NTP, Inc. v. Research In Motion, Ltd.

United States Court of Appeals, Federal Circuit
418 F.3d 1282 (2005)

ELI5:

Rule of Law:

Infringing "use" of a patented system under 35 U.S.C. § 271(a) occurs where the system as a whole is controlled and its beneficial use is obtained, even if a component is located abroad. In contrast, a patented method is not "used" within the U.S. unless every step of the method is performed within the U.S.

Facts:

Inventors Thomas Campana, Jr., Michael Ponschke, and Gary Thelen developed a system to integrate existing wireline electronic mail systems with wireless radio frequency (RF) networks.
The invention enabled a mobile user to receive email over a wireless network on an RF receiver, which could later transfer the stored messages to a destination processor like a desktop computer.
NTP, Inc. (NTP) acquired ownership of the five patents-in-suit related to this invention.
Research In Motion, Ltd. (RIM), a Canadian corporation, manufactured, marketed, and sold the BlackBerry system, which allowed users to send and receive emails on a handheld wireless device.
RIM's BlackBerry system utilized 'push' technology that routed messages to a user's handheld device.
A central component of RIM's system, the BlackBerry Relay, was physically located in Canada.
This Relay component received emails from a user's server, processed them, and routed them to a partner wireless network for delivery to the user's BlackBerry handheld.
RIM's customers, many located in the United States, used their BlackBerry handhelds in the U.S. to send and receive emails, a process which involved transmissions to and from the Relay in Canada.

Procedural Posture:

NTP, Inc. filed a lawsuit against Research In Motion, Ltd. (RIM) in the U.S. District Court for the Eastern District of Virginia, alleging patent infringement.
The district court construed several disputed patent claim terms following a Markman hearing.
The district court denied RIM's motion for summary judgment of non-infringement, in which RIM argued that the Canadian location of its Relay component precluded infringement under U.S. law.
Following a jury trial, the jury returned a verdict for NTP, finding that RIM had willfully infringed all asserted claims and awarded damages.
The district court denied RIM's post-trial motion for judgment as a matter of law (JMOL) or a new trial.
The district court entered a final judgment in favor of NTP, awarding over $53 million in damages and fees and issuing a permanent injunction against RIM, which was stayed pending appeal.
RIM, as appellant, appealed the district court's final judgment and injunction to the U.S. Court of Appeals for the Federal Circuit, with NTP as appellee.

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Issue:

Does a company's activity constitute patent infringement by "use... within the United States" under 35 U.S.C. § 271(a) when a key component of the accused system and a critical step of the accused method are located and performed in Canada, while customers control and benefit from the system in the United States?

Opinions:

Majority - Linn, Circuit Judge

Yes, as to the system claims, but no, as to the method claims. The location of an infringing 'use' under 35 U.S.C. § 271(a) is determined differently for system claims and method claims. For system claims, the situs of the 'use' is where the system as a whole is put into service, meaning the place where control of the system is exercised and its beneficial use is obtained. Here, RIM's U.S. customers controlled the BlackBerry system and obtained its benefits within the United States by operating their handheld devices there. The physical location of the Relay component in Canada does not preclude a finding of infringement for the system claims because the system's overall use occurred in the U.S. However, a patented method or process is a sequence of steps, and it is not 'used' within the United States unless all of the steps of the claimed process are performed within the United States. Since the asserted method claims included a step corresponding to the function of the BlackBerry Relay, which was performed in Canada, the entire method was not performed in the U.S. Therefore, the method claims were not infringed as a matter of law. The court also found no infringement of the method claims under other theories like 'sale' or 'importation' of a process.

Analysis:

This decision established a critical precedent for patent infringement in the context of globalized, network-based technologies. It created a significant distinction between the territorial requirements for infringing a system claim versus a method claim. By allowing system claims to be infringed based on the location of control and benefit, the court prevented companies from easily avoiding liability by placing a single server or component offshore. Conversely, the strict 'all steps' rule for method claims created a clear way to design around such patents by ensuring at least one step is performed outside the U.S., influencing subsequent patent prosecution and litigation strategies in the tech sector.

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