This article is co-authored by Phelan Simpkins, counsel for State Farm who oversees emerging technology licenses, among other key areas for the company. Phelan is speaking in his individual capacity. The views expressed herein do not necessarily reflect the view and position of State Farm.
PatentNext Takeaway: This post discusses the issues of divided infringement in U.S. patent law, specifically focusing on software-based patent claims. Divided infringement occurs when multiple parties collectively perform all the steps of a patent claim, but no single party carries out every element. This is particularly problematic for software patents, where actions can be split between different entities. This post reviews key case law, such as Akamai Techs. v. Limelight Networks and Travel Sentry v. Tropp, which illustrate scenarios where divided infringement disputes arise. The post emphasizes that patent drafters should focus on drafting claims that assign all essential steps or components of a system to a single entity to avoid costly litigation. This strategy helps ensure enforceability and minimizes the complexities of proving infringement when multiple actors are involved. This post concludes with best practices for drafting patent claims, encouraging practitioners to structure claims in ways that simplify enforcement and reduce reliance on third-party actions.
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I. Introduction
Divided infringement, also known as “joint” or “split” infringement, refers to a scenario in U.S. patent law where multiple parties collectively practice all the elements of a patent claim, but where no single party performs every claim. This issue arises particularly with method or process patents, where such claims require multiple actions that can be split among different entities.
From the perspective of a patent owner, divided infringement is undesirable because it can create an additional litigation burden. Such burden typically comes from the need to accuse two or more parties of infringing the patent and further from a more substantial evidentiary burden requiring proof of divided infringement (also known as “joint infringement”) by the two parties, which typically results in increased discovery and other litigation-related expenses.
This article explores case law related to divided infringement and provides best practices from a patentee’s perspective for drafting patent claims to avoid divided infringement in the first place.
II. Divided Infringement and Direct Infringement
This article explores divided infringement pursuant to direct infringement under 35 U.S.C. § 271(a):
Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.
35 USC § 271(a).
Section 271(a) pertains to direct infringement, which is a strict liability tort. For example, a party that “makes” or “uses” a device or method covered by a patent claim infringes that patent claim without requiring proof that the party had “knowledge” of the given patent.
When considered under a theory of divided infringement, the question of direct infringement becomes: “When can a single party directly infringe a patent even though the single party does not practice all elements of a given patent claim, and instead the claim elements are jointly infringed by the single party and a third party”?
The sections below address this question by providing a case law review illustrating examples of divided infringement disputes that can arise from poorly drafted patent claims. The final section describes claim drafting techniques to prepare claims to prevent divided infringement.
III. Divided Infringement Case Law Review for Method Claims
The Federal Circuit has addressed divided infringement based on different claim types. This section addresses the method claim considerations.
With respect to method claims, the Federal Circuit has held that “[d]irect infringement under § 271(a) occurs where all steps of a claimed method are performed by or attributable to a single entity.” Akamai Techs., Inc. v. Limelight Networks, Inc., 797 F.3d 1020, 1022 (Fed. Cir. 2015) (en banc) (emphasis added). The key language is “attribute to,” meaning that the acts of a third party can be attributable to the single entity if certain circumstances are found. That is, the single entity may be liable for direct infringement under 35 U.S.C. § 271(a) under a theory of divided infringement, even if a third party performs one or more steps of a claimed method. Id.
In particular, the single entity is responsible for the third party’s performance of method steps in two sets of circumstances: (1) where that single entity “directs or controls” the third party’s performance and (2) where the actors (i.e., the single entity and the third party) form a joint enterprise. Id.
First, direction or control may be found “when an alleged infringer [e.g., the single entity] 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,” even if there is no principal-agent or contractual relationship. Id.
Second, joint enterprise requires a showing of four elements: (1) an agreement, express or implied, among the members of the group; (2) a common purpose to be carried out by the group; (3) a community of pecuniary interest in that purpose, among the members; and (4) an equal right to a voice in the direction of the enterprise, which gives an equal right of control. Id. Joint enterprise considers whether “each [party] is the agent or servant of the others, and that the act of anyone within the scope of the enterprise is to be charged vicariously against the rest.” Id.
