McKesson Technologies Inc. v. Epic Systems Corp. ( 2011 )

United States Court of Appeals
for the Federal Circuit
__________________________
MCKESSON TECHNOLOGIES INC. (formerly
McKesson Information Solutions, LLC),
Plaintiff-Appellant,
v.
EPIC SYSTEMS CORPORATION,
Defendant-Appellee.
__________________________
2010-1291
__________________________
Appeal from the United States District Court for the
Northern District of Georgia in case no. 06-CV-2965,
Chief Judge Jack T. Camp.
__________________________
Decided: April 12, 2011
__________________________
PAUL D. CLEMENT, King & Spalding LLP, of Washing-
ton, DC, argued for plaintiff-appellant. With him on the
brief were DARYL JOSEFFER; and TIMOTHY G. BARBER and
ADAM M. CONRAD, of Charlotte, North Carolina.
STEVEN D. MOORE, Kilpatrick Stockton LLP, of At-
lanta, Georgia, argued for defendants-appellees. With
him on the brief were WILLIAM H. BOICE, RUSSELL A.
KORN, D. CLAY HOLLOWAY, and JASON D. GARDNER; and
ADAM H. CHARNES of Winston-Salem, North Carolina.
MCKESSON TECH v. EPIC SYSTEMS 2
__________________________
Before NEWMAN, BRYSON, and LINN, Circuit Judges.
Opinion for the court filed by Circuit Judge LINN. Con-
curring opinion filed by Circuit Judge BRYSON. Dissent-
ing opinion filed by Circuit Judge NEWMAN.
LINN, Circuit Judge.
McKesson Technologies Inc. (“McKesson”) appeals the
district court’s grant of Epic Systems Corporation’s
(“Epic”) renewed motion for summary judgment of nonin-
fringement of claims 1-10, 12-14, and 16-18 of U.S. Patent
No. 6,757,898 (the “’898 patent”). McKesson Info. Solu-
tions LLC v. Epic Sys. Corp., No. 06-cv-2965, 2009 WL
2915778 (N.D. Ga. Sept. 8, 2009) (“Summary Judgment
Order”). Because McKesson is unable to attribute the
performance of all the steps of the asserted method claims
to a single party—namely, Epic’s healthcare-provider
customers—this court affirms the finding of noninfringe-
ment.
BACKGROUND
I. The Technology and Nature of the Dispute
McKesson’s ’898 patent is directed to an electronic
method of communication between healthcare providers
and patients involving personalized web pages for doctors
and their patients. See ’898 patent col.4 ll.3-44. This
solution facilitates direct communication between pa-
tients and their doctors. See id. col.4 ll.24-40. For exam-
ple, the ’898 patent discloses a system whereby a patient
can access visit-specific content online following every
doctor visit. Id. col.4 ll.57-63. This online content “offers
the patient significantly more information than he/she
could have absorbed during a typical visit with the physi-
cian.” Id. col.4 ll.63-65. This solution also increases
efficiencies for both doctors and patients. See id. col.4
3 MCKESSON TECH v. EPIC SYSTEMS
ll.24-40. For example, patients may submit appointment
and prescription refill requests online and physicians may
respond to these requests and manage callbacks at their
convenience. Id. col.4 l.65–col.5 l.3; col.9 ll.37-39.
Epic is a privately owned software development com-
pany that licenses software to healthcare providers. One
such product is the accused MyChart software. MyChart
allows healthcare providers to associate medical records
with a patient’s personalized web page. MyChart also
allows the patients to communicate with their healthcare
provider online through these personalized MyChart web
pages. In this way, patients are given access to their own
medical records, treatment information, scheduling
information, and other material.
Epic itself does not use the MyChart software.
Rather, Epic licenses the MyChart software to healthcare
providers. These licensed healthcare providers choose
whether to offer MyChart as an option for their patients’
use and none of these healthcare providers requires their
patients to actually use the MyChart software. If a
patient chooses to utilize the MyChart software, that
patient “initiates a communication” to the provider by
logging on to the healthcare provider’s MyChart web
page. Once authenticated, the patient is then presented
with a personalized web page from which that patient
may access his or her medical records and other such
information.
II. Proceedings Before the District Court
On December 6, 2006, McKesson sued Epic in the
United States District Court for the Northern District of
Georgia alleging that Epic induced infringement of claims
1-10, 12-14, and 16-18 of the ’898 patent by licensing
MyChart to healthcare providers who subsequently
MCKESSON TECH v. EPIC SYSTEMS 4
offered it to their patients. Claim 1 is representative of
the asserted claims and reads as follows:
1. A method of automatically and electronically
communicating between at least one health-care
provider and a plurality of users serviced by the
health-care provider, said method comprising the
steps of:
initiating a communication by one of the plu-
rality of users to the provider for information,
wherein the provider has established a preexisting
medical record for each user;
enabling communication by transporting the
communication . . . ;
electronically comparing content of the com-
munication . . . ;
returning the response to the communication
automatically . . . ;
said provider/patient interface providing a
fully automated mechanism for generating a per-
sonalized page or area within the provider’s Web
site for each user serviced by the provider; and
said patient-provider interface service center
for dynamically assembling and delivering cus-
tomer content to said user.
’898 patent col.44 l.60–col.45 l.24 (emphasis added).
