The court’s ruling potentially expands the possible circumstances where the standard could be met.
In Travel Sentry v. Tropp, the US Court of Appeals for the Federal Circuit expanded the scope of direct infringement under divided infringement. It vacated a district court summary judgment of no infringement after the district court misapplied the court’s Akamai V’s framework for divided infringement. See generally Akamai Techs, Inc. v. Limelight Networks, Inc. (Akamai V), 797 F.3d 1020 (Fed. Cir. 2015) (en banc).
Tropp Technologies, Inc. (Tropp) patented a luggage inspecting system, claiming methods of improving airline luggage inspection by using a lock that permits the Transportation Security Administration (TSA) to use master keys to unlock and relock bags previously locked by passengers. The method claims require supplying a special lock and a luggage screening entity using a master key. In this case, Travel Sentry provides the locks and master keys and the TSA screens the luggage using the master key. Travel Sentry also trains TSA personnel to identify the locks during screening. Further, the parties have a memorandum of understanding on TSA’s handling of the locks.
Typically, a single entity or actor must practice every step of a method claim. Therefore, Tropp argued that it could not induce infringement because the method steps were divided between two actors. However, that “[d]irect infringement under § 271(a) occurs where all steps of a claimed method are performed by or attributable to a single entity,” and held that an entity is responsible for others’ performance of method steps where that entity directs or controls others’ performance or where the actors form a joint enterprise. Akamai V, 797 F.3d at 1022. The Federal Circuit previously rejected the argument that an actor can only condition the performance of a step by imposing a legal obligation to do so, by interposing that step as an unavoidable technological prerequisite to participation, or, as in Akamai V, both. As long as the third party must perform the patented steps to receive benefits, its actions may be attributed to the accused infringer.
Although the district court found that Travel Sentry facilitates TSA’s activity by supplying master locks and instructions, it found that this involvement failed to satisfy the mastermind or joint enterprise requirements under Akamai V. It accordingly granted Travel Sentry’s motion for summary judgment of no direct infringement, finding that “there is simply no evidence that Travel Sentry had any influence whatsoever on…the method carried out by the TSA…” It also determined that the TSA faces no consequences by not taking direction from Travel Sentry, so TSA’s compliance with instructions was voluntary and could not be attributed to Travel Sentry.
The Federal Circuit reversed, holding that the district court misapplied Akamai V’s framework for evaluating whether Travel Sentry directed or controlled TSA’s performance. According to the court, infringement may be found 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.” The court emphasized the importance of identifying the relevant “activity,” the types of “benefits,” and what is required for one to “condition” a third party’s participation in an activity.
Although the partnership-like relationship between Travel Sentry and TSA differs in several respects from the service provider-customer and physician-patient relationships in Akamai V . . ., a common thread connects all three cases: evidence that a third party hoping to obtain access to certain benefits can only do so if it performs certain steps identified by the defendant, and does so under the terms prescribed by the defendant. The district court, however, did not make this connection.
The Federal Circuit found that a “reasonable jury could conclude that TSA’s performance of the final two claim steps is attributable to Travel Sentry such that Travel Sentry is liable for direct infringement.” In this case, a reasonable jury could find that the cooperation between TSA and Travel Sentry and a memorandum of understanding attributes TSA’s activities to Travel Sentry. Specifically, TSA derived a benefit from using Travel Sentry’s luggage system, this benefit was conditioned upon the TSA’s performance of the patented method, and the memorandum of understanding established the manner or timing of the performance by the TSA.
The issue of divided infringement has been heavily litigated for the last five years at the US Supreme Court and the Federal Circuit. The Federal Circuit panel’s decision in this case endorses a more flexible approach to the question of divided infringement and expands the possible circumstances where Akamai V’s standard could be met.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact the authors, Sanjay K. Murthy, Michael J. Abernathy, and Caroline S. Lourgos, in our Chicago office, or any of the following lawyers from Morgan Lewis’s IP disputes team:
David W. Marston Jr.