For each test, determining “direction or control” and/or the existence of a joint enterprise is a question of fact. Id. at 1023.
Thus, for a method claim, a single party can be liable for direct infringement under Section 271(a) under a theory of divided Infringement when that single party either performs the method steps itself or when a second party’s activity is attributable to the first party, either via a finding of (1) “direction or control” or (2) joint enterprise.
The case law review below provides examples from the Federal Circuit.
Akamai Techs v. Limelight Networks
In Akamai Techs, plaintiff Akamai claimed that defendant Limelight, through its customers, jointly infringed Akamai’s patent-at-issue (U.S. Patent 6,108,703). In particular, the patent-at-issue recited a “content delivery method” for improving the delivery of content (e.g., images or video) across the Internet via a web page. The claims required the “tagging” of the content (embedded content) in the webpage. While the accused infringer (Limelight) provided software for a content delivery network, Limelight required its customers to tag embedded objects in web pages, thus, setting up a dispute regarding divided infringement.
In particular, the content delivery method of the patent-at-issue included a step that required tagging of “embedded objects” of a webpage page so that requests for the embedded objects could be accessed at a nearer domain instead of a further away content provider domain, thus speeding up the delivery of the content over the network.
Figure 5 of the patent-in-issue (as reproduced below) illustrates how embedded objects could be accessed at a nearer domain (i.e., the “Nearby Ghost”; green annotation) instead of a further away content provider domain (i.e., the “Content Provider Site”; blue annotation):
U.S. Patent 6,108,703, Fig. 5 (related ‘703 Patent description: “FIG. 5 is a simplified state diagram illustrating how the present invention responds to an HTTP request for a Web page.”)
As shown above, a third party (i.e., a customer of the accused infringer, Limelight) performed the tagging step. Thus, Limelight argued that it could not directly infringe because it did not actually perform the “tagging step.”
The Federal Circuit disagreed because Limelight directed or controlled its customers to tag the embedded content. In particular, the Federal Circuit found that “Limelight perform[ed] every step save the ‘tagging’ step, in which Limelight’s customers tag[ged] the content to be hosted and delivered by Limelight’s content delivery network.” Akamai Techs., 797 F.3d at 1024. Substantial evidence showed that “Limelight direct[ed] or control[ed] its customers’ performance of each remaining method step, such that all steps of the method are attributable to Limelight.” Id. “Specifically, Akamai presented substantial evidence demonstrating that Limelight conditions its customers’ use of its content delivery network upon its customers’ performance of the tagging and serving steps and that Limelight establishes the manner or timing of its customers’ performance.” Id.
Accordingly, the Federal Circuit held that Limelight was liable via direct Infringement under a theory of divided Infringement (i.e., joint Infringement) because Limelight practiced portions of the method claim itself, and because Limelight directed or controlled its customers to perform the remaining portions regarding “tagging” the embedded content. Id. at 1025.
Even though Akamai successfully demonstrated divided infringement, a key takeaway of this case is that if Akamai had drafted its patent claim such that the “tagging” step was a passive element as performed by its own software regardless of who “tagged” the content, or otherwise an element not requiring the activity of its customers, then Akami could have avoided the divided infringement dispute in the first instance.
Travel Sentry v. Tropp
In Travel Sentry, Inc. v. Tropp, Travel Sentry administered a system that enabled a traveler to lock a checked bag while allowing the Transportation Security Administration (“TSA”) to open the lock, search the bag as needed, and then relock it. 877 F.3d 1370, 1373 (Fed. Cir. 2017). The patent owner, Tropp, asserted that Travel Sentry infringed its patent (U.S. patent 7,021,53), which was directed to methods of improving airline luggage inspection through the use of dual-access locks. Id. at 1372.
Travel Sentry argued that it did not perform certain method steps performed by the TSA. In particular, Travel Sentry argued that because it was not a “luggage screening authority” (as recited by the patent claims), then it could not perform the claim steps that required the performance by the “luggage screening authority“ (e.g., the TSA). Id. at 1377.
