Patent Law

Muniauction, Inc. v. Thomson Corp. and I-Deal (Fed. Cir. 2008)

Ray Niro's team helped Muniauction win a jury verdict of willful infringement resulting in an award of $77 million for lost profit and enhanced damages. On appeal, the CAFC reversed finding some of the claims obvious as a matter of law and others not infringed. As its name implies, Muniauction's patent relates to municipal bond auctions.

Infringement by a Single Actor: If it were not well understood already, this opinion completely rejects the rogue theory of joint infringement. Rather, a method claim is only infringed when a single party can be charged with performing each step of the asserted claim. Here, Muni's claims required action by both a bidder and an auction system.

There are times when infringement can be found despite multiple actors. However, in those cases, a single party must be shown to exercise "control or direction" over the entire infringement. This is known as the "mastermind" requirement, and the CAFC has noted that it closely parallels the theory of vicarious liability.

"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."

The CAFC left some wiggle room. A later case could still hold that it is not necessary to show facts sufficient to support traditional vicarious liability. (This case notes that such facts would be sufficient, but does not state they are necessary). Thus activities by an independent contractor could potentially still be attributed to the principal. However, the court made clear that direct infringement will not be found when the steps of a method claim are performed "mere arms-length cooperation" between parties. I have suggested that the line be drawn with collusion or conspiracy to infringe rather than limited to principal-agent relationships.

Obviousness: Muni's expert admitted that claims 1 and 31 were identical to a prior art system except for the patentee's use of a web browser to access the auction. In a post-KSR world that type of invention is difficult to protect. The court reversed the jury verdict ? finding the invention obvious as a matter of law. [More on Muniauction obviousness in tomorrow's post]