Ricoh Co., Ltd. v. Quanta Comput. Inc. - 550 F.3d 1325 (Fed. Cir. 2008)

Rule:

One who sells a component especially designed for use in a patented invention may be liable as a contributory infringer, provided that the component is not a staple article of commerce suitable for substantial noninfringing use. Providing liability for contributory infringement reflects that one who makes a special device constituting the heart of a patented machine and supplies it to others with directions (specific or implied) to complete the machine is obviously appropriating the benefit of the patented invention. The statutory language "offers to sell or sells. or imports into the United States" applies not only to the bare sale of an infringing component, but also to the sale of that component as part of a product or device. 

Facts:

The patents in suit are directed to various aspects of optical disc drive technology. Recordable optical discs and disc drives (e.g., CD-R, DVD-R) allow a user to permanently record data, and rewritable optical discs and disc drives (e.g., CD-RW, DVD-RW) allow a user to record, erase, or overwrite data. First, the '109 patent is directed to methods and apparatuses for generating a particular pulse sequence for recording information to a rewritable optical disc. The asserted method claims of the '109 patent cover a specific write strategy for making legible marks on phase-change optical discs over a wide range of disc speeds. Second, the '955 patent is directed to methods and apparatuses for formatting rewritable optical discs. The '955 patent teaches formatting as a background process, such that the background formatting can be interrupted to carry out a read or write command. Third, the '552 patent is directed to an apparatus and method for controlling the velocity at which a disc drive spins an optical disc. The use of a CLV system increases the recording capacity of an optical disc but requires more complicated machinery in the optical disc drive. Id. at col.2 ll.15-36. The invention of the '552 patent addresses this trade-off through the use of Zone-CLV. Zone-CLV, as claimed in the '552 patent, divides an optical disc into annular zones, wherein each zone is recorded at constant linear velocity, but different linear velocities are used for different zones. Last, the '755 patent is directed to methods of writing data to optical discs in multiple sessions. The methods of the '755 patent solve problems during data writing by allowing the write operation to pause when the buffer runs low, which ensures that no dummy data is recorded to the disc.

Quanta Computer Inc. ("QCI") is a large manufacturer of notebook computers. QCI does not, however, sell notebooks directly to consumers. It is an original equipment manufacturer ("OEM") and sells its products to other companies for retail marketing. QCI is a one-third owner of Quanta Storage, Inc. ("QSI"), which manufactures optical disc drives. Like QCI, QSI is an OEM. It does not sell direct to consumers, but sells products such as optical disc drives to its U.S. customers, including NU Technologies, who in turn sell to consumers. QCI also owns more than ten percent of Quanta Computer USA, Inc. ("QCA"), which is a California company that repairs notebook computers for branded computer companies

Ricoh filed suit against Quanta and NU, accusing them of directly and indirectly infringing each of the patents in suit. The district court granted summary judgment in favor of Quanta and accordingly dismissed all of Ricoh's claims against Quanta and NU and entered a final judgment.

Issue:

Did Quanta contributorily infringe the 552 and 755 patents by selling optical disc drives adapted to perform the patented recording methods?

Answer:

Yes.

Conclusion:

It appears to be undisputed that, assuming direct infringement is found, Quanta would be liable under § 271(c) if it imported into or sold within the United States a bare component (say, a microcontroller containing routines to execute the patented methods) that had no use other than practicing the methods of the '552 and '755 patents. Such a component, specially adapted for use in the patented process and with no substantial noninfringing use, would plainly be "good for nothing else" but infringement of the patented process. It thus follows that Quanta should not be permitted to escape liability as a contributory infringer merely by embedding that microcontroller in a larger product with some additional, separable feature before importing and selling it. If the court were to hold otherwise, then so long as the resulting product, as a whole, has a substantial non-infringing use based solely on the additional feature, no contributory liability would exist despite the presence of a component that, if sold alone, plainly would incur liability. Under such a rule, evasion of the protection intended by Congress in enacting § 271(c) would become rather easy. A competitor who wished to sell hardware that would enable infringement of a patented process could do so without incurring liability for contributory infringement by selling a device that simply embedded the hardware for practicing the patented process within other hardware that also performs another process, or by combining the enabling hardware with other hardware before importing it. Moreover, only the first person in the supply chain (in the example above, the manufacturer who sells the microcontroller) could be liable for contributory infringement. The person who bought that infringing component and assembled it into something else would face no liability for contributory infringement, even if that component were good for nothing but infringement. And most importantly, no § 271(c) liability could ever be found where an infringing component is both manufactured and assembled into something else by the same person. In many of these situations, the only remedy would be against end users of the product for direct infringement. This result would be contrary to what the Supreme Court recognized in Grokster as a fundamental purpose of contributory infringement liability: because "it may be impossible to enforce rights in the protected work effectively against all direct infringers, the only practical alternative [is] to go against the distributor of the copying device for secondary liability."