Docket No. 2017-1672
DYK, REYNA, TARANTO
March 6, 2018
Brief summary: DC’s dismissal of complaint alleging that McDonald’s “through its use of various credit card companies’ authorization networks directly infringed” under § 271(a) affirmed because the only benefits to McDonald’s referenced in the complaint related to “the claimed system as a whole-the argument we rejected in Intellectual Ventures”.
Summary: Mr. Grecia appealed from the DC’s dismissal of his complaint alleging that McDonald’s “through its use of various credit card companies’ authorization networks directly infringed” (i.e., “every time it accepted Visa cards as a payment tool for food purchases”) US 8,533,860 and 8,402,555 “that claim systems for managing access to digital data” (“relate to the field of digital rights management, which aims to restrict access rights to digital media in order to curb unlawful copying”). McDonald’s moved to dismiss the complaint since, it argued, “because it did not control any of the accused system’s components, it did not ‘use’ the claimed system as required to plausibly plead direct infringement under 35 U.S.C. § 271(a)”. McDonald’s relied on Uniloc (FC 2011) “which held that Microsoft could directly infringe for its manufacture and use of a patent software registration system, where the claims required end-user participation on a local computer.” “McDonald’s argued that like the claims in Uniloc, the asserted claims” here “are drafted to focus on the actions of one entity, Visa, and because Visa possessed and controlled all the claimed systems’ six modules, only Visa could directly infringe”. Mr. Grecia relied on Centillion (FC 2011) which “held that ‘use’ should be broadly interpreted to require only that an accused infringer ‘put the invention into service, i.e., control[led] the system as a whoel and obtain[ed] a benefit from it.’” The DC agreed with McDonald’s, concluding “Centillion did not apply because the holding was limited to divided systems, while in the instant dispute, Visa possessed all of the allegedly infringing systems’ components”, finding “Uniloc to be controlling” (“McDonald’s role in sending customers’ credit card data to Visa was akin that of ‘Microsoft’s customers’ computers in Uniloc, merely part [of] the environment in which the claimed inventions function”). The DC denied Grecia’s request for reconsideration and to amend his complaint because his original complaint did not “allege that McDonald’s point-of-sale devices are part of the claimed systems.” The FC panel explained that it reviewed the DC’s dismissal according to Seventh Circuit law (Glenayre, FC 2006) which “does ‘not accept as true any legal assertions or recital of claim elements of a cause of action supported by mere conclusory statements” (Vesely, 7th Cir. 2014). It explained the parties here ask the FC “to define what is considered ‘use’ of a claimed system when the accused infringer must act to put the claimed system into service, but the accused infringer does not appear to possess any element of the claimed system”, noting there is “no controlling precedent”. The FC panel disagreed with the DC that Uniloc controlled (unlike here, “predicated on the system claims being drafted in a way that focuses on ‘one entity’”), and also disagreed with Mr. Grecia that Centillion controlled (“it does not appear that McDonald’s is in the possession of any of the six modules claimed”). The FC panel explained that in Intellectual Ventures I (FC 2017), it “clarified that the infringer must ‘benefit from each claimed component,’ i.e., from ‘each and every element of the claimed system’” and rejected the notion that it “needs only to ‘benefit from the system as a whole’ by deriving a benefit from ‘any claimed component of the claimed system.’” Here, the FC panel concluded, McDonald’s benefits that Grecia referenced in his complaint as with respect to “the claimed system as a whole-the argument we rejected in Intellectual Ventures” (“The alleged benefit should be tangible, not speculative, and tethered to the claims.”) Thus, it agreed with the DC’s conclusion, although “on different grounds”, and found no abuse of discretion in the DC’s denial of Mr. Grecia’s motion to amend since “he failed to describe or attach an amended complaint to his request for leave, not did he ‘offer any meaningful indication of how [he] would plead differently’” (Indep. Trust, 7th Cir. 2012).