Ricoh Company, LTD., v. Quanta Computer Inc.
by William Chung
Background
Plaintiff-appellant Ricoh Company, LTD. ("Ricoh") appealed to the United States Court of Appeals for the Federal Circuit from
a summary judgment dismissing all claims against defendant-appellees Quanta Computer Inc. ("QCI"), Quanta Storage, Inc.
("QSI"), Quanta Computer USA, Inc. ("QCA"), and NU Technology, Inc. ("NU"). On summary judgment, the United States District
Court for the Western District of Wisconsin ruled that the asserted claims of U.S. Patent No. 6,631,109 ('109 patent) were invalid
for obviousness; that the accused devices do not practice the methods of the asserted claims of U.S. Patent No. 6,172,955 ('955 patent);
and that Ricoh failed to present evidence sufficient to create a material issue of fact as to either direct or indirect infringement of U.S.
Patent No. 5,063,552 ('552 patent) and 6,661,755 ('755 patent) by the defendant-appellees.
Summary
The Federal Circuit vacated the district court's summary judgment of noninfringement because the district court applied erroneous
legal standards for assessing (1) whether Quanta contributorily infringed the '552 and '755 patents, and (2) whether QSI induced
infringement of the '552 and '755 patents. The Federal Circuit affirmed the remainder of the district court's decision.
Direct Infringement
Ricoh claimed that Quanta directly infringed under 35 U.S.C. §271(a) the '552 and '755 patents through the sale or offer for sale of
software that causes the accused drives to perform the claimed methods.
The Federal Circuit affirmed the district court's grant of summary judgment of no direct infringement because §271(a) does not prohibit
selling or offering to sell software containing instructions to perform a patented method.
Contributory Infringement
Ricoh also claimed that Quanta contributorily infringed under 35 U.S.C. §271(c) the '552 and '755 patents by selling optical disc
drives adapted to perform the patented recording methods.
The district court held that even though Quanta's drives might be capable of being used to infringe Ricoh's patented processes by
writing discs, there was no liability for contributory infringement because the drives were also capable of "substantial noninfringing
use" within the meaning of §271(c) because they could also be used to read discs in a noninfringing manner.
The Federal Circuit stated that assuming direct infringement is found, Quanta would be liable under §271(c) if it imported into or sold
within the United States a bare component, such as a microcontroller, that had no use other than practicing the methods of the '552
and '755 patents. The Federal Circuit reasoned that Quanta therefore should not be permitted to escape liability as a contributory
infringer merely by embedding such a component in a larger product with some additional, separable feature before importing and
selling it.
Accordingly, the Federal Circuit vacated the district court's grant of summary judgment of no contributory infringement and remanded
to the district court for further proceedings on the material issue of fact of whether Quanta's optical disc drives contain hardware or
software components that have no substantial noninfringing use other than to practice Ricoh's claimed methods.
Active Inducement
Ricoh further claimed that QSI actively induced infringement by its customers (e.g., Hewlett-Packard, Dell, and Gateway) as well as
the end-users of the drives. The district court granted summary judgment of no inducement on the grounds that Ricoh had not presented
evidence sufficient to create a material issue of fact as to whether QSI possessed the requisite intent that the patents be infringed.
The Federal Circuit, citing its decision in DSU Medical Corp. v. JMS Co., Ltd, stated that a finding of active inducement required specific
intent to cause infringement. That is, for a finding of active inducement, it must be established that the defendant possessed specific
intent to encourage another's infringement and not merely that the defendant had knowledge of the acts alleged to constitute inducement.
The Federal Circuit stated that the issue then was whether Ricoh had introduced evidence sufficient to create a material issue of fact as to
Quanta's intent that it drives be used to infringe the method claims of the '552 and '755 patents.
Citing the Supreme Court's decision in Metro-Goldwyn-Mayer v. Grokster, Ltd., the Federal Circuit stated that evidence that the accused
indirect infringer successfully communicated a message of encouragement to the alleged direct infringer was the preeminent but not
exclusive way of showing that active steps were taken with the purpose of bringing about infringing acts, and of showing that infringing
acts took place by using the device distributed. Thus, the Federal Circuit held that the district court erred to the extent that it discounted
Ricoh's evidence of QSI's intent as failing to present evidence that QSI communicated the nature of its actions to alleged infringers.
The Federal Circuit further stated that while proof of intent is necessary, direct evidence is not required, and that circumstantial evidence
may suffice. Specific intent to cause infringement can be inferred, said the Federal Circuit, from a defendant's knowledge of the patent
and control over the design or manufacturing of the product used for direct infringement. Thus, the Federal Circuit found that to the extent
that the accused drives do contain components which are in fact separable from those used to implement noninfringing functions, and to
the extent that the components do not in fact have a purpose other than the performance of infringing functions under normal use conditions,
such evidence would create a material issue of fact regarding QSI's intent that its drives be used to infringe the '552 and '755 patents.
Accordingly, the Federal Circuit vacated the district court's grant of summary judgment of no inducement under §271(b) by QSI and remanded
for consideration of whether a material issue of fact exists with respect to QSI's specific intent that the '552 or '755 patents be infringed by the
use of Quanta's optical disc drives.
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