Epic first moved for summary judgment of nonin-
fringement on January 14, 2008, on the issue of joint
infringement. The parties do not dispute that Epic’s
customers do not directly perform the first step of the
asserted method claims, the “initiating a communication”
step. The district court, in denying Epic’s motion, relied
on BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d
1373 (Fed. Cir. 2007), and found “questions of material
5 MCKESSON TECH v. EPIC SYSTEMS
fact remain as to whether the providers using Epic’s
MyChart software direct and control the user to perform
the first step of the method” based upon an expert decla-
ration filed by McKesson. McKesson Info. Solutions LLC
v. Epic Sys. Corp., No. 06-cv-2965 (N.D. Ga. May 19,
2008).
Following claim construction and the close of discov-
ery, Epic renewed its motion for summary judgment of
noninfringement on the issue of joint infringement, citing
both Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318
(Fed. Cir. 2008), and McKesson’s withdrawal of its expert
declaration. Epic argued that because its customers
neither directly perform the “initiating a communication”
step of the asserted method claims nor exercise control or
direction over another who performs this step, McKesson
failed to demonstrate that a single party directly infringes
the ’898 patent and, accordingly, could not have succeeded
on its claim of indirect infringement. The district court
agreed and granted Epic’s renewed motion for summary
judgment of noninfringement on September 8, 2009.
Summary Judgment Order.
McKesson appealed and this court has jurisdiction
under 28 U.S.C. § 1295(a)(1).
DISCUSSION
This court reviews summary judgment of nonin-
fringement without deference to ascertain whether genu-
ine issues of material fact exist. BMC Res., 498 F.3d at
1378. Summary judgment is appropriate only “if the
pleadings, the discovery and disclosure materials on file,
and any affidavits show that there is no genuine issue as
to any material fact and that the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(c). In
assessing the evidence, all reasonable inferences are
drawn in favor of the non-movant. Del. Valley Floral
MCKESSON TECH v. EPIC SYSTEMS 6
Grp., Inc. v. Shaw Rose Nets, LLC, 597 F.3d 1374, 1379
(Fed. Cir. 2010).
McKesson alleged induced infringement, which re-
quires a direct infringer. BMC Res., 498 F.3d at 1379. A
method claim is directly infringed only if each step of the
claimed method is performed by a single party. Id. at
1378-79. McKesson and Epic agree that no single party
performs every step of the asserted method claims. Thus,
the sole issue presented by this appeal relates to whether
the relationship between Epic’s customers (MyChart
providers) and the MyChart users is such that perform-
ance of the “initiating a communication” step may be
attributed to the MyChart providers.
In both BMC Resources and Muniauction, this court
confronted the situation where the actions of multiple
parties combined to perform the steps of a claimed
method, but no single party performed every step of the
claimed method. This court concluded that “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 control-
ling party.” Muniauction, 532 F.3d at 1329 (citing BMC
Res., 498 F.3d at 1380-81). “[T]he ‘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.”
Id. at 1330 (citing BMC Res., 498 F.3d at 1379).
Recently, in Akamai Technologies, Inc. v. Limelight
Networks, Inc., 629 F.3d 1311 (Fed. Cir. 2010), the pat-
entee sought to attribute the actions of multiple parties,
each performing a subset of the claimed method steps, to
a single party for a finding of direct infringement.
Akamai’s asserted method claims were directed towards a
7 MCKESSON TECH v. EPIC SYSTEMS
content delivery service that permitted a content provider
to outsource the storage and delivery of discrete portions
of its website content. Id. at 1351. It was undisputed
that Limelight performed all but the “tagging” and “serv-
ing” steps of the asserted method claims. Id. at 1317.
Limelight instead provided a service to its customers
along with the information necessary for its customers to
perform the “tagging” and “serving” steps themselves. Id.
Additionally, Limelight’s standard customer contract,
while not obligating Limelight’s customers to perform the
“tagging” or “serving” steps, explained that the customer
would have to perform this step itself if the customer
decided to take advantage of Limelight’s service. Id. at
1321.
The court in Akamai held “there can only be joint in-
fringement when there is an agency relationship between
the parties who perform the method steps or when one
party is contractually obligated to the other to perform
the steps.” Id. at 1320. The court concluded that Lime-
light’s customers were not performing any of the claimed
method steps as agents for Limelight nor were they
contractually obligated to perform any of the claimed
method steps. Id. Because Limelight did not perform all
of the steps of the asserted method claims and there was
no basis to attribute to Limelight the actions of its cus-
tomers who carried out the remaining steps, this court
affirmed the district court’s judgment as a matter of law
of noninfringement. Id. at 1322.
In this case, nothing indicates that MyChart users are
performing any of the claimed method steps as agents for
the MyChart providers. Nor does McKesson argue an
agency relationship existed here. Indeed, McKesson
faulted the district court for applying this court’s control
or direction test as one “that is satisfied only . . . through
an employment or other agency relationship, such that
MCKESSON TECH v. EPIC SYSTEMS 8
the other acts out of obligation rather than consent.”
McKesson Br. 27. McKesson instead argues that the
special nature of the doctor-patient relationship is some-
thing more than a mere arms length relationship and is
sufficient to provide attribution, because “[t]he phrase
‘doctor’s orders’ says it all” and because of the existence of
a doctor-patient privilege. Id. at 18, 31. This argument
misses the mark. A doctor-patient relationship does not
by itself give rise to an agency relationship or impose on
patients a contractual obligation such that the voluntary
actions of patients can be said to represent the vicarious
actions of their doctors.
