Leader Technologies Inc. v. Facebook Inc.

Filing 679

Letter to The Honorable Leonard P. Stark from Steven L. Caponi regarding Notice of Supplemental Authority - re 628 MOTION for Judgment as a Matter of Law of No Direct Infringement, 632 MEMORANDUM in Support,. (Attachments: # 1 Exhibit A)(Caponi, Steven)

EXHIBIT A

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HOnly the WestIaw citation is currently available.
United States Court of Appeals,

Federal Circuit.

CENTILLION DATA SYSTEMS, LLC, Plain­

tiff-Appellant,

v.

QWEST COMMUNICATIONS INTERNATIONAL,

INC, Qwest Corporation, and Qwest Communica­

tions Corporation, Defendants-Cross Appellants.

Nos. 2010-1110, 2010-1131.

Jan. 20,2011.

Background: Patentee filed action against competitor
alleging infringement of patent that disclosed system
for collecting, processing, and delivering information
from service provider, such as telephone company, to
customer. The United States District Court for the
Southern District of Indiana, Larry J. McKinney,
Chief Judge, 2009 WL 7185615, granted summary
judgment of noninfringement to competitor. Parties
appealed.
Holdings: The Court of Appeals, Moore, Circuit
Judge, held that:
ill customer "used" accused system;
ill competitor did not "use" entire claimed system by
supplying computer software and technical assistance
for customer to use;
ill competitor did not "make" claimed system by
manufacturing only part of claimed system; and
ill factual issue existed as to whether prior art met
"summary reports as specified by the user" limitation.
Reversed in part, vacated in part, and remanded.
West Headnotes

ill Patents 291 ~O
Patents

directly infringed when more than one actor was in
possession ofelements of system claim. ~==!!..!.:.~
27I(a).

ill Patents 291 ~O
291 Patents
To "use" a system for purposes of infringement, a
party must put the invention into service, i.e., control
the system as a whole and obtain benefit from it. 35
U.S.CA. § 271(a).

ill Patents 29]

~O

291 Patents
Direct infringement by "use" of a system claim
requires a party to use each and every element of a
claimed system; in order to put the system into ser­
vice, the end user must be using all portions of the
claimed invention. ~..:;...:.="-"-'''->...:..:..-'-''''.....

ill Patents 291

~O

291 Patents
Customer "used" accused system, within mean­
ing of statute that prohibited direct infringement of
patents, by creating query that caused back-end
processing in accused system to act for its intended
purpose to run query and return result which then
allowed customer to download result and perform
additional processing, as required by claim in patent
that disclosed system for collecting, processing, and
delivering information from service provider, such as
telephone company, to customer; although back-end
processing was physically possessed by competitor,
customer on one request/one response basis put sys­
tem as whole into service. 35 U.S.CA. § 27I(a).

ill Patents 291 ~O

Party need not exercise physical or direct control
over each individual element of patented system in
order to "use" that system, and thus patent could be

291 Patents
Customer "used" accused system, within mean­

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ing of statute that prohibited direct infringement of
patents, by subscribing to accused service to receive
electronic billing information on monthly basis which
then activated competitor's back-end system to gen­
erate monthly reports and make them available to
customer by download or other means; although use
did not generate one response from one request,
back-end processing in normal operation was per­
formed in response to customer demand. 35 U.S.C.A.
§ 271(a).

W Patents 291 C;:70
291 Patents
Competitor that supplied computer software and
technical assistance for customer to use did not put
personal computer data processing means into service,
and thus did not "use" entire claimed system for col­
lecting, processing, and delivering information, within
meaning of statute that prohibited direct infringement
of patents; although competitor made back·end
processing elements, entire system was not used until
customer loaded software on its personal computer
and processed data and competitor was not vicariously
liable for actions of its customers because decision of
wbether to install and operate software on personal
computer data processing means was entirely up to
customer. 35 U.S.C.A. § 27I(a).

ill Patents 291

C;:70

291 Patents
An agency relationship or other contractual ob­
ligation to perform the steps must exist for patent
infringement to be found when more than one party
performs the steps of a method claim. 35 U.S.C.A. §
27 J(a).

