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ENGATE, INC. v. ESQUIRE DEPOSITION SERVICES

June 13, 2003

ENGATE, INC., PLAINTIFF
v.
ESQUIRE DEPOSITION SERVICES, LLC, ATKINSON-BAKER, INC. AND WORDWAVE, INC., DEFENDANTS.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge

MEMORANDUM OPINION AND ORDER

Engate Inc. has sued three court reporting agencies, Atkinson-Baker, Inc., Esquire Deposition Services, LLC, and WordWave, Inc., for infringement of various patents directed to real-time transcription systems used by court reporters and attorneys. Engate alleges that the defendants infringe the patents by using the patented processes in connection with the court reporting services their court reporters provide and by offering to sell services that utilize the feature functionalities disclosed in the patents, both in violation of 35 U.S.C. § 271(a). The Court previously construed the disputed claim language, see Engate v. Esquire, No. 01 C 6204, 2003 WL 223306 (N.D.Ill. Jan. 30, 2003), and resolved motions for summary judgment filed by the defendants on the question of whether they could be liable for the acts of the court reporters who worked for them as independent contractors. See Engate v. Esquire, 236 F. Supp.2d 912 (N.D.Ill. 2002). On the latter, we held that the defendants could not be liable for those acts given the absence of any evidence suggesting that the defendants directed the court reporters to use infringing real time systems and software or hired the reporters for the purpose of using those systems or software. Id. at 915. In ruling on the earlier summary judgment motions we specifically left open two questions: (1) whether the defendant agencies could be held vicariously liable for any infringement committed by the court reporters who worked for them as employees (as opposed to independent contractors), and (2) whether the defendant agencies directly infringed the patents in suit by "offering for sale" the patented inventions. Today, in connection with the parties' cross motions for summary judgment, we address those questions.

Discussion

A. Applicable Legal Standards

Summary judgment is appropriate, in a patent case as in any other case, where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); C.R. Bard, Inc. v. Advanced Cardiovascular Systems, Inc., 911 F.2d 670, 672 (Fed. Cir. 1990). "In determining whether there is a genuine issue of material fact, the evidence must be viewed in the light most favorable to the party opposing the motion, with doubts resolved in favor of the opponent." Chiuminatta Concrete Concepts, Inc. v. Cardinal Industries, Inc., 145 F.3d 1303, 1307 (Fed. Cir. 1998). We grant the motion only when "no `reasonable jury could return a verdict for the nonmoving party.'" Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

Patent infringement occurs when someone "without authority makes, uses, offers to sell, or sells any patented invention. . . ." 35 U.S.C. § 271(a). We analyze infringement in two steps: first, we determine the meaning and scope of the patent claims asserted to be infringed; and second, we compare the properly construed claims to the product or process accused of infringing. Markman v. Westview Instruments, Inc., 52 F.3d 967, 976 (Fed. Cir. 1995). Having construed the disputed claim language, we move on to step two. To show literal infringement of its patents, the patentee "must supply sufficient evidence to prove that the accused product or process meets every element or limitation of a claim." Rohm & Haas Co. v. Brotech Corp., 127 F.3d 1089, 1092 (Fed. Cir. 1997). See also Laitram Corp. v. Rexnord, Inc., 939 F.2d 1533, 1535 (Fed. Cir. 1991) ("[T]he failure to meet a single limitation is sufficient to negate infringement of the claim. . . ."). Whereas claim construction is a question of law, infringement is a question of fact. Prima Tek, 318 F.3d at 1148 (citing Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1451 (Fed. Cir. 1998), Bai v. L & L Wings, Inc., 160 F.3d 1350, 1353 (Fed. Cir. 1998)).

B. The Parties' Motions

Engate alleges that Esquire and WordWave directly infringe the patents by allowing their employees to use infringing real time reporting services and that all three defendants directly infringe the patents by offering for sale infringing real time reporting services. Engate alleges, in other words, that some of the defendants have violated § 271(a)'s "use" prohibition and all of them have violated § 271(a)'s "offer to sell" prohibition. Engate initially alleged that the defendants directly infringed twenty-six claims from twelve patents. In its summary judgment motion it has narrowed the universe of claims to seven from seven of the patents: (1) claim five of U.S. Patent No. 5,740,245; (2) claim four of U.S. Patent No. 5,884,256; (3) claim four of U.S. Patent No. 5,926,787; (4) claim twenty-six of U.S. Patent No. 5,949,952; (5) claim one of U.S. Patent No. 6,023,675; (6) claim twelve of U.S. Patent No. 6,282,510; and (7) claim sixteen of U.S. Patent No. 5,369,704. The defendants argue that they are entitled to summary judgment on Engate's allegation that they have directly infringed these seven claims, as well as the remaining nineteen claims initially asserted by Engate.