Nor is there anything indicating that MyChart users
were contractually obligated to perform any of the
claimed method steps on behalf of the MyChart providers.
These facts are undisputed. MyChart users choose
whether or not to initiate communications with their
providers and are under no obligation to do so. As in both
Akamai and Muniauction, MyChart providers simply
control the users’ access to MyChart. Akamai 629 F.3d at
1321 (finding Limelight’s customers chose whether to
perform the “tagging” or “scanning” steps); Muniauction,
532 F.3d at 1330 (finding that although the accused
infringer controlled access to its system and instructed
bidders on its use, that was insufficient to incur liability
for direct infringement). Here, as in Akamai, MyChart
users “acted principally for their own benefit and under
their own control.” Akamai 629 F.3d at 1321.
McKesson has identified no viable legal theory under
which the actions of MyChart users may be attributed to
Epic’s customers. Without an agency relationship or
contractual obligation, the MyChart users’ actions cannot
be attributed to the MyChart providers, Epic’s customers.
Thus, McKesson has failed to demonstrate that any single
party directly infringes the ’898 patent. Absent direct
infringement, Epic cannot be liable for indirect infringe-
9 MCKESSON TECH v. EPIC SYSTEMS
ment. BMC Res., 498 F.3d at 1379 (stating “[i]ndirect
infringement requires, as a predicate, a finding that some
party amongst the accused actors has committed the
entire act of direct infringement.”).
McKesson argues that this court’s precedents contra-
vene ordinary principles of law involving concerted action.
Specifically, McKesson compares this court’s precedents
with joint tortfeasor liability and vicarious copyright
liability. Under tort law, according to McKesson, joint
liability attaches “where the acts of each of two or more
parties, standing alone, would not be wrongful, but to-
gether they cause harm to the plaintiff.” McKesson Br. 20
(citing Prosser & Keeton on Torts § 52, at 354 (5th ed.
1984)). Similarly, McKesson cites various copyright cases
where courts have found vicarious copyright liability
stemming from a defendant’s decision to profit from
infringement “while declining to exercise a right to stop or
limit it.” McKesson Br. 23 (quoting Metro-Goldwyn-
Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930
(2005)).
This court finds McKesson’s invitation to depart from
our precedents unpersuasive, let alone beyond our author-
ity as a three-judge panel. See Newell Cos. v. Kenney Mfg.
Co., 864 F.2d 757, 765 (Fed. Cir. 1988) (“This court has
adopted the rule that prior decisions of a panel of the
court are binding precedent on subsequent panels unless
and until overturned in banc.”). Patent law is a creature
of statute and “expanding the rules governing direct
infringement to reach independent conduct of multiple
actors would subvert the statutory scheme for indirect
infringement.” BMC Res., 498 F.3d at 1381. The notion
of indirect patent infringement, encompassing contribu-
tory and induced infringement, already addresses the
joint tortfeasor problem. See 35 U.S.C. §§ 271(b), (c).
Indeed, an indirect infringer is a type of joint tortfeasor
MCKESSON TECH v. EPIC SYSTEMS 10
because, while his actions alone do not harm the patentee,
his actions along with another cause a single harm to the
plaintiff. See Aro Mfg. Co. v. Convertible Top Replacement
Co., 377 U.S. 476, 500 (1964). That “single harm,” how-
ever, is direct patent infringement, a strict-liability of-
fense limited to those who practice each and every
element of the claimed invention. BMC Res., 498 F.3d at
1381; Jurgens v. CBK, Ltd., 80 F.3d 1566, 1570 n.2 (Fed.
Cir. 1996). Absent direct infringement, the patentee has
not suffered a compensable harm. BMC Res., 498 F.3d at
1379; cf. Grokster, 545 U.S. at 930 (stating “[o]ne infringes
contributorily by intentionally inducing or encouraging
direct infringement and infringes vicariously by profiting
from direct infringement while declining to exercise a
right to stop or limit it.” (citations omitted) (emphases
added)). Finally, in patent law, unlike in other areas of
tort law, the patentee specifically defines the boundaries
of his or her exclusive rights and provides notice to the
public to permit avoidance of infringement. This stands
in sharp contrast to the circumstances surrounding a joint
tort where the victim has no ability to define the injurious
conduct upfront and where, absent joint liability, the
victim would stand uncompensated as a consequence.
McKesson also relies upon Peerless Equipment Co. v.
W.H. Miner, Inc., 93 F.2d 98 (7th Cir. 1937), in arguing
that the regional courts of appeals have affirmed liability
where one party performed most of the patented method
and simply handed it over to another party to complete
the method. Id. at 105 (finding liability where a seller of
gears knowingly left it to customers to flatten the gears’
crown, thereby “completing the final step of the [patented]
process.”). The Peerless opinion is neither binding nor
persuasive. This court has time and again rejected liabil-
ity where one party performed most of the patented
method and left it to another party to complete the
method in the absence of any contractual obligation or
11 MCKESSON TECH v. EPIC SYSTEMS
agency relationship that would vicariously attribute the
acts of the one party to the other. See Akamai 629 F.3d at
1322; Muniauction, 532 F.3d at 1330; BMC Res., 498 F.3d
at 1381-82. Nor is this court persuaded by the conclusory
reasoning in Peerless affirming the district court’s finding
of contributory infringement. See Peerless, 93 F.2d at 105
(stating “we think that finding is correct.”).