W Patents 291 C;:70

petitor, completed system by providing "personal
computer data processing means" and installing client
software. 35 U.S.C.A. § 271(a).

ill Patents 291

~o

291 Patents
Genuine issue of material fact existed as to
whether prior art met "summary reports as specified
by the user" limitation in patent that disclosed system
for collecting, processing, and delivering information
from service provider, such as telephone company, to
customer, precluding summary judgment on anticipa­
tion claim. 35 U.S.C.A. § 102(b); Fed.Rules
Civ.Proc.Rule 56. 28 U.S.C.A.

Patents 291 ~328(2)
291 Patents
-291XIll Decisions on the Validity, Construction,
and Infringement of Particular Patents
291k328 Patents Enumerated
29Ik328(2) k. Original Utility. Most Cited

5,287,270. Cited.
Appeals from the United States District Court for the
Southern District of Indiana in consolidated case Nos.
04-CV-0073 and 04-CV-2076, Chief Judge Larry L.
McKinney.Victor M. Wigman, Blank Rome LLP, of
Washington, DC, argued for plaintiff-appellant. With
him on the brief were Paul M. Honigberg; and Ken­
neth L. Bressler, of New York, NY.
Vincent J. Belusko, Morrison & Foerster LLP, of Los
Angeles, CA, argued for defendants-cross appellants.
With bim on the brief was Hector G. Gallegos.
Before LOURIE, LINN, and MOORE, Circuit Judges.

Patents
Competitor that manufactured only part of
claimed system for collecting, processing, and deli­
vering information did not "make" claimed system,
within meaning of statute that prohibited direct in­
fringement of patents, where customer, without con­
tractual obligation or agency relationship with com­

MOORE, Circuit Judge.
*1 Appellant Centillion Data Systems, LLC
(Centillion) appeals the district court's grant of sum­
mary judgment that Qwest Communications Interna­
tional, Inc., Qwest Corporation, and Qwest Commu­
nications Corporation (Qwest, collectively) do not
infringe the claims of U.S. patent no. 5.287.270 ('270
patent). Qwest cross-appeals the district court's grant

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of summary judgment that the asserted claims are not
anticipated. Because the district court erred in granting
summary judgment of noninfringement, we vacate
and remand. Because there are genuine issues of ma­
terial fact regarding anticipation, we reverse and re­
mand.
BACKGROUND
The '270 patent discloses a system for collecting,
processing, and delivering information from a service
provider, such as a telephone company, to a customer.
'270 patent col.1 II.1S-20. Prior to the '270 patent,
according to the inventors, telephone companies did
not have a system to process and deliver billing data to
clients in an electronic format other than tapes used on
a mainframe. Id. col.2 11.29-39. The inventors devel­
oped a system for processing call data and delivering it
to customers in a format appropriate for a personal
computer. Id. col.2 1.66-col.3 1.6. The personal com­
puters are adapted to perform analysis on the data
using a specialized software package. Id. col.3
11.34-48.
Claims 1, 8, 10, and 46 are relevant to this appeal.
Claim 1 is illustrative and, at a high level, requires "a
system for presenting information ... to a user ...
comprising:" 1) storage means for storing transaction
records, 2) data processing means for generating
summary reports as specified by a user from the
transaction records, 3) transferring means for trans­
ferring the transaction records and summary reports to
a user, and 4) personal computer data processing
means adapted to perform additional processing on the
transaction records. Centillion concedes that the claim
includes both a "back-end" system maintained by the
service provider (claim elements 1, 2, and 3) and a
"front-end" system maintained by an end user (claim
element 4).
Centillion accused a number of Qwest's billing
systems including Logic, eBiII Companion, and Insite
(accused products) of infringing claims of the '270
patent. For the purposes of this appeal, we need not
differentiate between these products. The accused
products include two parts: Qwest's back office sys­
tems and front-end client applications that a user may
install on a personal computer. Customers who sign up
for the accused products "have made available to them
electronic billing information on a monthly basis."
Appellee's Br. 9. Qwest also provides, as part of the
accused products, software applications that a user can

