Federal Circuit addresses direct/contributory patent infringement liability for software

The Federal Circuit recently issued an opinion that refines certain standards for patent infringement.  In particular, the decision in Ricoh Company, Ltd. v Quanta Computer Inc., may limit the situations under which software can directly infringe a patented method, while increasing potential liability for contributory infringement for sellers of products containing infringing components. 

Software and Method Claims:  In the case, Ricoh sued QCI and others for infringement of several patents.  Two of the patents included method claims covering methods of operating computer disc drives.  Ricoh asserted that QCI directly infringed the method claims by selling software that caused the drives to perform the patented methods.  As the software itself did not perform the patented method, the Court disagreed, stating that:

software is not itself a sequence of actions, but rather is a set of instructions that directs hardware to perform a sequence of actions. . .. [W]e hold that a party that sells or offers to sell software containing instructions to perform a patented method does not infringe the patent under §271(a). 

Component Parts and Contributory Infringement:  Section 271(c) of the Patent Act states that the sale of a component that is made or adapted for infringement and that is “not a staple article or commodity of commerce suitable for substantial noninfringing use” may be liable as a contributory infringer.  In the case, Ricoh also asserted that QCI sold disc drives containing software modules that caused the hardware to perform the patented methods.  Although the hardware could perform many methods and thus was capable of substantial noninfringing uses, Ricoh asserted that the separate software modules were used only to perform the allegedly infringing write methods.   The Court looked to past Supreme Court decisions such as Sony Corporation of America v. Universal City Studios and Metro-Goldwyn-Mayer Studios v. Grokster, Ltd. and stated:

it is entirely appropriate to presume that one who sells a product containing a component that has no substantial noninfringing use in that product does so with the intent that the component will be used to infringe.  We are unable to read Grokster as suggesting that Congress intended § 271(c) to eliminate this presumption in such cases where an infringing component is bundled together with something else.

Lessons Learned:  The holdings of the case contain lessons for both patent applicants and product sellers who: 

  • First, parties preparing or enforcing patents for software-related inventions may wish to consider Beauregard-type claims directed to computer program products to bring software sellers into the scope of the patent.  
  • Second, sellers of assembled products should seek adequate warranties and indemnities for patent infringement in their agreements with component part suppliers.

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