devices.” The Parties agreed that claim 41 of the ’144 patent was a system claim. Claim 41 was at issue.

“Claims 41: A communications device, comprising: [1] a processor; and [2] a memory that stores at least one program usable to control the communications device, [3] wherein the communications device is configured to: [a] display a collection of file identifiers, wherein each file identifier represents a selectable file; [b] receive a user selection of at least one file identifier representing a file selected to be transferred to a second device; [c] display a collection of destinations identifiers, wherein each destination identifier represents a remote device having a numbered destination address on a circuit switched or packet switched network; [d] receive a user selection of at least one destination identifier as selection of the second device; [e] display a data entry field in which a text message can be entered; [f] receiving the text message; [g] encapsulate the text message with the selected file into a single combined file; [h] generate a unique transaction identifier that identifies a transfer of the single combined file; and [i] send the single combined file to the second device at its numbered destination address, [j] the second device being configured to: [k] receive the single combined file irrespective of user action at the second device; [l] generate a delivery confirmation message confirming reception of the single combined file; [m] transmit to an authenticating device of the communications network, the delivery confirmation message; [n] provide an alert indicating reception of the single combined file; [o] display an identification of the communications device in relation to at least one of the selected file or the associated text file, [p] wherein the identification includes at least one of a communications address of the communications device, a name of the communications device, or a username associated with the communications device; and [q] display at least a portion of content of the selected file or the text message, [r] wherein the authenticating device is configured to: [s] generate a delivery report that indicates a delivery event and a time of the delivery event.”

Motorola argued that the district court erred in denying judgment as a matter of law that claim 41 of the ’144 patent is invalid for lack of written description. Whether a patent claim is adequately supported by the written description under 35 U.S.C. § 112 is a question of fact reviewed for substantial evidence following a jury trial. See, e.g., Ariad Pharms., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1355 (Fed. Cir. 2010) (en banc).

Motorola contends that the specification of the ’144 patent excludes “long-term” or “permanent” storage of the data being transmitted on an intervening computing device. The words “long-term” and “permanent” do not appear in the ’144 patent.

“Instead, the specification of the ’144 patent describes that ‘electronic transfer mechanisms’ over ‘interconnected networks of computers and telecommunications equipment . . . generally employ intermediary computers in the form of e-mail servers, FTP servers, or Web servers.’ The specification further explains that ‘[t]hese intermediary computers’ come with several drawbacks because they: (1) ‘reduce the relative security and timeliness of the transfers effected because neither the sender nor the recipient controls the intermediary server’; (2) ‘require significant administration and usually require login procedures and passwords in an attempt to overcome security issues, albeit at the expense of user convenience and system complexity’; and (3) ‘represent concentrated points of possible failure, as well as communication ‘bottlenecks’ that set capacity limits for the collective number and size of files transferred.’”

“To overcome these drawbacks, the invention of the ’144 patent is a ‘file transfer system’ that ‘enables direct transfer of electronic files between . . . interconnected [personal computers] . . . and without intermediate storage of files on an intervening computer.’”

Per the Federal Circuit, the district court correctly ruled that under the proper claim construction, “claim 41 does not cover file transfers that involve long-term or permanent storage.” The relevant limitations of claim 41 recite “send[ing] the single combined file to the second device” and “receiv[ing] the single combined file . . . at the second device.”

The Parties treated claim 41 as a system claim with limitations “directed to a ‘communications device,’ a ‘second device,’ and an ‘authenticating device configured to . . . generate a delivery report.’” At trial, IV argued that Motorola’s customers directly infringed claim 41 by using the accused system to send text-plus-photo messages using a Multimedia Messaging Service (‘MMS’), and that Motorola itself directly infringed claim 41 by testing the accused phones’ MMS functionality. As evidence, IV presented consumer surveys showing that Motorola’s customers sent MMS messages using the accused phones, and numerous compliance and testing documents from Motorola demonstrating that sending and receiving of MMS messages was tested on the various carrier net-works. Under these theories, when accused Motorola phones were used to send and receive text-plus photo MMS messages, the devices met the limitations of the ‘communications device’ and the ‘second device’ of the asserted claim.

Motorola contends on appeal that IV failed to offer evidence of a directly infringing ‘use’ of the claimed system because none of the accused direct infringers “used” the “authenticating device configured to . . . generate a delivery report.” Claim 41 provides: “wherein the authenticating device is configured to: generate a delivery report that indicates a delivery event and a time of the delivery event.”

The Federal Circuit reviewed case law regarding patent claims wherein a device is “configured” to do some functions. “We first address the applicable standard under Centillion Data Systems, LLC v. Qwest Communications International, Inc., 631 F.3d 1279 (Fed. Cir. 2011). Claim 41 is written to claim a ‘device configured’ to perform certain operations, some of which involve communications with other devices having certain functionality.”

“In NTP, Inc. v. Research in Motion, Ltd., in addressing the question of ‘where’ an infringing use of a claimed system occurs, we held that ‘[t]he use of a claimed system under section 271(a) is the place at which the system as a whole is put into service, i.e., the place where control of the system is exercised and beneficial use of the system obtained.’ 418 F.3d 1282, 1317 (Fed. Cir. 2005).”

“We concluded that ‘to ‘use’ a system for purposes of infringement, a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it.’ Id. at 1284. Thus, under NTP and Centillion, to prove an infringing ‘use’ of a system under § 271(a), a patentee must demonstrate ‘use’—that is, ‘control’ and ‘benefit’—of the claimed system by an accused direct infringer.”

“NTP and Centillion both found control of and benefit from every element on their particular facts. In NTP, customers of the accused infringer, by exchanging messages over the allegedly infringing system, controlled and benefitted from the claim-required relay equipment at issue, which was part of what made the message exchanges work. See NTP, 418 F.3d at 1317. In Centillion, the customers found to be direct infringers controlled and benefitted from back-end processing equipment over which they exercised no physical control by requesting service and requesting particular reports, and because their requests produced response from the back-end equipment on a ‘one request/one response basis. Centillion, 631 F.3d at 1285–86.”

“Under Centillion, the critical question here is whether there was substantial evidence that Motorola’s customers obtained a ‘benefit’ from the generation of delivery reports. … In the ’144 patent, the only benefits identified as flowing from the delivery reports rest on the sending device’s ability to receive or retrieve the delivery reports from the third-party authenticating device.”

The Federal Circuit also found that attorneys arguments, unsupported by evidence, should not be relied upon. “In the record below and at oral argument in this court, IV’s counsel asserted two additional theories for how Motorola’s customers indirectly benefitted from delivery reports generated by the MMSCs. First, IV’s counsel told the jury in opening argument that the delivery reports were used by the carriers to bill customers for sending MMS messages. See J.A. 578 (‘That device, the [authentication] device, validates the delivery of the messages and can be used for billing.’). Second, IV’s counsel told this court at oral argument that the delivery reports could be used as an antifraud measure. See Oral Argument at 24:01, Intellectual Ventures I LLC v. Motorola Mobility LLC, No. 16-1795 (Fed. Cir. Mar. 7, 2017). But IV has not pointed to any trial evidence relying on either theory as a basis for inferring a customer benefit, and the specification of the ’144 patent provides no suggestion that the delivery reports are used in these manners. Thus, these theories of indirect benefit amount to mere speculation or attorney argument and do not provide substantial evidence supporting the jury’s verdict of direct infringement.”

The Appeals Court found that patent owner IV failed to present substantial evidence that the parties accused of direct infringement in this case benefitted from the limitation of ‘generat[ing] a delivery report’ of the claimed system.

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