choose to install on a personal computer. A customer
may take advantage of the electronic billing informa­
tion without installing the software, but the software
allows for additional functionality. Customers access
data by download.
*2 In most uses, the processing of information on
the back-end is passive. Once a user subscribes, the
back-end will perform its monthly processing re­
gardless of whether the user chooses to download the
data. However, the system allows for "on-demand"
reports when a user, at a personal computer, requests
different date ranges. These "on-demand" requests
cause the back-end system to process data and deliver
it to the user via download.
The parties filed cross motions for summary
judgment regarding infringement. Qwest also filed a
motion for summary judgment of invalidity and Cen­
tillion filed a motion for summary judgment of no
anticipation. The district court granted Qwest's motion
for summary judgment of non infringement. Centillion
Data Sys., L.L.C v. Qwest Commc'ns In!'l, Inc., No.
1:04cv73 (S.D.Ind. Oct. 29, 2009) (Opinion). The
district court did not perform an element by element
comparison. Rather, it considered whether, under our
case law, Qwest could be liable for infringement of a
system claim that requires both a back office portion
as well as a personal computer operated by a user. All
claims on appeal are system claims. The district court
only considered infringement by "use" under 3S
U.S.C. § 271(a). The district court held that NIP, Inc.
v. Research in Motion. Ltd., 418 F.3d 1282
(Fed.Cir.200S) defined use as "put [ting] the system
into service, i.e., ... exercis[ing] control over, and
benefit[ting] from, the system's application." It held
that under BMC Resources Inc. v. Paymentech, L.P..
498 FJd 1373 (Fed.Cir.2007) and Cross Medical
Products v. Medtronic Sofamor Danek, Inc .. 424 FJd
1293 (Fed.Cir.200S), an accused infringer must either
practice every element or control or direct the actions
of another that practices the element in question.
Applying this law to the facts, the district court
determined that no single party practices all of the
limitations of the asserted claims. Regarding Qwest,
the district court determined that Qwest does not "use"
the system under § 271 (a) by providing the back-end
portions of the accused systems and the software for a
user to load on its "personal computer processing
means." Opinion at 32. It held that, under its definition

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of "use," Centillion could not show that Qwest "prac­
ticed each and every element ofthe system claim." Id.
Specifically, it held that Qwest does not control the
"personal computer processing means" of the asserted
claims. Id. It held that, although Qwest provides the
software, it does not require customers to load the
software or perform the additional processing required
by the asserted claims. Id. at 32·33. It further held that
Centillion could not establish any direction or control
of the customers by Qwest such that Qwest should be
vicariously liable for the actions of its customers as in
Cross Medical.
The district court further held that Qwest's cus­
tomers did not "use" the patented system under ~
271{a). Opinion at 34. It held that "Centillion has not
demonstrated ... that Qwest's customers directed or
controlled the '[data] processing means' ofthe accused
systems' 'back-end: " Id.
*3 The district court also granted Centillion's
motion for summary judgment of no anticipation
holding that the prior art COBRA system did not
generate "summary reports as specified by the user" as
required by the claims. Both parties appeal. We have
jurisdiction under 28 U.S.C. § 1295(a)(l).
DISCUSSION
We review a district court's grant of summary
judgment de novo. leU Med.. Inc. v. Alads Med. Sys.
Inc.. 558 F.3d 1368, 1374 (Fed.Cir.2009). Summary
judgment is appropriate when, drawing all justifiable
inferences in the nonmovant's favor, there exists no
genuine issue of material fact and the movant is en­
titled to judgment as a matter of law. "'-"""-'-"-'=!..!.!!...!
56(c); Anderson v. Liberty Lobby, Inc .. 477 U.S. 242,
255,106 S.O. 2505, 91 L.Ed.2d 202 (1986).
I. Infringement

ill To analyze infringement in this case, we must
first address the district court's definition of "use"
under § 271(a) and its application of the rules of vi­
carious liability. Then. we apply the rule for "use" to
the potential direct infringers in this case.
A. "Use" of a System Claim Under Section 271(a)
This case turns on what constitutes "use" of a
system or apparatus claim under § 27](a). Centillion
argues that the district court adopted an overly narrow
interpretation and that "use" simply means "the right
to put into service any given invention." Appellant's

