Establishing Substantial Non-Infringing Use for Software Under 35 U.S.C. ' 271(c)

In the case of contributory infringement, ' 271(c) reads “[w]hoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination, or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial non-infringing use, shall be liable as a contributory infringer.” (emphasis added.) Proving a substantial non-infringing use for software is difficult due to its nature as a set of particularized instructions specifically directed to the accomplishment of one or more discrete purposes. Programmed with a highly specific end in mind, software does not fit the classic paradigm that this defense was intended to capture. The paradigm typically involved a manufactured item (e.g., a pipe or screw), or a chemical having the capacity to serve as an ingredient for a wide variety of end products. For instance, because the purpose of a pipe is to convey fluid over a distance, its purpose encompasses an enormously expansive range of ends. A manufacturer of such a staple has no way of knowing how it will be applied. Generally, a particular software product does not exhibit such a high degree of general applicability. Unlike a pipe, for instance, software normally is written with a very specific purpose in mind. A programmer typically knows the purpose to which the software is applied, and the manner by which the software accomplishes this purpose. Therefore, if the functions resulting from the execution of the software satisfy the method claim, then the task of establishing the defense will depend on: 1) identifying whether the accused software can be executed in a different setting (e.g., embedded in a system having a different purpose) to perform other functions falling outside the scope of the claim, and 2) determining if this alternative setting is aberrational or not, and whether these other functions occur often enough, or are sufficiently related to the accomplishment, rather than the frustration, of the purpose of the software, as to amount to a non-infringing use that is “substantial.”

Ricoh v. Quanta

In Ricoh Co., Ltd v. Quanta Computer Inc., 550 F.3d 1325 (Fed. Cir. 2009), the accused products were optical disc drives capable of recording data to and reading it from optical disks. The asserted method claims were directed to methods for optically recording data. Defendant Quanta asserted that its optical drives had substantial non-infringing uses because, in addition to recording data, they also reproduce data during playback. The Federal Circuit characterized the issue as involving a device in which “separate and distinct components [are] used only to perform the allegedly infringing write methods” and other components are used to perform read operations having nothing to do with the method claims. Id. at 1336. In effect, Quanta argued that the focus should be on the overall optical disc drive since the disc drive contains software for performing the non-infringing read operations in addition to other software performing the allegedly infringing write operations and, therefore, the accused disc drive is suitable for substantial non-infringing use. The Federal Circuit rejected this argument, stating that since “Quanta would be liable under ' 271 (c) if it imported into or sold within the United States a bare component ' that had no use other than practicing the methods of the '552 and '755 patents,” “[i]t thus follows that Quanta should not be permitted to escape liability as a contributory infringer merely by embedding that [bare component] in a larger product with some additional, separable feature before importing and selling it.” Id. at 1337. To get the analysis right, one must correctly identify the proper scope of the accused device. The proper scope does not embrace a larger product containing “additional, separable features,” but instead that portion of the product that by itself is alleged to perform all of the steps of the claim.

Lucent v. Gateway

The accused products in Lucent Techs, Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009) were various Microsoft software packages including Money, Outlook, and Mobile. The infringement centered on the date picker tool of these software products, which allows a user to enter dates in a calendar grid having graphical controls. Id. at 1317. Microsoft argued that, for purposes of determining whether a substantial non-infringing use existed, the proper focus should be on the overall software suite, like Outlook or Money, in which the date picker was embedded. As expressed by the court, “the main issue reduces to whether the 'material or apparatus' is the entire software package or just the particular tool (e.g., the calendar date picker) that performs the claimed method.” Id. at 1320. The Federal Circuit rejected the argument by Microsoft because, in a scenario where a plurality of software features of an overall package are each covered by a respective method patent, “the software seller can never be liable for contributory infringement of any of the method patents because the entire software program is capable of substantial noninfringing use. This seems both untenable as a practical outcome and inconsistent with both the statute and governing precedent.” Id. As with the Ricoh opinion, determining the proper scope of the accused product (e.g., overall software package versus functional component thereof) was critical to the holding.

i4i, Ltd. v. Microsoft Corp.

Although noted largely as the Supreme Court opinion that confirmed the clear and convincing standard of proof for overcoming the presumption of patent validity, this case also produced a panel decision of the Federal Circuit, reported at 598 F.3d 831 (Fed. Cir. 2010), that addressed the issue of substantial non-infringing use for software, specifically, whether the XML editor function of Microsoft WORD had a substantial non-infringing use.