The Federal Circuit disagreed. The Federal Circuit provided a “two-prong” test that clarified its decision in Akamai Techs regarding when one party “directs or controls” another party for the purpose of establishing divided infringement. The first prong of the two-prong test requires the first party to “condition the use” of the method by the second party in order for the second party to receive the value or benefit of the method. Id. at 1373. The second prong requires the first party to “establish the manner or timing of the performance” of the method as performed by the second party. Id.
In the Travel Sentry case, the Federal Circuit found the first prong satisfied because the TSA (i.e., the second party) received a benefit from being able to identify Travel Sentry-marked luggage and, where necessary, open that luggage using passkeys that Travel Sentry provided. Id. at 1382.
Further, the Federal Circuit found the second prong satisfied because, in order for TSA to receive the benefits that flow from inspecting luggage with Travel Sentry’s dual-access locks, the TSA had to use the passkeys that Travel Sentry distributed to open those locks, pursuant to a Memorandum of Understanding (“MOU”) signed between the TSA and Travel Sentry. Thus, the Federal Circuit found that the MOU established the manner or timing of the TSA’s performance, thus satisfying the second prong.
Accordingly, the Federal Circuit held that Travel Sentry was liable via direct Infringement under a theory of divided Infringement (i.e., joint Infringement) because Travel Sentry practiced portions of the method claim itself and because Travel Sentry directed or controlled the TSA to perform the remaining portions regarding inspecting luggage.
Just like in the Akamai case, so too here: even though the patentee successfully demonstrated divided infringement, a key takeaway of this case is: had Tropp drafted its patent claim such that the luggage inspection step was a passive element not requiring activity by the TSA, then Tropp could have avoided the divided infringement dispute in the first instance.
Muniauction v. Thomson Corp
The case Muniauction, Inc. v. Thomson Corp. illustrates an example when a party failed to prove direct infringement under a divided infringement theory. 553 F.3d 1318 (Fed. Cir. 2008).
The case dealt with patent infringement related to methods for conducting online bond auctions. Id. at 1321. Muniauction, Inc. sued Thomson Corporation, claiming that Thomson’s system for conducting electronic municipal bond auctions infringed on Muniauction’s patent-at-issue (U.S. Patent No. 6,161,099). Id. at 1322.
Muniauction’s patent-at-issue covered a method for conducting online auctions for financial instruments, particularly municipal bonds. Id. It allowed bidders to submit bids through web browsers, using conventional web browsers in combination with third-party software. Id.
The patent-at-issue included an “inputting” step (i.e., “inputting data associated with at least one bid for at least one fixed income financial instrument into said bidder’s computer via said input device”) that neither party disputed was completed by an auction bidder. Id. at 1328-29. Further, neither party disputed that the remaining steps of the method claim were performed by the defendant’s (Thomson’s) auctioneer system (e.g., Thomson’s BidComp/Parity® system). Id.
The core legal question was whether Thomson’s conduct constituted direct infringement under 35 U.S.C. § 271(a) under a theory of divided infringement. Id. a t 1329.
The Federal Circuit ruled that Thomson did not directly infringe the patent because no single party performed all the steps required by the claimed method. The Federal Circuit found that “Thomson neither performed every step of the claimed methods nor had another party perform steps on its behalf, and Muniauction has identified no legal theory under which Thomson might be vicariously liable for the actions of the bidders. Therefore, Thomson does not infringe the asserted claims as a matter of law.” Id. at 1330.
This case further illustrates the requirements for proving direct infringement in cases of divided infringement for method claims, emphasizing that for direct infringement, a single entity must perform all steps, direct and control others to do so, or form a joint enterprise with them.
IV. Divided Infringement Case Law Review for System Claims
The Federal Circuit has considered divided infringement for system claims from the perspective of how and where a given system is put into “use.” See 35 U.S.C. § 271(a) (regarding direct infringement based on “use” of a “patented invention,” such as a claimed system).
Regarding how a system claim is used, the Federal Circuit has held that “to ‘use’ a system for purposes of direct infringement, a party must put the invention into service, i.e., control the system as a whole and obtain the benefit from it.” Intellectual Ventures I LLC v. Motorola Mobility LLC, 870 F.3d 1320, 1328 (Fed. Cir. Sept. 13, 2017). Further, “[i]n order to put the system into service, the end user must be using all portions of the claimed invention.” Id. In particular, “to use a system, a person must control (even if indirectly) and benefit from each claimed component.” Id. at 1329.