CONCLUSION
For the foregoing reasons, this court affirms the dis-
trict court’s grant of Epic’s renewed motion for summary
judgment of noninfringement of the ’898 patent.
AFFIRMED
United States Court of Appeals
for the Federal Circuit
__________________________
MCKESSON TECHNOLOGIES INC. (formerly
McKesson Information Solutions, LLC),
Plaintiff-Appellant,
v.
EPIC SYSTEMS CORPORATION,
Defendant-Appellee.
__________________________
2010-1291
__________________________
Appeal from the United States District Court for the
Northern District of Georgia in Case No. 06-CV-2965,
Chief Judge Jack T. Camp.
__________________________
BRYSON, Circuit Judge, concurring.
I agree that the decision in this case is correct in light
of this court’s decisions in BMC Resources, Muniauction,
and Akamai Technologies. Whether those decisions are
correct is another question, one that is close enough and
important enough that it may warrant review by the en
banc court in an appropriate case.
United States Court of Appeals
for the Federal Circuit
__________________________
MCKESSON TECHNOLOGIES INC. (formerly
McKesson Information Solutions, LLC),
Plaintiff-Appellant,
v.
EPIC SYSTEMS CORPORATION,
Defendant-Appellee.
__________________________
2010-1291
__________________________
Appeal from the United States District Court for the
Northern District of Georgia in Case No. 06-CV-2965, Chief
Judge Jack T. Camp.
__________________________
NEWMAN, Circuit Judge, dissenting.
The court again departs from the “prior panel rule,”
which requires appellate panels to conform to the earlier of
conflicting panel precedent. Instead, the court again selec-
tively applies some newly minted panel rulings while ignor-
ing others, adding to the conflict with precedent. Our
obligation is either to obtain en banc resolution of divergent
statements in various panel opinions, or to follow the earlier
MCKESSON TECH v. EPIC SYSTEMS 2
panel holding, as do the other circuits. 1 The court does
neither. I must, respectfully, dissent.
The question is whether there can be infringement of a
patented method, when a step of the method is performed
by an entity that is not “controlled or directed” by the same
entity that performs the other steps. Interactive methods
have been enabled by advances in computer-based technol-
ogy. In the McKesson method, a patient initiates inquiry
into various kinds of information relating to the patient and
maintained by the patient’s physician; the panel majority
holds that even if every step of the claimed method is per-
formed there can be no infringement, on the theory that
there is no direct infringement and thus no indirect in-
fringement. Some recent panel holdings are of similar vein,
holding that neither collaboration nor joint action nor facili-
tation nor authorization nor invitation can overcome the
immutable barrier to infringement when all of the partici-
pating entities are not under the “control or direction” of a
mastermind infringer.
According to the panel majority today, there can be no
infringement of this interactive patent, on the theory that
the physician does not control or direct the patient who
performs the step of entering the system maintained by the
physician. The court thus eliminates the patent incentive
from such interactive procedures, rendering McKesson’s
new method, and all such interactive methods, open for
infringement without redress. However, other panels of this
court, and the Supreme Court, have held that there can be
infringement liability when steps of the claimed method are
performed by different entities. This new retrenchment of
1 See Newell Cos., Inc. v. Kenney Mfg. Co., 864 F.2d
757, 765 (Fed. Cir. 1988); cf. Teague v. City of Flower
Mound, Tex., 179 F.3d 377, 383 (5th Cir. 1999) (referring to
the “rule of orderliness”).
3 MCKESSON TECH v. EPIC SYSTEMS
the patent grant disserves commerce, fairness, and the
innovation incentive.
The patent in suit, U.S. Patent No. 6,757,898, is di-
rected to “a communication system for providing automated,
electronic communications between at least one health-care
provider and a plurality of users of the health-care pro-
vider.” ‘898 patent, abstract. The ‘898 patent describes the
operation of personalized web pages for patients. The
patent states that “once the patient has logged into his/her
own Web page,” the patient can access data in the practitio-
ner’s scheduling and billing systems and a variety of prac-
tice-based services including “appointment requests and
updates, prescription refills, online triage, health search
information and the like.” Col.4 ll.50-56.
Computer-implemented methods that are new, useful,
nonobvious, described, enabled, and particularly claimed,
are not excluded from the patent system simply because
their performance involves more than one entity. Here the
patient initiates the interaction with the health-care pro-
vider, by performing the first step of claim 1:
1. A method of automatically and electronically
communicating between at least one health-care
provider and a plurality of users serviced by the
health-care provider, said method comprising the
steps of:
initiating a communication by one of the plural-
ity of users to the provider for information, wherein
the provider has established a preexisting medical
record for each user;
enabling communication by transporting the
communication through a provider/patient interface
over an electronic communication network to a Web
MCKESSON TECH v. EPIC SYSTEMS 4
site which is unique to the provider, whereupon the
communication is automatically reformatted and
processed or stored on a central server, said Web
site supported by or in communication with the cen-
tral server through a provider-patient interface ser-
vice center;
electronically comparing content of the commu-
nication with mapped content, which has been pre-
viously provided by the provider to the central
server, to formulate a response as a static or dy-
namic object, or a combined static and dynamic ob-
ject; and
returning the response to the communication
automatically to the user’s computer, whereupon
the response is read by the user or stored on the
user’s computers
said provider/patient interface providing a fully
automated mechanism for generating a personalized
page or area within the provider’s Web site for each
user serviced by the provider; and
said patient-provider interface service center for
dynamically assembling and delivering custom con-
tent to said user.
