Imagine That IP Law Blog

Divided infringement, or infringement carried out by multiple actors, seemed like an easy escape from accusations of direct infringement for entities teaming up to perform different steps of a patented method. That is until the Federal Circuit ultimately expanded the scope of direct infringement in the recent Travel Sentry, Inc. v. Tropp¹ case. The Federal Circuit’s decision expanded the scope of direct infringement by loosening the standard used to determine whether all steps of a claimed method are attributable to a single entity.

In the midst of evolving case law, Travel Sentry, Inc. reached a Federal Circuit panel for the third time. In this enduring dispute, appellant and patent owner, David Tropp (“Tropp”), accused Travel Sentry, Inc. (“Travel Sentry”) and its licensees of infringing two of his patents. In the latest proceeding at the Federal Circuit, Tropp appealed the District Court’s order for summary judgment that Travel Sentry and its licensees did not directly infringe any of the method claims in the two asserted patents.

Tropp’s patents claim a method of improving airline luggage inspection by administering and using dual-access luggage locks. These locks may be unlocked and relocked after inspection with a master key provided to a luggage screening entity. However, problematically, the method leads to different steps being carried out by different actors, or in other words, divided infringement. For instance, Tropp’s patented method claims include steps of supplying the special lock, allegedly carried out by Travel Sentry, as well as other steps requiring “the luggage screening entity” to use the master key with the lock, which in this case is performed by the Travel Security Administration (“TSA”). Yet, direct infringement can only be committed by a single entity.

In Akamai Technologies, Inc. v. Limelight Networks, Inc. (Akamai V),² the Federal Circuit reaffirmed the principle that “direct infringement under [35 U.S.C.] § 271(a) occurs where all steps of a claimed method are performed by or attributable to a single entity.” Additionally, the court in Akamai V found that all steps of a claimed method are attributable to a single entity if that entity “directs or controls” the other’s performance. The court determined an entity directed or controlled the other’s performance when one entity (1) “condition[ed] participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method” and (2) “establish[ed] the manner or timing of that performance.”

The Federal Circuit found in Travel Sentry that the district court erroneously interpreted and applied the decision in Akamai V. Importantly, the Federal Circuit stated that Akamai V “broadened the circumstances in which others’ acts may be attributed to an accused infringer to support direct-infringement liability for divided infringement[.]” The narrower, predecessor standard set forth in BMC Resources, Inc. v. Paymentech, L.P.³ and Muniauction, Inc. v. Thomson Corp.⁴ requiring a single entity to “mastermind” the entire patented process is no longer the governing standard.

The Court applied the facts of this case to the two pronged test set forth in Akamai V to determine whether a reasonable jury could find Travel Sentry liable for direct infringement of all the method steps by directing or controlling the TSA. Notably, Travel Sentry entered into a Memorandum of Understanding (“MOU”) with the TSA. The MOU established terms wherein Travel Sentry supplied keys to the locks, training materials, and instruction on how to use the keys to the TSA, and the TSA, while under no obligation to use the master keys, agreed to make good faith efforts to use the keys and relock the locks after the luggage is inspected. The agreement was nonexclusive and both parties could terminate the agreement at any time.

First, the Court considered whether Travel Sentry conditioned participation in an activity or receipt of a benefit of performance of a step or steps of the patented method pursuant to Akamai V. The Federal Circuit reasoned that the activity TSA wished to participate in was “screening luggage that TSA knows can be opened with the passkeys provided by Travel Sentry.” Additionally, the court perceived that a reasonable jury could find that the benefit TSA obtained was the ability to open luggage with the key without having to break open the locks. Benefits may also include “a reduction in the number of claims submitted by aggrieved travelers,” “an improvement in the health of its employees,” or “promotion of the public’s perception of the agency.” Finally, the court also concluded that a reasonable jury could determine that Travel Sentry “conditioned” TSA’s participation in the activity or receipt of the benefits in the MOU agreement. Therefore, the facts of the case could lead a reasonable jury to conclude the first prong of Akamai V was met.

Second, the Federal Circuit deliberated whether Travel Sentry established the manner or timing of the TSA’s performance. The Federal Circuit found that the MOU established steps the TSA was required to follow in order to use Travel Sentry’s system and to obtain the associated benefits. Thus, a jury could find that Travel Sentry established the manner of TSA’s performance of the method claim steps. The facts of the case could lead a reasonable jury to find the second prong of Akamai V was satisfied.

With sufficient facts to allow a reasonable jury to determine that Travel Sentry directed or controlled the TSA in a manner where all steps of the claimed method were attributable to Travel Sentry, the Federal Circuit found the district court erred in granting summary judgment of noninfringment in favor of Travel Sentry. As a result, this continuous, longstanding dispute may finally reach a jury, and in the future, entities carrying out only some steps of a patented method may find themselves liable for direct infringement.

[1] Travel Sentry, Inc. v. Tropp, No. 2017-1025, 2017 U.S. App. LEXIS 25548 (Fed. Cir. Dec. 19, 2017).

[2] Akamai Techs., Inc. v. Limelight Networks, Inc. (Akamai V), 797 F.3d 1020 (Fed. Cir. 2015).

[3] BMC Res., Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007).

[4] Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008).