Further, to address the question of “where” an infringing use of a claimed system occurs, the Federal Circuit has held that “[t]he use of a claimed system under section 271(a) 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 obtained.” Intellectual Ventures I, 870 F.3d at 1328 (citing NTP, Inc. v. Research in Motion, Ltd,.418 F.3d 1282, 1317 (Fed. Cir. 2005)).
The Grecia v. McDonald’s CorporationEyeglasses illustrates an example of divided infringement with respect to a system claim. 724 Fed.Appx. 942 (2018). In the Grecia case, the patentee argued that the accused system (McDonald’s system) infringed under a divided infringement theory where a claimed “branding module” permitted a third party (Visa) to “write[ ] [a] token to the token vault, associating the token to the [primary account number] for later cross-referencing upon subsequent hamburger purchases at McDonalds.” Id. at 947. The Grecia court found, however, that McDonald’s accused system did not receive or store the token. Id. Rather it was a potential tool employed by the third party (Visa) to facilitate future Visa transactions. Id. Thus, any benefit from the accused branding module rested solely with the third party (Visa). Id. Because of this, the Grecia court found that the patentee’s assertion—i.e., that McDonald’s somehow benefited by Visa’s cross-referencing the token upon subsequent hamburger requests—was merely speculative, conclusory, and ultimately insufficient to state a plausible claim for relief for an infringing use of a claimed system under § 271(a).
The Grecia court made several nuanced observations regarding divided infringement for system claims. In particular, the Grecia court found that an infringer must “benefit from each claimed component,” i.e., from “each and every element of the claimed system.” Grecia, 724 Fed.Appx. at 946. An argument that an accused infringer need only “benefit from the system as a whole” by deriving a benefit from “any claimed component of the claimed system” is insufficient for finding divided infringement of use of a system claim under Section 271(a). Id. at 946-47. “The alleged benefit should be tangible, not speculative, and tethered to the claims.” Id. at 947. In addition, a component of a system that solely benefits a third party is insufficient. Id.
Other cases involving divided infringement for system claims illustrate and expand on these concepts. For example, actions that are “entirely the decision of the customer” are not attributed to a provider of software. Centillion Data Systems, LLC v. Qwest Communications International, Inc., 631 F.3d 1279, 1287 (Fed. Cir. 2011). As yet another example, the limitation of “operatively joined” is not attributed to a provider of an apparatus when “a third party surgeon [has] to actually bring the relevant part[s] into contact.” LifeNet Health v. LifeCell Corp., 837 F.3d 1316, 1326 (Fed. Cir. 2016) quoting Cross Medical Products, Inc. v. Medtronic Sofamor Danek, Inc., 424 F.3d 1293, 1310 (Fed. Cir. 2005).
Accordingly, the cases illustrate that avoiding divided infringement for system claims involves drafting system claims considering how a future accused system will operate. The draftsperson should draft every element from the perspective of how a future party, such as a competitor party (and not a third party), will benefit from each component of a claimed system. Further, the future party should be the one that puts the system into service, i.e., control the system as a whole and obtain the benefit from all portions of it.
In addition, the draftsperson should consider where the claimed system will reside. The system claim should consider the location of the system such that when the system as a whole is put into service, the system resides at the place where the future party (e.g., an accused infringer) is the one who controls the system as a whole to obtain a beneficial use of the system by virtue of selecting such a location.
V. Patent Claim Drafting to Avoid Divided Infringement: Takeaways and Best Practices
As illustrated above, in light of the evolving complexities surrounding divided infringement, practitioners must adopt a more refined approach to drafting software patent claims. The judicial landscape, shaped by case law as discussed above, highlights the need for patent claims that account for the realities of multi-actor interactions, particularly in the realm of modern technology. In particular, divided infringement creates additional evidentiary and legal argument burdens for a patentee to overcome during litigation. To enhance the enforceability of these patents and minimize the potential pitfalls of divided infringement, it is critical to craft claims that clearly delineate responsibility and control. Thus, for drafting new clam, a key question for fellow patent practitioners is: “how can we draft patent claims to avoid divided infringement issues and thus prevent costly litigation”?