All but the first step are performed by or controlled or
directed by the health-care provider. The court today holds
that the claim cannot be infringed as a matter of law, on the
theory that a “single-entity rule” is violated because the
provider does not control or direct the patient who initiates
the communication, in that the patient is neither the agent
of the health-care provider nor contractually obligated to
initiate the communication. Maj. Op. at 8-9. There is no
such rule of law. Even the recent creation of a “single-entity
rule” by this court does not go that far.
5 MCKESSON TECH v. EPIC SYSTEMS
Interactive methods that meet all of the conditions and
requirements of the Patent Act are fully entitled to partici-
pate in the patent system. The court’s removal of interac-
tive methods from the purview of the patent system,
through its newly minted and now enlarged “single-entity
rule,” is contrary to law and policy. Conflicts in precedent
require resolution, not enlargement, for inconsistent prece-
dent is as much a deterrent to innovation as is elimination
of the patent right entirely.
I
CONFLICT WITH PRECEDENT
Precedent requires that: “For infringement of a process
invention, all of the claimed steps of the process must be
performed.” EMI Grp. N. Am., Inc. v. Intel Corp., 157 F.3d
887, 896 (Fed. Cir. 1998). The panel majority now rules
that: “A method claim is directly infringed only if each step
of the claimed method is performed by a single party.” Maj.
Op. at 6. Since the user (patient), not the provider (physi-
cian), decides whether to initiate the communication, the
court holds that the provider does not “control or direct”
whether the user takes this initiating step. Thus the court
holds, first, that the method claim cannot be directly in-
fringed, as a matter of law. The court then holds that
without direct infringement there cannot be indirect in-
fringement, such as induced or contributory infringement,
as a matter of law. Thus the court concludes that the claims
can never be infringed, although the patent meets every
requirement of patentability and every step of the claimed
method is practiced. These rulings and conclusion are
contrary to statute and precedent.
The patent statute grants to every patentee the right to
exclude others from practicing the patented invention:
MCKESSON TECH v. EPIC SYSTEMS 6
35 U.S.C. §154(a)(1) Every patent shall contain a
short title of the invention and a grant to the pat-
entee, his heirs and assigns, of the right to exclude
others from making, using, offering for sale, or sell-
ing the invention . . . .
35 U.S.C. §154(a)(1) (2006). “The franchise which the
patent grants, consists altogether in the right to exclude
every one from making, using, or vending the thing pat-
ented, without the permission of the patentee.” Bloomer v.
McQuewan, 55 U.S. 539, 549 (1852); see also Crown Die &
Tool Co. v. Nye Tool & Machine Works, 261 U.S. 24, 36
(1923). The present statute codifies this right:
35 U.S.C. §271(a) Except as otherwise provided in
this title, whoever without authority makes, uses or
sells any patented invention, within the United
States during the term of the patent therefor, in-
fringes the patent.
35 U.S.C. §271(a) (2006). A patent that can never be in-
fringed is not a patent in the definition of the law, for a
patent that cannot be infringed does not have the “right to
exclude.” This court’s elimination of infringement, by
creating a new but far-reaching restriction, is inappropriate.
“[C]ourts ‘should not read into the patent laws limitations
or conditions which the legislature has not expressed.’”
Bilski v. Kappos, 130 S. Ct. 3218, 3226 (2010) (quoting
Diamond v. Diehr, 450 U.S. 175, 182 (1981)).
These fundamental principles have not changed; they
are the foundation of the patent system.
As technology advanced, the variety of invention and
modes of infringement has been accommodated by statute,
by precedent, and if needed by legislation, in fidelity to the
7 MCKESSON TECH v. EPIC SYSTEMS
purposes and policy of patent law. For example, the liability
of “participants” in infringement was summarized by Pro-
fessor Robinson:
The nature of the act of infringement is indi-
cated by that of the exclusive right which it invades.
. . . [E]very method by which the invention can be
made available for the benefit of the infringer, and
any person who participates in any wrongful appro-
priation of the invention becomes thereby a violator
of the rights protected by the patent.
3 William C. Robinson, The Law of Patents for Useful Inven-
tions §897 (1890) (reprint 1972). This foundation is violated
by the introduction of an absolute bar to enforcement of
patents that are directed to information-age electronic
methods, simply because more than one entity is involved.
Neither statute nor precedent supports this court’s pro-
nouncement that the patentee’s right to exclude is limited to
situations in which a single entity performs or controls or
directs every step of the claimed method, whatever the
method and whatever the relationship among the partici-
pants. Precedent elaborating on direct and indirect in-
fringement had evolved to accommodate, not to limit, the
patentee’s right to exclude.
The district court deemed itself bound by this court’s
aberrant “single entity” decisions, although not without
remarking on the flaws:
[T]he single entity rule and BMC’s interpretation
thereof severely limits the protection provided for
patents which would otherwise be valid and en-
forceable. . . . As long as the sale of a product con-
stitutes an arms length transaction between the
customer and the infringing company, which is in-
sufficient to create vicarious liability, the patent
MCKESSON TECH v. EPIC SYSTEMS 8
holder would likely have no redress against the in-
fringer. This result weakens the policy of providing
protection to those who devote the time and re-
sources to develop otherwise novel and patentable
methods.