Br. 22. It argues that use does not require that a party
"practice" every element. only that it use the system as
a collective. In other words, Centillion argues that
operation of one component of an invention may "put
into service" the invention even if the accused in­
fringer does not directly interact with other compo­
nents. It argues that we explicitly defined "use" under
§ 27Ha) in NTP. It further argues that by introducing a
requirement that an individual party practice every
claim element, the district court introduced concepts
of infringement that apply only to method claims.
Finally, it argues that the district court did not need to
apply the rules of vicarious liability when Centillion is
arguing that there is a single "user" of the system.
Qwest responds that the district court was correct,
that to "use" a system under § 27 Ha), an accused
infringer must exert control over or "practice" each
claimed element. It further argues that we should
reject the application of vicarious liability to "use." It
argues that, although we have endorsed the notion of
vicarious liability in the context of method claims, we
should not extend this analysis to system or apparatus
claims. It argues that we should require "use" of the
entire system, practicing each element. by a single
entity and should never look to the conduct of more
than one party to determine "use."
Qwest further argues that public policy disfavors
Centillion's proposed definition of "use" under ~
271Ca). It argues that to allow direct infringement of a
claim that includes both a front-end personal computer
and a backend controlled by a service provider would
subvert the statutory scheme for indirect infringement.
It argues that if an end user can "put a system into
service" even though it does not control back-end
components, then there would be no need for the in­
direct infringement analysis. It also argues that the
claims in this case are poorly drafted to require action
by two distinct parties. It argues that we should not
"remedy Centillion's ill-conceived claims" by defin­
ing "use" to cover the accused products. Appellee's
Br.52.
*4 We have never directly addressed the issue of
infringement for "use" of a system claim that includes
elements in the possession of more than one actor.
However, we defined the term in a very similar sce­
nario in NIP. In NTP, the issue was whether in­
fringement occurred within the United States. Id. at
1313. The claims and the accused product involved a

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handheld device operated by a customer as well as a
number of relays operated by a service provider. One
of these relays was located outside the United States.
We had to determine whether a "use" by a customer of
the entire system amounted to a "use" within the
United States. We stated that "courts have interpreted
the term 'use' broadly." Id. at 1316. Citing Bauer &
Cie v. O'Donnell. 229 U.S. 1, 33 S.C!. 616, 57 L.Ed.
1041 (1913), we stated that the term use means "the
right to put into service any invention." NTP. 418 F.3d
at 1316-17. We went further to distinguish use of a
claimed method from that of a claimed system and to
hold that "[t]he use of a claimed system under section
271(a) is the place at which the system as a whole is
put into service, i.e., the place where control of the
system is exercised and beneficial use of the system
obtained." Id. at 1317. Applying this rule to the facts
of the case in NTP, we held that customers located in
the United States who sent messages via the accused
product used the overall system and the location of the
use was in the United States.

ill Turning to the instant action, although NTP
dealt with the situs of infringement rather than the
nature ofthe infringing act, it interpreted the definition
of "use" under § 271(a). We hold that to "use" a sys­
tem for purposes of infringement, a party must put the
invention into service, i.e., control the system as a
whole and obtain benefit from it. NT?, 418 F.3d at
1317. The district court correctly determined that this
definition from NTPwas the proper one to apply.
Opinion at 22.
The district court erred, however by holding that
in order to "use" a system under § 271 (a), a party must
exercise physical or direct control over each individ­
ual element ofthe system. The "control" contemplated
in NT? is the ability to place the system as a whole
into service. In other words, the customer in NTP
remotely "controlled" the system by simply transmit­
ting a message. 418 F.3d at 1317. That customer
clearly did not have possession of each of the relays in
the system, nor did it exert the level of direct, physical
"control" that the district court requires. To accept the
district court's interpretation of "use" would effec­
tively overturn NT? because the predicate "use" in
that case would no longer fall under the definition of
"use."

