The Software IP Report

Is a Patent Infringed by Activation of Software Abroad from a System in the U.S.?

In a discovery context, at least, one should assume that a U.S.-based system that activates software sold abroad can infringe a U.S. patent.  Prism Technologies v. Adobe Systems Inc., No. 8:10CV220 (D. Neb. July 17, 2012).  Prism sought financial data and activation data “pertaining to Symantec’s use of its U.S.-based software activation system to activate software sold abroad.”  The court granted Prism’s motion to compel Symantec’s responses to its interrogatories.

Prism did not contend that Symantec’s customers outside the United States “used” Symantec’s software within the meaning of the patent statute.  Instead, Prism averred an intent to argue at trial that “Symantec makes its own use of the infringing system for its own benefit” and “directly infringes by controlling and operating its activation system to its own advantage, namely anti-piracy and license enforcement benefits.”  On this basis, Prism contended it was entitled to the discovery it sought.

According to Prism, these circumstances were addressed by Uniloc USA, Inc. v. Microsoft Corp., 632 F. Supp. 2d 147 (D.R.I. 2009) (“Uniloc I“).  Relying on NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005), the Uniloc I court stated that “a claim of infringement is only actionable (and inclusion of foreign licenses in the damages calculation proper) if the United States 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 is obtained.’”  Thus, it was not necessary for all parts of an accused system to be in the United States for there to be infringement.

Symantec relied on Centillion Data Sys., LLC v. Qwest Communic’ns Int’l, Inc., 631 F.3d 1279 (Fed. Cir. 2011), which was decided after Uniloc I and held “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.”  Prism distinguished Centillion by arguing that the system claim at issue was “about ‘controlling access to protected computer resources,’ which Symantec does for its own benefit, without regard for customer demand.”

The court found reasonable Prism’s argument “that the computer resources to be protected belong to Symantec, not Symantec’s customers, such that it would be Symantec who would ‘use’ the system for protection.”  Further, in a subsequent iteration of the Uniloc case, Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011), reh’g denied (Mar. 22, 2011), the Federal Circuit rejected Microsoft’s argument that “Uniloc failed to prove direct infringement because Microsoft did not supply or use the end-users’ computers that implemented the local licensee unique ID generating means and mode switching means.”  Instead, “the Federal Circuit stated ‘[t]hat other parties are necessary to complete the environment in which the claimed element functions does not necessarily divide the infringement between the necessary parties.’”

Although the court could not say, at this point in the litigation, whether “Prism’s theory of Symantec’s “use” of the accused system will succeed,” the court did find “that Prism’s discovery requests are relevant to its infringement claim involving Symantec’s accused use of its system, even when one component of the system is physically located outside of the United States.”