McKesson Info. Solutions LLC v. Epic Sys. Corp., No. 06-cv-
2965, 2009 WL 2915778, at *7 (N.D. Ga. Sept. 8, 2009). The
district court referred to BMC Resources, Inc. v. Paymen-
tech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), Muniauction, Inc.
v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2007), and
Global Patent Holdings, LLC v. Panthers BRHC LLC, 586 F.
Supp. 2d 1331 (S.D. Fla. 2008), aff’d, 318 F. App’x 908 (Fed.
Cir. 2009) (Table), and stated that these cases “compel” its
flawed decision.
In BMC Resources the defendant was one of three inde-
pendent entities needed to perform the claim steps of debit
network, financial institution, and payment services pro-
vider; the court observed that the defendant payment ser-
vices provider did not control or direct either the debit
networks or the financial institutions that performed the
other steps. In Muniauction this court held that the defen-
dant, who controlled access to its auction system and in-
structed bidders on its use, was not liable for direct
infringement, but did not hold that indirect infringement
was barred. In Global Patent a district court applied the
evolving “single-entity rule” and held that the patentee
could not state a claim for either direct or indirect infringe-
ment although the defendant “puts Javascript programs on
the remote user’s computer to allow the process to begin.”
586 F. Supp. 2d at 1335. Although the BMC Resources
decision is supportable on its facts, the enlargement of its
holding is not.
9 MCKESSON TECH v. EPIC SYSTEMS
Applying these decisions to the ‘898 patent, the district
court held that because the patient independently initiates
the interaction with the physician’s records, there can be no
joint infringement and thus no direct infringement of the
claim. Applying the rule that there must be direct in-
fringement before there can be indirect infringement, see
Aro Mfg. Co. v. Convertible Top Replacement Co., Inc., 377
U.S. 476, 483 (1964) (referring to “the fundamental precept
that there can be no contributory infringement in the ab-
sence of a direct infringement.”), the court held that McKes-
son could not enforce its patent against anyone. This court
agrees, although it is not disputed every major step of the
patented process is practiced by a single entity, with author-
ized initiation by the patient.
This court’s error is the pronouncement of the “single-
entity rule” as an absolute rule of law—for the multiple
independent entities required to carry out the claimed
method in BMC Resources could have led to a fact-based
decision of non-liability on application of the ordinary rules
of tort liability. Instead, the “control or direction” require-
ment is announced as extending to all interactive situations,
whatever the relationship of the participants and whatever
their participation. Here, for example, the “uncontrolled”
entity, the patient, initiates the process by accessing the
physician’s system using the access code provided by the
physician; the physician’s office then performs the other
steps of the method. The court today holds that such a
claim cannot be infringed, whether on a theory of joint or
collaborative or induced infringement. However, no rule of
law, no precedent, prohibits patenting and enforcing a
method that is performed by interacting entities. The cases
from which the court created this theory do not require
otherwise.
MCKESSON TECH v. EPIC SYSTEMS 10
Indeed, the cases cited for support in BMC Resources
and Muniauction do not deal with the form of interactive
situation to which they are now being applied. These cases
include Canton Bio-Med., Inc. v. Integrated Liner Technolo-
gies., Inc., 216 F.3d 1367, 1370 (Fed. Cir. 2000) (explaining
that the “all-elements rule” of the doctrine of equivalents
applies to method claims); General Foods Corp. v. Studi-
engesellschaft Kohle mbH, 972 F.2d 1272, 1274 (Fed. Cir.
1992) (explaining that “each claim is an entity which must
be considered as a whole,” and reversing invalidity of
method claims for double patenting (emphases omitted));
Joy Technologies, Inc. v. Flakt, Inc., 6 F.3d 770, 773 (Fed.
Cir. 1993) (“[T]he sale of equipment to perform a process is
not a sale of the process within the meaning of section
271(a)”); Dynacore Holdings Corp. v. U.S. Philips Corp., 363
F.3d 1263, 1272 (Fed. Cir. 2004) (“Indirect infringement,
whether inducement to infringe or contributory infringe-
ment, can only arise in the presence of direct infringement,
though the direct infringer is typically someone other than
the defendant accused of indirect infringement”); NTP, Inc.
v. Research in Motion, 418 F.3d 1282, 1318 (Fed. Cir. 2005)
(“[A] process cannot be used ‘within’ the United States as
required by section 271(a) unless each of the steps is per-
formed within this country”). I am surprised at my col-
leagues’ holding that these cases require an absolute
“single-entity rule” of infringement, for none of these cases
turned on whether different entities independently or
interactively perform different steps of a method claim.
My colleagues mention the Aro cases on contributory in-
fringement as requiring that there can never be joint or
collaborative infringement. That interpretation is inapt.
In Aro Manufacturing Co. v. Convertible Top Replacement
Co., Inc., 365 U.S. 336 (1961) the Court held that car owners
did not directly infringe claims directed to a convertible top
when the car owners replaced the fabric. In Aro Manufac-
11 MCKESSON TECH v. EPIC SYSTEMS
turing Co. v. Convertible Top Replacement Co., Inc., 377 U.S.