Unlike the prior two decisions discussed above, this decision did not involve an attempt by the defendant (Microsoft) to establish a substantial non-infringing use based on the operation of a separable component bundled together with the infringing component in a larger software package. Instead, the question centered on whether the non-infringing use of the XML editor qualified as “substantial” under the statute. The XML editor could save documents in an infringing manner by saving the content separately from the metacodes associated with the content. According to Microsoft, since the XML editor was also able to save documents in a non-infringing format, it was capable of substantial non-infringing use. However, the court rejected this argument, relying on the testimony of an expert who stated that “none [of the three non-infringing uses] were 'substantial' ' [because] saving a document in the noninfringing, binary format deprived users of the very benefit XML was intended to provide ' namely, allowing another program to search and read the document's metacode tags.” Id. at 851. Elaborating further, the Federal Circuit stated that:

[E]vidence that some users saved XML documents in these noninfringing formats does not render the jury's verdict unreasonable. Whether a use is “substantial,” rather than just “unusual, far-fetched, illusory, impractical, occasional, aberrant, or experimental,” cannot be evaluated in a vacuum '
[T]he jury was allowed to consider not only the use's frequency, but also the use's practicality, the invention's intended purpose, and the intended market ' Here, the jury heard ample testimony that the noninfringing, binary file format was not a practical or worthwhile use for the XML community, for which the custom XML editor was designed and marketed. Id.

A Possible Road Map for Successful Assertions of the Defense

The decisions summarized above exemplify the difficulty faced by software sellers seeking to rely on a substantial non-infringing use to defeat an assertion of contributory infringement. The attempt fails either because the non-infringing use concerns an additional component separable from the infringing component, or, in the case where the infringing component actually has a non-infringing use, the non-infringing use is not “substantial.”

Although not stated expressly, the Federal Circuit's i4i decision appears to tacitly accept the proposition that had the XML editor, the software at issue, provided a non-infringing use that did not undermine the purpose of having documents saved in the XML format (perhaps by allowing users to select a mode in which documents are saved in XML without meeting the claimed feature of separating the content from the metacodes), such a use would have been substantial. The Ricoh decision, in its treatment of Sony Corp. v. Universal Studios, 464 U.S. 417 (1984), hints at a similar willingness to recognize substantial non-infringing uses for software in certain situations.

The Sony case is famous for legally validating the video cassette recorder (“VCR”). Notwithstanding the ability of a VCR to unlawfully record copyrighted shows without permission, the Supreme Court ruled that the ability of the VCR to lawfully record a broadcast program for later viewing (the time-shifting feature) amounted to a substantial non-infringing use under copyright law. The Ricoh court distinguished Sony because, unlike the separable reading and writing components in the optical disc drives at issue, “the same tuner and recording features of the VCR [at issue in Sony] would be employed for either the infringing or the noninfringing use.” (emphasis added.) Ricoh, 550 F.3d at 1339.

It would take software of a particular character to benefit from the substantial non-infringing use defense to contributory infringement. The very same software that, under a first set of circumstances, would infringe a method claim, would have to also possess the ability to avoid infringing the claim under a different set of circumstances. For instance, if software infringes a claim when acting on a first set of input values, it could plausibly avoid liability for contributory infringement if it was programmed to act in a non-infringing manner when acting on a second set of input values, provided that this second mode of operation did not frustrate or undermine the purpose for which the software was designed.

Dervis Magistre is a partner at the intellectual property law firm of Fay Kaplun & Marcin LLP in New York, where he specializes in patent infringement and invalidity analysis, inter partes and ex parte re-examinations, and all aspects of patent prosecution in electronics, software, and medical devices. He can be reached at [email protected].

A software company accused of infringing a method claim is often sued not as a direct infringer under 35 U.S.C. ' 271(a), but as an indirect infringer, either for actively inducing infringement under 35 U.S.C. ' 271(b) or as a contributory infringer under 35 U.S.C. ' 271(c). If sued as a contributory infringer, the company can prevail if it establishes that the accused software has a substantial non-infringing use. In many cases addressing this issue, however, software companies have usually failed to establish this defense. This article summarizes the particular circumstances that gave rise to these failures, and proposes a particular scenario under which a defendant may succeed in showing that its software is suitable for substantial non-infringing use.