1. Direct Infringement Based on "Use"

We first consider Engate's claim that the defendants violate § 271(a) when their court reporters perform services that use the methods and functionalities disclosed in the patents. As a result of our earlier summary judgment ruling, this claim focuses only on the activities of the court reporters who work for Esquire and Wordwave as employees (as opposed to independent contractors). See Engate v. Esquire, 236 F. Supp.2d at 915 & n. 2.*fn1

Engate argues that it is entitled to judgment as a matter of law that the methods used and the services provided by the defendants' employee court reporters read on each and every element of the seven claims listed above. And ordinarily, in a case presented to us in this context, we would simply compare the accused method or process with the patented method or process to see whether this is so. The difficulty here, however, is that Engate has failed to nail down exactly what the court reporters do and exactly what the attorneys who retain the court reporters' services do that together or separately is claimed to amount to direct infringement. Engate has stated that the defendants generally provide real time court reporting services, see Engate's Statement of Facts ¶ 3, but it has made no attempt to show that those services are provided by the employee court reporters. Nor has Engate attempted to show that the systems and methods used by the employee court reporters read on each element of the transcription networks and methods disclosed in the asserted claims. By proceeding in this way, Engate appears to suggest that the mere use of a real time court reporting system is enough to prove infringement. But that is not true. The patents in suit do not cover real time court reporting generally; rather, they cover various methods and means for performing certain functions that make such reporting more better and easier to use. Thus Engate has no right to prevent the use of real time reporting in and of itself — and the Court has never understood this to be the nature of Engate's claims. What Engate has is the right to prevent the unauthorized performance of the methods disclosed in the patents and the unauthorized use of the methods or functionalities disclosed in the patents. With respect to Engate's "use" allegations, the Court must first consider whether Engate is required to show that the defendants' employees themselves "use" — more accurately, perform — each element of an asserted claim, or whether it would be enough for Engate to show that the employees do so in conjunction with the attorneys who retain them. As the Court understands Engate's motion, it seeks summary judgment on its claim of direct infringement under § 271(a), not on a claim of contributory infringement under § 271(c). But it is not clear that § 271(a) covers this type of "joint infringement" situation.

Although some courts have recognized a "joint tortfeasor" theory of liability in patent cases, they have done so in the context of contributory, not direct, infringement. See, e.g., Mahurkar v. C.R. Bard, Inc., No. 01 C 8452, 2003 WL 355636 (N.D.Ill. Feb. 13, 2003) (recognizing that the joint tortfeasor theory is viable in patent cases, but holding that, to proceed under that theory, the plaintiff "must first show that [the defendant] itself engaged in one of the activities prohibited by Section 271(a)"; in other words, the plaintiff must first prove direct infringement). See also Aro Manufacturing Co. v. Convertible Top Replacement Co., 377 U.S. 476, 500-01 (1964) (discussing joint infringement in a way that makes clear the court means contributory infringement); Superior Merchandise Co., Inc. v. M.G.I. Wholesale, Inc., Nos. Civ. A 98-3174, Civ. A 99-3492, 2000 WL 322779, at *13 (E.D.La. March 27, 2000) (same).

And to the extent "joint infringement" can be synonymous with "direct infringement," as opposed to "contributory infringement," the Federal Circuit has rejected the theory in situations analogous to the one presented here. In Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565 (Fed. Cir. 1983), for example, the holder of a patent involving a process for making photographic printing plates sued a company that performed several steps in the process and then sold the resulting product to customers, who then performed the remaining steps. The Federal Circuit held that the defendant could not be liable for direct infringement:

It is undisputed that Advance manufactured and sold "wipe-on" plates comprising an anodized aluminum sheet that had been treated with an aqueous solution of sodium silicate, and that its customers applied a diazo coating to those plates. Because the claims include the application of a diazo coating or other light sensitive layer and because Advance's customers, not Advance, applied the diazo coating, Advance cannot be liable for direct infringement with respect to those plates but could be liable for contributory infringement.
Id. at 1567-58.

Similarly, in RF Delaware, Inc. v. Pacific Keystone Technologies, Inc., 326 F.3d 1255 (Fed. Cir. 2003), the accused infringer argued that it could not have violated § 271(a) because it did not itself perform the methods covered by the patents, but only sold equipment that could be used to do so. After noting that "[a] method claim is directly infringed only by one practicing the patented method," the Federal Circuit held that the defendant's acts could not amount to direct infringement; if the patentee could show, however, that someone using the defendant's products infringed the patent, the defendant might be liable for "active inducement of infringement or contributory infringement of a method claim under 35 U.S.C. § 271(b) and (c)." Id. at 1267 (quoting Joy Technologies, 6 F.3d at 775). The Court is not certain whether Engate has asserted a claim under § 271(b) or (c). But even if it has, those claims are not presently before the Court because the parties' summary judgment motions concern only the issue of direct infringement.

Engate cites Shields v. Halliburton, 493 F. Supp. 1376 (W.D.La. 1980), as proof that courts have imposed liability for infringement even where the defendant has not itself performed all of the steps in the process covered by the patent. In Shields, the court found that the defendants had "singularly and jointly infringed" the plaintiff's process patents on three occasions. Id. at 1389. The court found that, on two of those occasions, the defendants themselves had performed each step in the process. Id. at 1388. On the third occasion, the court determined that the defendants had performed all but one of the steps. And on that step, the evidence at least established that someone had done it, even if it did not establish that it was the defendants. Id. In other words, the evidence conclusively established that each step in the process had actually been performed. Thus Shields actually brings us to the next point: before we even reach the question of whether the defendants can be liable for direct infringement based on the joint actions of their ...


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