476 (1964), the Court drew upon common-law principles, not
a new “rule of law,” in stating that “a contributory infringer
is a species of joint-tortfeasor, who is held liable because he
has contributed with another to the causing of a single harm
to the plaintiff.” Id. at 500. There was no issue of single
entities or of control or direction. Earlier cases recognized
the tortious nature of infringement, and the foundation of
tort remedy. See, e.g., Carbice Corp. of Am. v. Am. Patents
Dev. Corp., 283 U.S. 27, 33 (1931) (“Infringement, whether
direct or contributory, is essentially a tort, and implies
invasion of some right of the patentee.”); Dowagiac Mfg. Co.
v. Minnesota Moline Plow Co., 235 U.S. 641, 648 (1915)
(“[T]he exclusive right conferred by the patent was property,
and the infringement was a tortious taking of a part of that
property.”).
The complainant here is not attempting to sue all pa-
tients and physicians who use the patented system, but is
seeking to enforce the patent against the purveyor of the
system, on a theory of inducement to infringe. The pat-
entee’s position is that the patent is directly infringed
jointly, and that the purveyor of the claimed method thereby
induces direct infringement. The common-law concept of
joint tortfeasor has long been established in the patent
arena and in its application the cases have turned on their
particular facts, not on some indefeasible “single entity” bar
created as a new rule of law. Questions of joint liability
turned on participation, collaboration, or other relevant
facts, as courts applied the experience of the common law in
a variety of factual situations. The state of the law of joint
infringement was summarized in a jury instruction in On
Demand Machine Co. v. Ingram Industries, Inc., 442 F.3d
1331 (Fed. Cir. 2006), as follows:
MCKESSON TECH v. EPIC SYSTEMS 12
It is not necessary for the acts that constitute in-
fringement to be performed by one person or entity.
When infringement results from the participation
and combined action(s) of more than one person or
entity, they are all joint infringers and jointly liable
for patent infringement. Infringement of a patented
process or method cannot be avoided by having an-
other perform one step of the process or method.
Where the infringement is the result of the partici-
pation and combined action(s) of one or more per-
sons or entities, they are joint infringers and are
jointly liable for the infringement.
442 F.3d at 1344-45. This court stated that “[w]e discern no
flaw in this instruction as a statement of law,” although the
court concluded as to that case that “no reasonable jury
could find infringement, on the correct claim construction.”
Id. at 1345.
The present disregard of precedent is reflected in an-
other recent decision, where the court held that when the
two entities “formed a strategic partnership, enabled [none-
theless] their two programs to work together, and collabo-
rated to sell the two programs as a unit,” there could be no
infringement of the asserted method claims, as a matter of
law. Golden Hour Data Sys., Inc. v. emCharts, Inc., 614
F.3d 1367, 1371 (Fed. Cir. 2010). The court, reversing the
jury verdict, found that “the evidence of control or direction
was insufficient as a matter of law to uphold a finding of
joint infringement.” Id. at 1380.
Other recent rulings of this court are inconsistent. In
Cross Medical Products v. Medtronic Sofamor Danek, 424
F.3d 1293 (Fed. Cir. 2005) the apparatus claim required
that an orthopedic implant is in contact with bone inside the
body; the court held that the implant before installation did
13 MCKESSON TECH v. EPIC SYSTEMS
not directly infringe the apparatus claim, and that the
implant provider’s liability for direct infringement could not
turn on the act of a surgeon installing the implant as di-
rected, because the surgeon was not an agent of the pro-
vider; nonetheless, this court remanded for determination of
whether the provider was liable for indirect infringement.
In Fantasy Sports Properties v. Sportsline.com, Inc., 287
F.3d 1108 (Fed. Cir. 2002) the claim was for a computer-
simulated football game with certain features; the district
court held that a defendant-vendor of the software/game
could not be liable for contributory infringement because the
plaintiff-patentee did not prove that any users operated the
software in an infringing manner. However, in contrast
with the present holding, the court left open the possibility
that the vendor was liable for direct infringement, rejecting
the vendor’s argument that it could not be liable for direct
infringement because the software was operated by users on
their own computers, outside of the control and direction of
the vendor. The court held that “[t]he users of the [accused]
product therefore access the necessary software to play
fantasy football at [the vendor’s] server on the Internet, and
thus that software is maintained and controlled by [the
vendor].” Id. at 1119.
Again in contrast with these principles, in Akamai
Technologies, Inc. v. Limelight Networks, Inc., 629 F.3d 1311
(Fed. Cir. 2010), a panel of the court proposed to promote a
version of these aberrant holdings to “Federal Circuit law,”
stating:
This court therefore holds as a matter of Federal
Circuit law that there can only be joint infringement
when there is an agency relationship between the
parties who perform the method steps or when one
party is contractually obligated to the other to per-
form the steps.
MCKESSON TECH v. EPIC SYSTEMS 14
629 F.3d at 1320. However, if this change of law is to be “a
matter of Federal Circuit law,” conflicting holdings must be
overturned en banc, not by a three-judge panel. In confus-
ing contrast, in Centillion Data Systems, LLC v. Qwest
Communications International, Inc., 631 F.3d 1279 (Fed.
Cir. 2011), a panel of this court, citing NTP, Inc. v. Research
in Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005), held that,
unlike a claim to an interactive “method,” direct infringe-
ment of a claim to an interactive “system,” wherein ele-
ments of the system are physically controlled by different
entities such as an independent “user,” is not subject to a
“single-entity rule”:
By causing the system as a whole to perform this
processing and obtaining the benefit of the result,
the customer has ‘used’ the system under §271(a).
It makes no difference that the back-end processing
is physically possessed by [the defendant]. The cus-
tomer is a single ‘user’ of the system and because
there is a single user, there is no need for the vicari-
ous liability analysis from BMC or Cross Medical.
