Brandon Baum, partner in Mayer Brown and Practice Center Contributor, passed along this analysis on the Federal Circuit decision Fujitsu Ltd. v. Netgear Inc.
The Federal Circuit has reiterated the importance of patent plaintiffs providing proof of direct infringement by end-users to establish indirect infringement by equipment suppliers. In Fujitsu Ltd. v. Netgear Inc., the patents-in-suit allegedly covered an aspect of the wireless communication protocols promulgated by the IEEE and Wi-Fi Alliance for IEEE 802.11 networking (“802.11 Standard”). Plaintiffs Fujitsu, LG Electronics and U.S. Philips Corporation each held patents “essential” to the 802.11 Standard, which they licensed through a patent pool. Philips’ patent purported to cover the 802.11 Standard’s message “fragmentation” protocol.
Plaintiffs sued Netgear, alleging that its 802.11 Standard-compliant products indirectly infringed the patents-in-suit. Pertinent to this article, Philips accused 260 Netgear products of implementing the patented fragmentation protocol, and therefore contributing to and inducing direct infringement by end-users of those products.
Netgear moved for summary judgment of noninfringement. Netgear argued that fragmentation was an optional feature under the 802.11 Standard that was disabled by default in the accused products, and therefore the court could not infer that the end-users had enabled the feature. Philips responded by offering a combination of evidence: 1) Netgear’s admission in advertisements that its products were compliant with the 802.11 Standard, 2) Netgear product manuals showing how to implement fragmentation, 3) testing evidence showing that certain of the accused products were capable of performing fragmentation per the 802.11 Standard, and 4) customer service records showing Netgear instructing customers to implement fragmentation in four specific products.
Netgear responded by arguing that user manuals, testing and advertisements only showed that the accused devices were capable of infringement, not that they actually infringed. The district court agreed with Netgear, holding that Philips failed to show that Netgear customers actually used the fragmentation feature, except with respect to the four products for which specific service records were offered.
The Federal Circuit concurred with the district court’s assessment. The panel noted that “it is not enough to simply show that a product is capable of infringement; the patent owner must show evidence of specific instances of direct infringement.” Philips’ evidence only showed that the products were capable of infringing when fragmentation was instantiated, which did not provide evidence of direct infringement. Thus, Philips failed to establish a genuine issue of material fact regarding direct infringement for all but the four accused models identified by the district court as being the subject of the relevant customer service records.
Netgear also urged that, even when fragmentation was enabled, user-defined threshold values in the accused device resulted in no fragmentation for at least 40% of the possible settings. Thus, argued Netgear, there were substantial noninfringing uses for the accused products that precluded a finding of contributory infringement. The Federal Circuit disagreed, observing that when determining the availability of noninfringing uses, the particular tool to focus on was the actual fragmentation software and hardware, and not the larger product. The fact that fragmentation might be disabled or remain deactivated under certain settings did not demonstrate that the fragmentation software itself (as opposed to the overall accused product) had a noninfringing use.
This case underscores the Federal Circuit’s insistence on evidence of direct infringement by end-users in an indirect infringement case. Here, although plaintiffs had evidence (customer service records) of direct infringement for four models, both the district court and the Federal Circuit refused to extrapolate from that evidence to other models, notwithstanding circumstantial evidence (user manuals, advertisements, expert opinions regarding typicality of products) suggesting they could. Thus, the practitioner would be well advised to obtain proof of direct infringement by end-users for each and every accused model, even where the accused products are numerous and the discovery tedious.
Tags: Brandon Baum, Direct Infringement, evidence of direct infringement, Federal Circuit, Fujitsu Ltd. v. Netgear Inc., indirect infringement case, Mayer Brown, Patent Litigation
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