Infringement of A Single Claim by Multipe Parties Requires That the Parties be Related or Under Common Control

BMC Resources, Inc. v. Pamentech, L.P., [2006-1503](September 20, 2007)[RADER, Gajarsa, Prost] The Federal Circuit affirmed the determination of non-infringement because the record contains no basis to hold Paymentech vicariously responsible for the actions of the unrelated parties who carried out the other steps of the claimed method.
SIGNIFICANCE: In one party does not perform all of the steps of a claimed method, it does not infringe the patent.
BRIEF: BMC is the assignee of U.S. Patent Nos. 5,718,298 and 5,870,456 on a method for processing debit transactions without a personal identification number. BMC claimed Paymentech was infringing these patents, but Paymentech denied infringement, arguing that it did not perform all of the steps of the patented method by itself or in coordination with its customers and financial institutions. The Federal Circuit characterized the case as presenting the issue of the proper standard for joint infringement by multiple parties of a single claim. Direct infringement requires a party to perform or use each and every step or element of a claimed method or product.
When a defendant participates in or encourages infringement but does not directly infringe a patent, the normal recourse under the law is for the court to apply the standards for liability under indirect infringement. Indirect infringement requires, as a predicate, a finding that some party amongst the accused actors has committed the entire act of direct infringement. These rules for vicarious liability might seem to provide a loophole for a party to escape infringement by having a third party carry out one or more of the claimed steps on its behalf. To the contrary, the law imposes vicarious liability on a party for the acts of another in circumstances showing that the liable party controlled the conduct of the acting party. In the context of patent infringement, a defendant cannot thus avoid liability for direct infringement by having someone else carry out one or more of the claimed steps on its behalf. It would be unfair indeed for the mastermind in such situations to escape liability. District courts in those cases have held a party liable for infringement. The Federal Circuit acknowledges that the standard requiring control or direction for a finding of joint infringement may in some circumstances allow parties to enter into arms-length agreements to avoid infringement. Nonetheless, this concern does not outweigh concerns over expanding the rules governing direct infringement.
Direct infringement is a strict-liability offense, but it is limited to those who practice each and every element of the claimed invention. By contrast, indirect liability requires evidence of “specific intent” to induce infringement. Another form of indirect infringement, contributory infringement under § 271(c), also requires a mens rea (knowledge) and is limited to sales of components or materials without substantial noninfringing uses.
The Federal Circuit observed that the problem could be avoided by better claim drafting:
"The concerns over a party avoiding infringement by arms-length cooperation can usually be offset by proper claim drafting. A patentee can usually structure a claim to capture infringement by a single party."