For example, for method claims, a key strategy is to convert any method steps that could be performed by a third party (e.g., a customer) into a limitation performed by a single entity or its software, such as a competitor or other likely future infringer of the claimed method steps.
Similarly, system claims should be drafted to ensure that the functionality of the system is clearly attributable to a single entity that controls the system as a whole at a given location and where the single entity would obtain a beneficial use of the system at the location.
The below list enumerates key considerations for patent drafters to keep in mind when addressing the unique challenges posed by software patents, ensuring they remain robust and enforceable in today’s dynamic environment:
- Ensure Single-Entity Responsibility: To mitigate the risk of divided infringement, it is essential to draft claims that can be infringed by a single entity. This strategy allows for more straightforward enforcement, avoiding the need to prove that multiple parties are collectively responsible for infringing the patent. For example, and as described above in Akamai Technologies, Inc. v. Limelight Networks, Inc., the court emphasized the importance of one entity exercising “direction or control” over the entire process. Practitioners should focus on structuring claims so that a single party is responsible for performing all steps of a method or for using all components of a system. Doing so reduces the complexities associated with proving infringement when multiple actors are involved and aligns with the court’s preference for a more unified approach to enforcement.
- Minimize Reliance on Third Parties: A useful strategy to reduce divided infringement risk is to minimize the role of third parties in performing any essential steps of the invention. In Travel Sentry, Inc. v. Tropp, the court examined whether third-party involvement constituted infringement, ultimately finding that passive or optional involvement did not. By drafting claims that assign critical steps to a single party and treat third-party participation as ancillary or passive, practitioners can avoid situations where divided infringement becomes a concern. For example, ensuring that third-party involvement is framed as optional or supplementary to the invention’s core functionality can significantly reduce the legal risks of relying on multiple actors to perform the patented method or use the patented system.
- Draft System Claims with Unified Control: For system claims, it is essential to ensure that one party controls the entire system. In Intellectual Ventures I LLC v. Motorola Mobility LLC, the court clarified that “use” of a system requires the party to control and derive benefit from all the claimed components. Therefore, when drafting system claims, practitioners should ensure that the system can be fully operated by one entity, such as a service provider or end-user. This attention to control reduces the risk of divided infringement, where multiple parties use different components of a system without a single entity being responsible for the overall operation. By drafting claims that assign full control of the system to one party, practitioners strengthen the patent’s enforceability and avoid potential legal challenges based on divided responsibility.
- Clarify Control in Multi-Actor Scenarios: In cases where multiple entities are likely to be involved in the operation of an invention, it is important to draft claims that clearly attribute control of the process to a single party. This approach aligns with judicial preferences seen in recent case law, where courts have emphasized the need for clear attribution of responsibility. For example, drafting claims that specify how one entity directs or controls the actions of other parties—through contracts, technical systems, or operational oversight—can provide a stronger basis for proving infringement. By clearly establishing which party has control over the invention’s execution, practitioners can avoid the ambiguity that often arises in multi-actor scenarios and strengthen the enforceability of the patent.
For patent practitioners, drafting software-based patent claims requires careful consideration of how the invention will be implemented in “real-world” scenarios. A primary lesson is to ensure that the patent claims are structured so that a single entity is responsible for performing all steps of a method or using all components of a system. This approach not only simplifies enforcement but also provides a more straightforward path to proving infringement. Additionally, by reducing reliance on third-party involvement and focusing on clear control and direction, practitioners can minimize the risks associated with divided infringement. In doing so, they can create stronger, more enforceable patents that offer greater protection and value to the patent holder. This strategic approach is critical in an increasingly complex technological landscape, especially for technology involving software and/or artificial intelligence (AI), where multiple actors often play a role in the execution of patented inventions.
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Phelan Simpkins is Counsel at State Farm in the Intellectual Property group. He is also an instructional assistant professor at Illinois State University.
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