The Software IP Report

MOU Overcomes Divided Patent Infringement

By Peter Keros

Categories: Patent Infringement, The Software IP Report

How do you find a direct infringer when no one party performs all steps of a method? In Travel Sentry, Inc. v. David A. Tropp, No. 2017-1025 (Fed. Cir. Dec. 19, 2017)(precedential) (Lourie, O’Malley, and Taranto presiding), the Federal Circuit held that a memorandum of understanding from a producer directing a consumer to perform steps of a patented method renders the producer liable for direct infringement.

David A. Tropp owns U.S. Patent Nos. 7,021,537 and 7,036,728 directed to methods of producing and selling luggage locks compliant with Transportation Security Administration (TSA) screening and inspection procedures. Travel Sentry and TSA entered into a memorandum of understanding (MOU) in which Travel Sentry would provide TSA with keys and instructions to unlock Travel Sentry locks, which included performing steps of the patented methods. The district court granted summary judgment to Travel Sentry, holding that the MOU was insufficient to establish Travel Sentry as a direct infringer. The Federal Circuit reviewed de novo and vacated the district court’s judgment, remanding for further proceedings.

For divided patent infringement under 35 U.S.C. § 271(b), a patent owner must show that a single party has directly infringed the patented claims under 35 U.S.C. § 271(a). Akamai Techs., Inc. v. Limelight Networks, Inc., 797 F.3d 1020, 1022 (Fed. Cir. 2015) (en banc) (citing Limelight Networks, Inc. v. Akamai Techs., Inc., 134 S.Ct. 2111, 2119-20 (2014)). When no single party performs all steps of a patented method, direct infringement under § 271(a) still occurs where performance of all steps of a claimed method is attributable to a single party. This attribution occurs when the party (1) conditions participation in an activity, or receipt of a benefit upon performance of a step or steps of a patented method, and (2) establishes the manner or timing of that performance. If TSA’s actions under the MOU were attributable to Travel Sentry, then Travel Sentry is a direct infringer of Tropp’s patents.

For the first prong, the Court held that a reasonable juror could conclude that the keys provided by Travel Sentry and the instructions in the MOU provided the benefit of allowing TSA to identify Travel Sentry luggage for screening and to screen the luggage without breaking the lock. The benefit could only be attained by TSA performing steps of the claimed method. For the second prong, the Court held that a reasonable juror could find that TSA’s benefits stem directly from use of Travel Sentry’s passkeys and locks pursuant to the MOU in performing the claimed steps. In the context of this MOU and the relationship between the parties, the Court attributed TSA’s performance of the claimed steps to Travel Sentry.

Lessons for Practice

In previous posts, we noted that divided infringement might be easier to prove in a post-Akamai world if the Federal Circuit expands the scope of what qualifies as a direct infringer, potentially obviating the direct infringement requirement for divided infringement. In Tropp, we see that the Federal Circuit has indeed relied on an expanded conception of direct infringement to find Travel Sentry a direct infringer where is provided the MOU directing TSA to perform steps of the patented method.