Knowledge of Ex-Employees Working for Accused Infringer Makes Inducement Claim Plausible

In Lifetime Industries, Inc., v. Trim-Lok, Inc., [2017-1096] (September 7, 2017), the Federal Circuit reversed the district court’s dismissal of Lifetime’s complaint for infringement of U.S. Patent 6,966,590 failing to adequately allege that Trim-Lok either directly or indirectly infringed the patent.  Lifetime filed two amended complaints after Trim-Lok twice moved for dismissal for failure to identify the accused product. A Lifetime representative  discovered a two-part Trim-Lok seal installed on an RV with a slideout room at a plant run by a third party.  On Trim-Lok’s third motion, the district court determined that Lifetime had adequately
identified the accused product, but that Lifetime had not adequately pleaded its case.

The district court concluded that Lifetime had not adequately pleaded direct infringement because the claims require both a two-part seal and an RV, and Trim-Lok only manufactures seals.  The district court rejected Lifetime’s argument that Trim-Lok had “assisted with the installation, directed the installation, or directly installed” the Trim-Lok seal as confusing liability for direct infringement with liability for contributory infringement, which the court characterized as imposing liability “based on an offer to sell a component, material, or apparatus,” and dismissed the complaint for direct infringement.

As to indirect infringement, the district court concluded that Lifetime had not alleged any facts from which intent to infringe could be inferred in this case, and dismissed the complaint for indirect infringement as well.

The Federal Circuit found that Lifetime adequately alleged that Trim-Lok directly infringed, observing that one who “makes” a patented invention without authorization infringes the patent.  The Federal Circuit said that commercial manufacture is not the only way that a combination can infringe; limited internal manufacture and use can also infringe.  The Federal Circuit said that although Lifetime did not allege that Trim-Lok made the RV onto which it installed the seal, Lifetime did allege that Trim-Lok installed the seal onto the RV; that is, Lifetime alleged that Trim-Lok made an infringing seal-RV combination.  The Federal Circuit found that Trim-Lok’s demand for more detail “asks for too much,” noting that there is no requirement for Lifetime to prove its case at the pleading stage.

The Federal Circuit also found that Lifetime has plausibly alleged
that Trim-Lok induced infringement.  The Federal Circuit noted that the plausibility requirement is not akin to a probability requirement at the pleading stage; it simply calls for enough facts to raise a reasonable expectation that discovery will reveal that the defendant is liable for the
misconduct alleged.  The Federal Circuit found that specific allegations that former employees Busch and Torrey had knowledge of the patent and its scope when they joined Trim-Lok, making it plausable that Trim-Lok had knowledge of the patent.  The Federal Circuit also found adequate pleading of intent to infringe, noting that Lifetime alleged that after gaining knowledge of the patent and the products covered by the patent Trim-Lok assisted in the installation of the same time of seal on a RV, never having previously made or sold such seals.

The Federal Circuit also agreed with Lifetime that pleading contributory patent infringement only requires pleading knowledge of the patent, not also an intent to infringe the patent.


Providing a Service Alone is not Contributory Infringement

In the Cleveland Clinic Foundation v. True Health Diagnostics LLC, [2016-1766](June 16, 2017), the Federal Circuit affirmed that the asserted claims of U.S. Patent Nos. 7,223,552, 7,459,286, and 8,349,581 are not directed to patent-eligible subject matter, and that Cleveland Clinic failed to state a claim of contributory or induced infringement of U.S. Patent No. 9,170,260.

The patents were all directed to methods for detecting the risk of cardiovascular disease in a patient.  The district court next found the three testing patents patent ineligible under the two-step framework for analyzing patent subject matter eligibility under §101 articulated in Alice.  More specifically, the district court found that the testing patents’ claims were directed to a law of nature under Alice step one because the claims were directed to the correlation between MPO in the blood and the risk of cardiovascular disease.  Under Alice step two, the district court found there was no saving inventive concept, employing well-known methods to detect MPO, comparing MPO levels with a control value in what could be a bare mental process, and ultimately, instructing a user to apply a natural law.

The district court further found that True Health’s testing service was not a “material or apparatus” that could form the basis for a contributory infringement claim.  The district court further found that the Cleveland Clinic did not allege facts sufficient to show the specific intent to induce third parties to infringe.

The Federal Circuit affirmed the propriety of deciding §101 rejections at the motion to dismiss stage, before claim construction or significant
discovery has commenced.  On the merits, the Federal Circuit agreed that the claims of the testing patents were directed to multistep methods for observing the law of nature that MPO correlates to cardiovascular disease.  Because this relationship exists in principle apart from human action, the claims are directed to a patent ineligible law of nature.  The Federal Circuit found the case similar to Ariosa.  At step two of the Alice inquiry, the Federal Circuit agreed that the practice of the method claims
does not result in an inventive concept that transforms the natural phenomena of MPO being associated with cardiovascular risk into a patentable invention.

On the issue of contributory infringement, the Federal Circuit said that a party that provides a service, but no “material or apparatus,” cannot be liable for contributory infringement.  Because the defendant was merely providing testing services, the Federal Circuit agreed that the claim should be dismissed.  On the issue of inducement, the Federal Circuit observed that the mere knowledge of possible infringement by others does not amount to inducement; and that specific intent and action to induce infringement must be proven. The Federal Circuit found that merely providing test reports to physicians falls short of showing the specific intent and action to induce infringement of the ’260 patent.