ill We agree that direct infringement by "use" of
a system claim "requires a party ... to use each and

every ... element of a claimed [system]." In order to
"put the system into service," the end user must be
using all portions of the claimed invention. For ex­
ample, in NTP. the end user was "using" every ele­
ment of the system by transmitting a message. It did
not matter that the user did not have physical control
over the relays, the user made them work for their
patented purpose, and thus "used" every element of
the system by putting every element collectively into
service.
1. "Use" by Qwest's Customers
*5 ~ Centillion argues that, under the correct
definition of "use" from NTP, Qwest's customers put
the claimed system into service. It argues that a system
is put into service "when it is engaged to accomplish
the purposes for which it is intended." Appellant's
Reply Br. 32. It argues that Qwest's customers use the
system by subscribing, thus causing the back-end
portions of the system to act and then downloading the
reports. It argues that this is sufficient to put the entire
system into service.
Qwest argues that its customers do not "use" the
system because they do not control the back-end
processing. It argues that Qwest performs the
back-end processing and provides the result-not the
processing itself-to the customer. It argues that the
customer then chooses autonomously whether to
download this information and whether to install and
use the Qwest software. It argues that under Cross
Medical, a customer could only be liable for use of the
system if Qwest actually provided the back end
processing hardware and software to the customer so
that the customer could control it.
There are two different manners of operation of
the Qwest system relevant to this appeaL First, there is
an on-demand function where a customer "seeks par­
ticular and specified information" by creating a query
that the Qwest back-end system processes and pro­
vides a result for download (on-demand operation).
Appellee's Br. 44. Second, during the normal func­
tioning of the system after a user subscribes, Qwest's
back-end systems create periodic summary reports
(standard operation) which are available for the user to
download.
We hold that the on-demand operation is a "use"
I'NI
of the system as a matter 0 f law.- Th e customer puts
the system as a whole into service, i.e., controls the

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system and obtains benefit from it. The customer
controls the system by creating a query and transmit­
ting it to Qwesfs back-end. The customer controls the
system on a one request/one response basis. This
query causes the backend processing to act for its
intended purpose to run a query and return a result.
The user may then download the result and perform
additional processing as required by the claim. If the
user did not make the request, then the back-end
processing would not be put into service. 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 § 27] (a). It makes no dif­
ference that the back-end processing is physically
possessed by Qwest. The customer is a single "user"
of the system and because there is a single user, there
is no need for the vicarious liability analysis from
BMC or Cross Medical.

ill We also hold that the standard operation is a
"use" as a matter of law. The standard operation al­
lows users to subscribe to receive electronic billing
information on a monthly basis. Once a user sub­
scribes, Qwest's back-end system generates monthly
reports and makes them available to the customer by
download or other means. Qwest also makes available
to customers software to load on their PCs to further
exploit these monthly reports. Unlike the on-demand
operation, this is not a one request/one response sce­
nario. By subscribing a single time, the user causes the
back-end processing to perform its function on a
monthly basis. Like the on-demand operation, the
back-end processing in normal operation is performed
in response to a customer demand. The difference
though is that a single customer demand (the act of
subscribing to the service) causes the back-end
processing monthly. But in both modes of operation, it
is the customer initiated demand for the service which
causes the back-end system to generate the requisite
reports. This is "use" because, but for the customer's
actions, the entire system would never have been put
into service. This is sufficient control over the system
under NTP, and the customer clearly benefits from this
function.
*6 Because the district court concluded as a
matter of law that no single party could be liable for
"use" of the patented invention, it did not compare the
accused system to the claim limitations. We note that,
although the customers "use" the system as a matter of
law, this does not settle the issue of infringement. We

