Federal Circuit Restricts Joint Infringement Doctrine in Golden Hour Data v. emsCharts


Brandon Baum, partner in Mayer Brown and Practice Center Contributor, passed along this analysis on the Federal Circuit decision Golden Hour Data Systems, Inc. v. emsCharts, Inc.

In the recent case of Golden Hour Data Systems, Inc. v. emsCharts, Inc., the Federal Circuit reiterated—and arguably restricted—its jurisprudence concerning “joint infringement.”  The joint infringement doctrine is an exception to the general rule that “[d]irect infringement requires a party to perform or use each and every step or element of a claimed method or product.”  BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373, 1378 (Fed. Cir. 2007).  Where the steps or elements are performed by multiple actors, there may still be a finding of direct infringement under the joint infringement doctrine if the accused infringer had “direction or control” over the other actors.  Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1329 (Fed. Cir. 2008).  In a 2-1 panel decision, the court found that the fact that the defendants collaborated to sell their software together as part of a “strategic partnership” was insufficient, as a matter of law, to establish joint infringement.

In the underlying district court case, plaintiff Golden Hour Data Systems, Inc. (“Golden Hour”) accused two defendants, emsCharts, Inc. (“emsCharts”) and Softtech, LLC (“Softtech”) of acting jointly to infringe its patent (U.S. 6,117,073) on systems and methods for emergency medical management.  emsCharts provides software that charts patient diagnosis and billing information, but does no flight dispatching.  Softtech provides flight dispatch software used in emergency helicopters to coordinate patient pickup and delivery, but offers no billing, charting or diagnosis.  emsCharts and Softtech formed a strategic partnership to enable their two programs to work together, and collaborated to sell the two programs as a unit.

The claims of the ’073 patent require various combinations of billing, medical, and dispatching software modules, of the type provided by the combination of the emsCharts and the Softtech products.  The jury was instructed on “joint infringement” and returned a verdict in favor of Golden Hour, finding that the defendants jointly infringed the patents and that emsCharts’ infringement was willful.  After trial, however, the trial court granted the defendants’ motion for judgment as a matter of law (“JMOL”), finding as a matter of law that there was insufficient evidence that either defendant exercised sufficient “direction or control” over the other to establish joint infringement.

Because the joint infringement issue was decided on JMOL, the federal circuit panel reviewed the trial court’s decision de novo.  With respect to the asserted method claims, the panel majority (Judges Dyk and Friedman) found no joint infringement because Golden Hour failed to “prove that one party exercised ‘control or direction’ over the entire process such that all steps of the process can be attributed to the controlling party, i.e., the ‘mastermind,’ citing Muniauction, 532 F.3d at 1329 (Fed. Cir. 2008).  With respect to the system claims, the panel majority rejected Golden Hour’s argument that emsCharts directly infringed by selling the two pieces of software together because, by agreement of the litigants, the issue was submitted to the jury solely on the theory of joint infringement.  Therefore, in light of Golden Hour’s failure to prove “control or direction,” the panel majority found that JMOL was properly granted as to the system claims as well.

Judge Newman dissented from the majority’s view that “control or direction” had not been proved.  She argued that evidence of the collaborative effort between emsCharts and Softtech to form a “strategic partnership” to sell the combined programs as a single unit was sufficient to uphold the jury verdict.

This case appears to restrict the availability of the doctrine of joint infringement for plaintiffs.  In BMC Resources, 498 F.3d at 1381, the court offered the following inconsistent statements regarding joint infringement:

A party cannot avoid infringement, however, simply by contracting out steps of a patented process to another entity.  In those cases, the party in control would be liable for direct infringement.

The court went on to state:

This court 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. 

Whatever distinction the BMC court intended to draw between “contracting out steps” (which “cannot avoid infringement”) and “enter[ing] into arms-length agreements” (which may avoid infringement) is further clouded by Golden Hour.

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