Turning to infringement of the remaining dependent claims, the only theory of infringement presented by Muniauction is that of so-called joint infringement. The law of this circuit is axiomatic that a method claim is directly infringed only if each step of the claimed method is performed. BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373, 1378–79 (Fed. Cir. 2007) (citing cases). With respect to the ’099 patent, the parties do not dispute that no single party performs every step of the asserted claims. 2007-1485 15
For example, at least the inputting step of claim 1 is completed by the bidder,5 whereas at least a majority of the remaining steps are performed by the auctioneer’s system (e.g., Thomson’s BidComp/Parity® system). The issue is thus whether the actions of at least the bidder and the auctioneer may be combined under the law so as to give rise to a finding of direct infringement by the auctioneer.
In BMC Resources, this court clarified the proper standard for whether a method claim is directly infringed by the combined actions of multiple parties. The court’s analysis was founded on the proposition that direct infringement requires a single party to perform every step of a claimed method. 498 F.3d at 1380 (concluding that this requirement derived directly from 35 U.S.C. § 271(a)); see also NTP, Inc. v. Research in Motion, 418 F.3d 1282, 1317–18 (Fed. Cir. 2005) (holding that users of accused system could not infringe method claims in the United States because one step of the method was performed in Canada). Yet the court recognized a tension between this proposition and the well-settled rule that “a defendant cannot thus avoid liability for direct infringement by having someone else carry out one or more of the claimed steps on its behalf.” Id. at 1379. Accordingly, where the actions of multiple parties combine to perform every step of a claimed method, the claim is directly infringed only if one party exercises “control or direction” over the entire process such that every step is attributable to the controlling party, i.e., the “mastermind.” Id. at 1380–81. At the other
5 The inputting step of claim 1 requires “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.” Although we conclude that claims 1 and 31 are invalid as a matter of law, we will, for convenience, confine our infringement analysis to these independent claims. A conclusion of noninfringement as to the independent claims requires a conclusion of noninfringement as to the dependent claims. See, e.g., Monsanto Co. v. Syngenta Seeds, Inc., 503 F.3d 1352, 1359 (Fed. Cir. 2007) end of this multi-party spectrum, mere “arms-length cooperation” will not give rise to direct infringement by any party. Id. at 1371.
Under BMC Resources then, the issue of infringement in this case turns on whether Thomson sufficiently controls or directs other parties (e.g., the bidder) such that Thomson itself can be said to have performed every step of the asserted claims. In its denial of Thomson’s JMOL motion, before BMC Resources issued, the district court purported to apply the standards of On Demand Machine Corp. v. Ingram Industries, Inc., 442 F.3d 1331 (Fed. Cir. 2006). The district court read that case as requiring a connection less than “direct control,” and thus found that “[t]here was sufficient evidence for the jury to have found the required connection between defendants, the bidders to whom they charge a fee for their services, and the issuers for whom they facilitate auctions, under the appropriate legal standards as set forth in the instructions.” Muniauction, 502 F. Supp. 2d at 492. The jury instruction on joint infringement read as follows:
Consider whether the parties are acting jointly or together in relation to the electronic auction process. Are they aware of each other's existence and interacting with each other in relation to the electronic auction process? Is there one party teaching, instructing, or facilitating the other party's participation in the electronic auction process? These are the types of questions that you should ask in making your decision on this issue. If you find that there is a sufficient connection between Thomson and the bidders and the issuers that used Thomson’s process, then you could find Thomson liable for direct infringement.
However, this court in BMC Resources explicitly affirmed a reading of On Demand as “not in any way rely[ing] on the relationship between the parties.” 498 F.3d at 1380. Moreover, none of the questions identified by the jury instruction are relevant to whether Thomson satisfies the “control or direction” standard of BMC Resources. That Thomson controls access to its system and instructs bidders on its use is not sufficient to incur liability for direct infringement.
Under BMC Resources, the control or direction standard is satisfied in situations where the law would traditionally hold the accused direct infringer vicariously liable for the acts committed by another party that are required to complete performance of a claimed method. 498 F.3d at 1379; accord Int’l Rectifier v. Samsung Elecs. Co., 361 F.3d 1355, 1361 (Fed. Cir. 2004) (reversing district court’s ruling that Samsung violated a permanent injunction prohibiting infringement in the United States on the grounds that Samsung did not control or participate in the extraterritorial activities of a third party such that the acts of the third party were not attributable to Samsung). In this case, 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.
Because we conclude that claims 1, 9, 14, 31, 36, and 56 are obvious, the judgment that these claims are valid is reversed. Because we conclude that claims 2, 18, 20, 24, 32, 40, 42, and 46 are not infringed, the infringement judgment is also reversed. Finally, given our holdings on invalidity and noninfringement, we need not consider Thomson’s remaining arguments presented on appeal. Accordingly, the remainder of the district court’s judgment is vacated.
REVERSE-IN-PART AND VACATE-IN-PART
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