631 F.3d at 1285. And in Uniloc USA, Inc. v. Microsoft
Corp., 632 F.3d 1292 (Fed. Cir. 2011) this court wrote “[t]hat
other parties are necessary to complete the environment in
which the claimed element functions does not necessarily
divide the infringement between the necessary parties.” 632
F.3d at 1309. The panel majority’s ruling today further
adds to the confusion of “use” of interactive inventions, as
the panel majority holds that an interactive “method” is
only used when a single entity performs or controls or
directs every step of the claimed method, even if, as here, a
single entity “cause[s] the [process] as a whole to perform ...
and obtain[s] the benefit of the result.” Centillion, 631 F.3d
at 1285. As “Congress did not use technical or occult
15 MCKESSON TECH v. EPIC SYSTEMS
phrases” in “defining the extent of the rights and privileges
secured to the patentee,” Bauer & Cie v. O’Donnell, 229 U.S.
1, 11 (1913), we too should avoid “technical or occult” inter-
pretations of §271(a). Panels of this court distinguishing
between practice of an element of a system, and practice of
an element of a method, does not add clarity or predictabil-
ity to patent law.
Earlier cases applied the law of infringement as a
straightforward matter of tortious responsibility. For
example, in Fromson v. Advance Offset Plate, Inc., 720 F.2d
1565 (Fed. Cir. 1985), the court held that contributory
infringement was possible when a step of a method claim
was practiced by the customer, and explained that “because
[the manufacturer’s] customers, not [the manufacturer],
applied the diazo coating, [the manufacturer] cannot be
liable for direct infringement with respect to those plates
but could be liable for contributory infringement.” Id. at
1568. This has been the law. It has never had en banc
reversal.
II
THE MCKESSON CLAIMS
McKesson argues that there is joint infringement even
on the “control or direction” theory, stating that the health-
care provider does exercise control or direction of the use of
the MyChart system by patients. McKesson states that:
Before patients can even use MyChart, healthcare
providers enter into a broader doctor-patient rela-
tionship, enroll patients in the program, and create
personalized webpages for the patients, in order to
facilitate the healthcare providers’ provision of ser-
vices to patients. Only enrolled patients with user-
names and passwords may access their personalized
webpages created by the healthcare providers,
MCKESSON TECH v. EPIC SYSTEMS 16
which are linked to medical records created by pro-
viders for each patient. Patients enter into a con-
tractual agreement covering their use of MyChart.
The healthcare providers provide instructions on
every aspect of using the webpages. They can end a
patient’s use of the system at any time. And they
even formulate some communications for patients.
McKesson Br. 16-17 (internal citations omitted). My col-
leagues deem this relationship irrelevant, ruling that it is
the patient’s choice whether to initiate a communication,
and use of the system is not required by the physician.
McKesson argues that the doctor-patient relationship is
far from the “arms-length cooperation” that was held inade-
quate to provide joint infringement in Muniauction or in
BMC Resources, and that the control-or-direction test must
be read in light of general principles of tort liability, citing
Restatement Second of Torts §875 (“Each of two or more
persons whose tortious conduct is a legal cause of a single
and indivisible harm to the injured party is subject to liabil-
ity to the injured party for the entire harm.”); §876(a) (“For
harm resulting to a third person from the tortious conduct of
another, one is subject to liability if he does a tortious act in
concert with the other or pursuant to a common design with
him”); §877(c) (“For harm resulting to a third person from
the tortious conduct of another, one is subject to liability if
he permits the other to act upon his premises or with his
instrumentalities, knowing or having reason to know that
the other is acting or will act tortuously”).
No patent principle or public policy, and no statutory
requirement, warrants departure from these common law
principles. See PharmaStem Therapeutics, Inc. v. ViaCell,
Inc., 491 F.3d 1342, 1358 (Fed. Cir. 2007) (“The 1952 Act did
not make a substantive change in the law of contributory
17 MCKESSON TECH v. EPIC SYSTEMS
infringement, but it divided the judicially created category
of contributory infringement into two statutory subsec-
tions.”). The question is that “of identifying the circum-
stances in which it is just to hold one individual accountable
for the actions of another.” Sony Corp. Am. v. Universal
City Studios, Inc., 464 U.S. 417, 435 (1984) (discussing
copyright infringement). To the extent that recent panel
rulings including BMC Resources, Muniauction, Golden
Hour, and Akamai appear to stand for an absolute require-
ment that there must be direct infringement by a single
entity who performs or controls or directs every step of the
claimed method before there can be indirect infringement,
these rulings are contravened by precedent.
This case does not raise the specter of a patentee
“impermissibly broaden[ing] the physical or temporal scope
of the patent . . . in a manner that has anticompetitive
effects,” in the words of Princo Corp. v. ITC, 616 F.3d 1318,
1328 (Fed. Cir. 2010) (en banc). To the contrary, this is a
case of new technology adapted to public benefit—an ad-
vance supported by patent policy. Today’s holding, and the
few recent cases on which it builds, have the curious effect
of removing from patent eligibility the burgeoning body of
interactive computer-managed advances.
A patent that cannot be enforced on any theory of in-
fringement, is not a statutory patent right. It is a cynical,
and expensive, delusion to encourage innovators to develop
new interactive procedures, only to find that the courts will
not recognize the patent because the participants are inde-
pendent entities. From the error, confusion, and unfairness
of this ruling, I respectfully dissent.