Software Vendors As Contributory Infringers

A patentee usually prefers obtaining relief from the seller of accused software rather than its users, especially when the users are the ultimate consumers. But if the claim to be enforced is a method claim, the patentee normally cannot prove that the seller is a direct infringer. Direct infringement of a method claim occurs only when all the steps of the claim are actually performed. Joy Techs., Inc. v. Flakt, Inc. , 6 F.3d 770, 774-75 (Fed. Cir. 1993). Direct infringement thus requires proof that the execution of the software results in the actual performance of all of the steps of the claim. Such actual performance occurs, for instance, when a consumer operates a device (whether a general purpose computer or dedicated electronic apparatus) programmed with the accused software. But the company that merely sold the software cannot be a direct infringer of the method claim because the mere sale of software capable of infringing the claim is not an actual performance of the steps recited in the claim. To enforce the method claim against the company, the patentee will have to accuse it either of actively inducing the direct infringement by the customers or of acting as a contributory infringer.

In the case of contributory infringement, ' 271(c) reads “[w]hoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination, or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial non-infringing use, shall be liable as a contributory infringer.” (emphasis added.) Proving a substantial non-infringing use for software is difficult due to its nature as a set of particularized instructions specifically directed to the accomplishment of one or more discrete purposes. Programmed with a highly specific end in mind, software does not fit the classic paradigm that this defense was intended to capture. The paradigm typically involved a manufactured item (e.g., a pipe or screw), or a chemical having the capacity to serve as an ingredient for a wide variety of end products. For instance, because the purpose of a pipe is to convey fluid over a distance, its purpose encompasses an enormously expansive range of ends. A manufacturer of such a staple has no way of knowing how it will be applied. Generally, a particular software product does not exhibit such a high degree of general applicability. Unlike a pipe, for instance, software normally is written with a very specific purpose in mind. A programmer typically knows the purpose to which the software is applied, and the manner by which the software accomplishes this purpose. Therefore, if the functions resulting from the execution of the software satisfy the method claim, then the task of establishing the defense will depend on: 1) identifying whether the accused software can be executed in a different setting (e.g., embedded in a system having a different purpose) to perform other functions falling outside the scope of the claim, and 2) determining if this alternative setting is aberrational or not, and whether these other functions occur often enough, or are sufficiently related to the accomplishment, rather than the frustration, of the purpose of the software, as to amount to a non-infringing use that is “substantial.”

Ricoh v. Quanta

In Ricoh Co., Ltd v. Quanta Computer Inc. , 550 F.3d 1325 (Fed. Cir. 2009), the accused products were optical disc drives capable of recording data to and reading it from optical disks. The asserted method claims were directed to methods for optically recording data. Defendant Quanta asserted that its optical drives had substantial non-infringing uses because, in addition to recording data, they also reproduce data during playback. The Federal Circuit characterized the issue as involving a device in which “separate and distinct components [are] used only to perform the allegedly infringing write methods” and other components are used to perform read operations having nothing to do with the method claims. Id. at 1336. In effect, Quanta argued that the focus should be on the overall optical disc drive since the disc drive contains software for performing the non-infringing read operations in addition to other software performing the allegedly infringing write operations and, therefore, the accused disc drive is suitable for substantial non-infringing use. The Federal Circuit rejected this argument, stating that since “Quanta would be liable under ' 271 (c) if it imported into or sold within the United States a bare component ' that had no use other than practicing the methods of the '552 and '755 patents,” “[i]t thus follows that Quanta should not be permitted to escape liability as a contributory infringer merely by embedding that [bare component] in a larger product with some additional, separable feature before importing and selling it.” Id. at 1337. To get the analysis right, one must correctly identify the proper scope of the accused device. The proper scope does not embrace a larger product containing “additional, separable features,” but instead that portion of the product that by itself is alleged to perform all of the steps of the claim.

Lucent v. Gateway

The accused products in Lucent Techs, Inc. v. Gateway, Inc. , 580 F.3d 1301 (Fed. Cir. 2009) were various Microsoft software packages including Money, Outlook, and Mobile. The infringement centered on the date picker tool of these software products, which allows a user to enter dates in a calendar grid having graphical controls. Id. at 1317. Microsoft argued that, for purposes of determining whether a substantial non-infringing use existed, the proper focus should be on the overall software suite, like Outlook or Money, in which the date picker was embedded. As expressed by the court, “the main issue reduces to whether the 'material or apparatus' is the entire software package or just the particular tool (e.g., the calendar date picker) that performs the claimed method.” Id. at 1320. The Federal Circuit rejected the argument by Microsoft because, in a scenario where a plurality of software features of an overall package are each covered by a respective method patent, “the software seller can never be liable for contributory infringement of any of the method patents because the entire software program is capable of substantial noninfringing use. This seems both untenable as a practical outcome and inconsistent with both the statute and governing precedent.” Id. As with the Ricoh opinion, determining the proper scope of the accused product (e.g., overall software package versus functional component thereof) was critical to the holding.

i4i, Ltd. v. Microsoft Corp.

