Court Partially Grants Dismissal in Spellcheck Patent Case

On Thursday in the Northern District of California, Judge Yvonne Gonzalez Rogers issued an order granting in part and denying in part Apple’s partial motion to dismiss a third amended complaint for patent infringement filed by Sentius International. Sentius alleged Apple products such as iPhones, MacBooks, Pages, and Keynote “through their spellcheck functionality” infringed the patents-in-suit because these accused products and applications purportedly “practice the claimed methods when a user selects a misspelled word to see spelling suggestions.”  Now the court must consider: “(1) direct infringement of the ’633 Patent, (2) vicarious infringement of the ’633 Patent, and (3) joint infringement of the ’985 Patent.”

The court began its analysis with the claim of direct infringement of the ’633 patent, the court noted that it previously declared that for Apple to have directly infringed, the following must occur: “(1) Apple actually operates the device to perform the method, (2) at least one step of the method is performed on equipment controlled by Apple (per SiRF), or (3) Apple exercises direction or control over the users.” However, Sentius claimed that “Apple and other users of the accused functionality…each respectively operated devices, such as the Accused Products, executing the software that performed the step” and that this occurred on Apple-controlled devices and servers. As a result, Sentius has claimed that Apple directly infringed through its operation of the devices and through the “direction and control over users who operate the devices.”

The court found the first theory possible, stating that “[w]hile Apple undoubtedly designs its products for other users, the Court finds it plausible that Apple may have tested its products or otherwise executed the relevant methods in the course of product development and support. However, the court found that the second theory “is the standard for joint infringement.” Apple argued that since Sentius abandoned the joint infringement claim, this is not applicable, but Sentius argues that the Federal Circuit “intended to expand principles of attribution in Akamai to allow for direct liability where a third party performs all steps of a claimed method based on the defendant’s conditioned benefit and control.” The court agreed with Sentius, stating that as a result, “a defendant may be directly liable for infringing a claimed method where a third party carries out all steps of the method to obtain a benefit conditioned by the defendant and the defendant controls the manner or timing of that performance.”

However, the court stated that Sentius failed to “state a claim under the ‘conditioned benefit’ test for direction and control.” As a result, the court found that “Sentius fails to state a claim for direct infringement based on allegations of direction and control through the provision of infringing software to end-user devices.” The court noted that Sentius even stated that the patented method was not the only way for users to obtain spell check. Thus, Sentius has stated a claim for direct infringement for Apple’s operations of the accused products, but failed to state a claim for direction or control over users operating the devices.

The court also examined the claim of vicarious infringement of the ’633 patent. The court stated that “[v]icarious infringement is a secondary liability doctrine based on ‘an alleged infringer’s liability for a third party’s commission of infringement.’ Joint infringement is a direct liability doctrine based on ‘an alleged infringer being responsible for method steps performed by a third party.’ The distinction is slim to nonexistent where vicarious liability is a viable theory, but has an impact where vicarious liability is not available—most obviously, where there is no direct infringement because no party performs all of the steps of a method claim.” Consequently, according to the court, “Sentius cannot state a claim for vicarious infringement based on the ‘conditioned benefit’ test of Akamai.” The court added that Sentius’s other allegations do not state a claim for vicarious infringement because Sentius “fails to allege any agency relationship between Apple and its users or that Apple has the right and ability to police users’ direct infringement.” As a result, the court concluded that amending the complaint for vicarious infringement claims “would be futile.”

In sum, the court granted Apple’s motion to dismiss in respect to allegations for direct infringement that were based upon direction and control over users and denies in respect to claims for Apple’s operation of the accused devices and the joint infringement of the ’985 patent. Apple has 21 days to answer.

Apple is represented by Kilpatrick Townsend & Stockton LLP. Sentius is represented by Seth Law Offices and Carr & Ferrell LLP.