will not decide, as Qwest requests, whether the ac­
cused products satisfY the "as specified by the user"
limitations for the first time on appeal. Likewise, we
decline to determine for the first time on appeal
whether any individual customer has actually installed
the Qwest software, ftU downloaded records, and
analyzed them as required by the claims. FN3 Because
the issue has not been raised on appeal here, we make
no comment on whether Qwest may have induced
infringement by a customer.
2. "Use" by Qwest
£Ql Centillion argues that there is a genuine issue
of material fact regarding whether Qwest, by operat­
ing the back-end processing, "uses" the system under
§ 271(a). It argues that Qwest operates the back-end
processing and provides the software to adapt the
user's personal computer. It argues that this effectively
puts the system into service and should qualifY as use
under § 27l(a). It argues that under our precedent,
actual performance of claim limitations is not required
to establish infringement of a system or apparatus
claims, citing Fantasy Sports Properties. {nco v.
Sportsline.com, {nc., 287 F.3d 1108 (Fed.Cir.2002)'
Centillion also argues that, in some instances, Qwest
customer service representatives can tog into the sys­
tem on behalf of an end user and operate all parts of
the claimed system.
Qwest argues that, as a matter of law, it cannot
"use" the system under § 27l(a) because it does not
control the claimed personal computer. Qwest argues
that this case is analogous to Cross Medical where a
third party assembled the complete system. Qwest
asserts that, because it does not control the actions of
its customers, it cannot meet the test of Cross Medical
for vicarious liability. It further argues that the district
court found that there was no evidence of Qwest
customer service using the system as a whole on be­
half of end users.
We agree with Qwest that, as a matter of law, it
does not "use" the patented invention under the ap­
propriate test from NTP. To "use" the system, Qwest
must put the claimed invention into service, i.e., con­
trol the system and obtain benefit from it. NTP. 418
F.3d at 1317. While Qwest may make the back-end
processing elements, it never "uses" the entire claimed
system because it never puts into service the personal
computer data processing means. Supplying the
software for the customer to use is not the same as

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using the system.

ill The only way that Centillion can establish
"use" by Qwest is if Qwest is vicariously liable for the
actions of its customers such that "use" by the cus­
tomers may be attributed to Qwest. Our precedents on
vicarious liability, BMC, Muniauction, Inc. v. Thom­
son Corp., 532 FJd 1318, 1328-29 (Fed.Cir.2008),
Akamai Technologies, Inc. v. Limelight Networks,
Inc., 2009-1372,2009-1380,2009-1416,2009-1417,
2010 WL 5151337 (Fed.Cir. Dec.20, 2010), and Cross
Medical, analyze the circumstances in which the ac­
tions of one party ought to be attributed to a second
party for purposes of direct infringement-vicarious
liability. In BMC, we noted that "[f]or process patent
or method patent claims, infringement occurs when a
party performs all of the steps of the process." 498
FJd at 1378-79. However, we noted that in some
instances, one party could be liable for infringement of
a method claim even if it did not perform all of the
steps. This vicarious liability arises when one party
controls or directs the actions of another to perform
one or more steps of the method. Id at 1379. We
confirmed this approach for method claims in Mu­
niauction, 532 FJd at 1328·29 and recently explained
in Akamai Technologies that for infringement to be
found when more than one party performs the steps of
a method claim, an agency relationship or other con­
tractual obligation to perform the steps must exist. See
Akamai Teem., 2010 WL 5151337. at *6. In Cross
Medical, we considered the issue of vicarious liability
for making a claimed apparatus or system under §.
27l(a). The claim related to a medical device and, as
properly construed, required contact between the de­
vice and human bone. 424 F.3d at 1310-11. In the
particular facts of that case, the accused manufacturer
created the accused product, but did not perform sur­
geries to bring the device into contact with bone. We
held that the manufacturer did not "make" the claimed
apparatus. We held that if anyone made the claimed
apparatus, it was the surgeon who implanted the ac­
cused device, possibly bringing it into contact with
bone. Id at 1311. We noted that the manufacturer
would not be liable for the surgeon's direct infringe­
ment unless the surgeon acted as an agent of the
manufacturer. Id.
*7 Following our vicarious liability precedents,
we conclude, as a matter of law, that Qwest is not
vicariously liable for the actions of its customers.
Qwest in no way directs its customers to perform nor

do its customers act as its agents. While Qwest pro·
vides software and technical assistance, it is entirely
the decision of the customer whether to install and
operate this software on its personal computer data
processing means.
Centillion's reliance on Fantasy Sports is mis·
placed because the issue in that case was whether the
district court erred by only considering indirect in­
fringement. 287 FJd at 1117·19. In Fantasy Sports,
we held that the district court should have considered
whether the defendant directly infringed the claims
because it housed all of the necessary software on its
servers. 287 FJd at 1119. This does not equate to a
holding that in order to prove "use" of a patented
invention, a patent owner must only show that the
accused infringer makes software available. As dis­
cussed above, the entire system is not used until a
customer loads software on its personal computer and
processes data. Qwest clearly does not fulfill this
claim requirement.
B. Liability for "Making" under § 271 (a)