Although noted largely as the Supreme Court opinion that confirmed the clear and convincing standard of proof for overcoming the presumption of patent validity, this case also produced a panel decision of the Federal Circuit, reported at 598 F.3d 831 (Fed. Cir. 2010), that addressed the issue of substantial non-infringing use for software, specifically, whether the XML editor function of Microsoft WORD had a substantial non-infringing use.

Unlike the prior two decisions discussed above, this decision did not involve an attempt by the defendant (Microsoft) to establish a substantial non-infringing use based on the operation of a separable component bundled together with the infringing component in a larger software package. Instead, the question centered on whether the non-infringing use of the XML editor qualified as “substantial” under the statute. The XML editor could save documents in an infringing manner by saving the content separately from the metacodes associated with the content. According to Microsoft, since the XML editor was also able to save documents in a non-infringing format, it was capable of substantial non-infringing use. However, the court rejected this argument, relying on the testimony of an expert who stated that “none [of the three non-infringing uses] were 'substantial' ' [because] saving a document in the noninfringing, binary format deprived users of the very benefit XML was intended to provide ' namely, allowing another program to search and read the document's metacode tags.” Id. at 851. Elaborating further, the Federal Circuit stated that:

[E]vidence that some users saved XML documents in these noninfringing formats does not render the jury's verdict unreasonable. Whether a use is “substantial,” rather than just “unusual, far-fetched, illusory, impractical, occasional, aberrant, or experimental,” cannot be evaluated in a vacuum '
[T]he jury was allowed to consider not only the use's frequency, but also the use's practicality, the invention's intended purpose, and the intended market ' Here, the jury heard ample testimony that the noninfringing, binary file format was not a practical or worthwhile use for the XML community, for which the custom XML editor was designed and marketed. Id.

A Possible Road Map for Successful Assertions of the Defense

The decisions summarized above exemplify the difficulty faced by software sellers seeking to rely on a substantial non-infringing use to defeat an assertion of contributory infringement. The attempt fails either because the non-infringing use concerns an additional component separable from the infringing component, or, in the case where the infringing component actually has a non-infringing use, the non-infringing use is not “substantial.”

Although not stated expressly, the Federal Circuit's i4i decision appears to tacitly accept the proposition that had the XML editor, the software at issue, provided a non-infringing use that did not undermine the purpose of having documents saved in the XML format (perhaps by allowing users to select a mode in which documents are saved in XML without meeting the claimed feature of separating the content from the metacodes), such a use would have been substantial. The Ricoh decision, in its treatment of Sony Corp. v. Universal Studios , 464 U.S. 417 (1984), hints at a similar willingness to recognize substantial non-infringing uses for software in certain situations.

The Sony case is famous for legally validating the video cassette recorder (“VCR”). Notwithstanding the ability of a VCR to unlawfully record copyrighted shows without permission, the Supreme Court ruled that the ability of the VCR to lawfully record a broadcast program for later viewing (the time-shifting feature) amounted to a substantial non-infringing use under copyright law. The Ricoh court distinguished Sony because, unlike the separable reading and writing components in the optical disc drives at issue, “the same tuner and recording features of the VCR [at issue in Sony] would be employed for either the infringing or the noninfringing use.” (emphasis added.) Ricoh, 550 F.3d at 1339.

It would take software of a particular character to benefit from the substantial non-infringing use defense to contributory infringement. The very same software that, under a first set of circumstances, would infringe a method claim, would have to also possess the ability to avoid infringing the claim under a different set of circumstances. For instance, if software infringes a claim when acting on a first set of input values, it could plausibly avoid liability for contributory infringement if it was programmed to act in a non-infringing manner when acting on a second set of input values, provided that this second mode of operation did not frustrate or undermine the purpose for which the software was designed.

Dervis Magistre is a partner at the intellectual property law firm of Fay Kaplun & Marcin LLP in New York, where he specializes in patent infringement and invalidity analysis, inter partes and ex parte re-examinations, and all aspects of patent prosecution in electronics, software, and medical devices. He can be reached at [email protected].