Patent Watch: Aristocrat Techs. Austl. Pty Ltd. v. Int' Game Tech.

by BakerHostetler

"[T]his court has rejected claims of liability for direct infringement of method claims in cases in which several parties have collectively committed the acts necessary to constitute direct infringement, but no single party has committed all of the required acts."

On March 13, 2013, in Aristocrat Techs. Austl. Pty Ltd. v. Int' Game Tech., the U.S. Court of Appeals for the Federal Circuit (O'Malley,* Bryson, Linn) affirmed-in-part, vacated-in-part and remanded the district court's summary judgment that IGT did not infringe U.S. Patents No. 7,056,215 and No. 7,108,603, which related to gaming machines, such as slot machines, and claim methods for awarding a progressive prize through a bonus game that may appear in addition to the main game. The Federal Circuit stated:

To establish liability for direct infringement of a claimed method or process under 35 U.S.C. § 271(a), a patentee must prove that each and every step of the method or process was performed. "[F]or a party to be liable for direct patent infringement under 35 U.S.C. § 271(a), that party must commit all the acts necessary to infringe the patent, either personally or vicariously." For method claims -- such as those at issue here -- a patent holder must establish that an accused infringer performs "all the steps of the claimed method, either personally or through another acting under his direction or control. Direct infringement has not been extended to cases in which multiple independent parties perform the steps of the method claim." "[T]he 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."

Under the claim constructions discussed above, no single actor performs all of the steps of the claimed methods. With respect to the '215 patent, Aristocrat admits that a player, rather than the casino or game operator, performs the step of "activating said user interface at said particular gaming machine by said player during said displaying of said second game to affect the display of said second game." Similarly, as recited in all the asserted claims, a player, rather than the game operator, "makes a wager." Thus, to be liable for direct infringement, IGT must exercise direction or control over a player playing the game.

The district court correctly determined that no material issue of fact existed as to IGT's lack of direction or control over the player. In opposition to IGT's motion for summary judgment, Aristocrat argued that IGT controls or directs the behavior of players by providing free credits to players to induce them to gamble at IGT's machines. As the district court found, "[w]hile providing players with free credits might encourage some people to gamble at IGT's machines, players are not obligated to use their free credits, nor are players acting on behalf of IGT when they use their free credits on IGT's machines." Unable to "discern any legal theory under which IGT is vicariously liable for players' actions as a general matter," the district court appropriately found no direct infringement.

"[T]his court has rejected claims of liability for direct infringement of method claims in cases in which several parties have collectively committed the acts necessary to constitute direct infringement, but no single party has committed all of the required acts." One party's direction or control over another in a principal-agent relationship or like contractual relationship operates as an exception to this general rule, but absent that agency relationship or joint enterprise, we have declined to find one party vicariously liable for another's actions. IGT has no such relationship with the player. Neither is the agent of the other, nor can we discern a theory under which one would be vicariously liable for the other's actions.

Finally, Aristocrat argues that a reasonable jury could find that IGT directly infringes during the testing of its machines because, "even under the district court's construction requiring 'legal entitlement,' the 'awarding' step is satisfied when the credits increment on the credit meter indicating that the player is entitled to the amount due." . . . There is no evidence in the record that testers are given the right to use any credits added to the credit meter or claim any prizes won in the course of such use. Because Aristocrat failed to establish a genuine fact dispute regarding the employee's entitlement to a prize, the district court properly granted summary judgment in IGT's favor on the issue of infringement during testing. For these reasons, we affirm the district court's grant of summary judgment of noninfringement with respect to liability under 35 U.S.C. § 271(a).

Neither the parties, nor the district court in its summary judgment order, expend significant time on the question of indirect or induced infringement. The district court premised its grant of summary judgment of noninfringement on its finding of no direct infringement. [W]e must vacate and remand the portion of the order relating to indirect infringement on that basis. "Requiring proof that there has been direct infringement as a predicate for induced infringement is not the same as requiring proof that a single party would be liable as a direct infringer." Thus, "[a] party who knowingly induces others to engage in acts that collectively practice the steps of the patented method -- and those others perform those acts -- has had precisely the same impact on the patentee as a party who induces the same infringement by a single direct infringer; there is no reason, either in the text of the statute or in the policy underlying it, to treat the two inducers differently." . . . Aristocrat deserves the opportunity to press its indirect infringement theory with the benefit of our clarification regarding inducement. While we express no opinion on the ultimate merits of Aristocrat's indirect infringement position, the adduced evidence could support a judgment in its favor on a theory of induced infringement. Therefore we vacate and remand the district court's grant of summary judgment as it relates to indirect infringement.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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