ill Centillion argues that there is a genuine issue
of material fact as to whether Qwest "makes" the
claimed invention under § 271(a) and that it was
therefore improper for the district court to grant
summary judgment of noninfringement. It argues that
Qwest builds all of the parts of the system including
the c1ient·side software. Although Centillion concedes
that the independent claim requires a "personal com·
puter processing means," it argues that Qwest acts as
the "mastermind" of the system by directing and con­
trolling its customers' action to install the software.
Appellant's Br. 37 (citing Muniauction. 532 FJd at
1329).
Qwest responds that Centillion waived this ar­
gument by not bringing it below. Ifthe argument is not
waived, Qwest argues that it asserts virtually no con·
trol over its customers to complete the system. It ar­
gues that its customers are free to choose whether to
install the software. With or without the software, they
can still download and view their reports.
The district court did not address this issue in its
opinion, likely because Qwest's motion for summary
judgment of noninfringement and Centillion's reo
sponse focused on "use." Centillion argues that the
issue is not waived because, in its response to Qwest's
motion, it incorporated by reference its own motion

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for partial summary judgment of infringement that
mentioned Qwesfs liability for "manufacture" of the
accused systems. J.A. 6323. We need not reach the
issue of whether a single statement in an incorporated
brief is sufficient to preserve an issue, because Qwest
does not "make" the patented invention under § 271 (a)
as a matter of law. Qwest manufactures only part of
the claimed system. In order to "make" the system
under § 27 Ha), Qwest would need to combine all of
the claim elements-this it does not do. The customer,
not Qwest, completes the system by providing the
"personal computer data processing means" and in­
stalling the client software.
*8 Further, Qwest is not vicariously liable for the
actions of its customers; as discussed above, Qwest's
customers do not act as Qwest's agents as a matter of
law nor are they contractually obligated by Qwest to
act. See Akamai Techs.! 2010 WL 5151337, at *6;
Cross Medical, 424 F.3d at 1311. llii
II. Invalidity
response to Qwest's motion for summary
judgment of invalidity, Centillion filed a motion for
summary judgment of no anticipation. These motions
addressed anticipation for prior sale under § 102(b)
based on a system called COBRA that had a similar
function to the claimed invention. The district court
denied Qwest's motion and granted Centillion's mo­
tion holding that the COBRA system did not antic­
ipate the asserted claims as a matter of law.

ill In

In the 1980s, the phone company New YorklNew
England Exchange (N.Y.NEX) created the COBRA
system to solve the same problem addressed by the
'270 patent. It sought to replace paper statements and
computer tapes with a more user-friendly format.
COBRA created diskettes for customers with billing
information for use on personal computers. There
were four different types of records, TOLL and three
other records that arguably did not directly involve the
cost of toll phone calls. For example, one of the other
record types involved charges for rented equipment. A
customer could choose to receive reports on one or
more ofthese record types. Like the asserted claims of
the' 270 patent, COBRA comprised a back-end sys­
tem as well as a software package for customers to
install on their personal computers. The system be­
came available for subscription in 1987 and was re­
named TRACE.

The district court granted summary judgment of
no anticipation holding that COBRA did not generate
"summary reports as specified by the user" as required
by the claims. The court's claim constructions are
undisputed. It construed "summary reports" to mean
"a collection of analyzed and/or reorganized data." It
construed "as specified by the user" to mean "cus­
tomer selects, or makes specific, the character of."
This means that, to anticipate, the COBRA system
must generate "a collection of analyzed and/or reor­
ganized data that a customer selects, or makes spe­
cific, the character of."
The district court held that the COBRA system
did not meet this limitation. It relied on the fact that
COBRA was simply an extension of the prior art
mainframe system that allowed users to select a record
type (e.g., TOLL) and receive monthly reports on tape.
It held that the '270 patent contemplated more than
simply collecting the same call data previously pro­
vided on a paper bill or tape. It stated that the "sum­
mary reports" of the '270 patent involved more
processing of the data and placing the data into a dif­
ferent format. It held that the '270 patent contemplated
greater customer input than simply selecting a record
type. Accordingly, the district court held that there
was no genuine issue of material fact that COBRA did
not meet the "as specified by user" limitation of the
independent claims.
*9 Qwest argues that there are genuine issues of
material fact as to whether COBRA discloses "sum­
mary reports as specified by the user." It first argues
that the district court was incorrect to find that CO­
BRA was merely an extension of the prior art system
that provided the same data on magnetic tape. It ar­
gues that COBRA had to reformat all files for use on a
personal computer. Further, it argues that the district
court improperly applied its own construction. It ar­
gues that COBRA users could select which type of
report they wanted (e.g., TOLL) and the resulting
reports meet the construction "a collection of analyzed
and/or reorganized data that a customer selects, or
makes specific, the character of." In other words, if a
customer received only its TOLL records, this would
be a collection of reorganized data that the customer
selected.
Centillion argues that the COBRA system only
allowed users to access one type of record that in­
cluded "rated" calls, the TOLL file. It argues that the

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court should only consider rated calls, because they
are the only types of calls relevant to billing. Further,
it argues that Qwest cannot rely on the COBRA sys­
tem because NYNEX concealed all of the back-end
processing. It argues that NYNEX only provided the
public with the software for personal computers and
concealed all of the processing that is relevant to the
claims. It asks us to consider this issue for the first
time on appeaL Cross-Appellee's Resp. Br. 48, n. 25. It
argues that even commercial sale will not result in a§.
102 bar if the seller does not fully disclose the claimed
invention, citing Woodland Trust v. Flowertree Nur­
sery, Inc., 148 F.3d 1368.1370-71 (Fed.Cir.1998).
The district court erred by holding there was no
genuine issue of material fact that COBRA meets the
"summary reports as specified by the user" limitation.
There is a factual dispute as to whether the records that
COBRA provided are "summary reports" as construed
by the district court. The different reports, such as the
TOLL report, are arguably "a collection of analyzed
and/or reorganized data" because they present records
in a format that was previously unavailable. Further,
there is a factual dispute as to whether these summary
reports are created "as specified by the user." This
claim term has a broad construction of "customer
selects, or makes specific, the character of." The
COBRA customer could define which record type it
wanted in the reports provided by the system. This is
arguably "select[ing] or mak[ing] specific, the cha­
racter of' a report. Because there are genuine issues of
material fact regarding whether COBRA satisfies the
"summary reports as specified by the user" claim
limitation, we hold that summary judgment was im­
proper.

FNI. As we discuss below, this does not
dispose of the issue of infringement because
the district court did not compare the accused
system to the asserted claims.
FN2. Centillion concedes that in order to in­
fringe, the customer must install Qwest's
client software. Appellant's Br. 31.
FN3. For purposes of its indirect infringe­
ment case, Qwest also asks us to determine
that the accused products have substantial
noninfringing uses. The district court did not
address this issue in its opinion and we de­
cline to perform this factual inquiry for the
first time on appeal.
FN4. Centillion also argues that Qwest em­
ployees can remotely log into customer
computers to install the software. Centillion
cites no evidence to support this statement
and Qwest argues that its personnel have
access to customer accounts, not computers.
C.A.Fed. (Ind.),2011.
Centillion Data Systems, LLC v. Qwest Communica·
tions Intern., Inc.
--- F.3d ---', 2011 WL 167036 (C.A.Fed. (Ind.»
END OF DOCUMENT

Regarding the failure to publicly disclose, we will
not decide this for the first time on appeaL Qwest
disputes almost every fact presented by Centillion. It
does not appear that this issue is amenable to summary
judgment, and ifit is, the district court should consider
it in the first instance.

*10 Because genuine issues of material fact re­
main, we reverse the district court's grant of summary
judgment of no anticipation. We remand the case for
further proceedings.
VACATED-IN-PART,
VERSED-IN-PART, and REMANDED

RE­

© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.