Whether TSA Action is Attributable for Direct Infringement is Genuine Issue of Fact

Travel Sentry, Inc. v. Tropp, Nos. 2016-2386, 2016-2387, 2016-2714, 2017-1025, (Fed. Cir. Dec. 19, 2017) (Before Lourie, O’Malley, and Taranto, J.) (Opinion for the court, O’Malley, J.)

David A. Tropp (“Tropp”) administers a lock system which permits the Transportation Security Administration (“TSA”) to unlock, inspect, and relock checked baggage as part of airline luggage inspection. Tropp also owns the so-called ‘537 and ‘728 patents, directed to methods of improving airline luggage inspection through the use of dual-access locks. Travel Sentry, Inc. (“Travel Sentry”) similarly administers a lock system which allows a traveler to lock a checked bag and TSA to unlock, inspect, and relock it. Travel Sentry’s locks have a distinctive shape and color and carry an identifying red diamond trademark. Travel Sentry entered into several agreements granting others the right to use and market its locks and master key, it retained the right to monitor quality and distribution. In 2003, Travel Sentry entered into a Memorandum of Understanding (“MOU”) with TSA, agreeing to supply it with a master key to open checked baggage secured with Travel Sentry’s certified locks.

The multi-year lawsuit centers around whether Travel Sentry and its licensees infringe one or more method claims of Tropp’s two patents under 35 U.S.C.S. § 271(a). The case tracks developments in Akamai Technologies, Inc. w. Limelight Networks, Inc., Civ. Action No. 06-11109-RWZ (D. Mass.), culminating in Akamai Technologies, Inc. w. Limelight Networks, Inc. (Akamai V), 797 F.3d 1020 (Fed. Cir. 2015) (en banc), regarding the scope of direct infringement under § 271(a), where no single actor performs all steps of a method claim.

The key issue in the present appeal, in light of Akamai V, is whether TSA’s performance of the final two steps of the patented method claims can be attributed to Travel Sentry, such that Travel Sentry is responsible for infringing the relevant claims. The district court held that Travel Sentry did not directly infringe any of the claims and granted summary judgment in favor of Travel Sentry and its licensees. Tropp appealed this decision and Travel Sentry cross-appealed the district court’s denial of attorney’s fees.

The Federal Circuit rejected the district court’s narrow reading of Akamai V as only limited to the facts present in that case and broadened the circumstances under which one entity’s acts may be attributed to another to establish direct infringement liability in cases of divided infringement.

Under Akamai V, direct infringement under § 271(a) occurs where all steps of a claimed method are performed by a single entity. When more than one actor is involved in practicing the steps, the court considers whether the acts of one entity are attributable to the other such that a single entity is effectively responsible for the infringement. An entity will be held responsible for another’s performance of method steps where it directs or controls that performance. This is a question of fact.

A third party’s actions may be attributed to an alleged infringer when the infringer: (1) conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and (2) establishes the manner or timing of that performance. Proper characterization of both the relevant “activity” and “benefit” that are being conditioned upon the performance of one or more claim steps is key to this analysis. Furthermore, while mere guidance or instruction does not constitute conditioning, legal obligations, technical prerequisites, or supervision and double-checking are not necessary. Finally, the specific context of the claim and conduct inform whether attribution is proper.

In the present case, there are genuine disputes of material fact regarding whether Travel Sentry directs or controls the performance of the final two claim steps of the claimed invention. First, the district court erred by mischaracterizing the relevant “activity” too broadly as “the luggage screening mandated by Congress” instead of the more narrowly defined “screening luggage that TSA knows can be opened with the passkeys provided by Travel Sentry.” This narrow reading is consistent with the MOU between Travel Sentry and TSA – an agreement to engage in only limited aspects of luggage screening. Similarly, the benefit to TSA contemplated in the MOU is the ability to open identifiable luggage using a master key and eliminating the need to break open the lock. The broad Congressional mandate to screen luggage is irrelevant; how TSA accomplishes this objective and whether a benefit flows from the chosen screening method is key. The existence of the MOU itself suggests that TSA believed it would receive some benefit from this arrangement, be it tangible or intangible.

Furthermore, TSA’s activity is the same actvitity identified in the final two claim steps. Any benefit to TSA flows directly from its performance of those steps. The penultimate step requires signaling to a luggage screener that the lock may be opened with a master key; the final step requires the screener to use the master key to open the lock. Travel Sentry supplied TSA with training materials that enable it to screen for the luggage and master keys that allow it to open the luggage. A reasonable jury could conclude that Travel Sentry conditions TSA’s participation in the correctly identified activity and that TSA receives a benefit for its performance of the final two claim steps.

The Court rejected the district court’s conclusion that TSA merely took guidance from Travel Sentry and acted independently. It held that a reasonable jury could find that Travel Sentry established the manner or timing of TSA’s performance of the final two claim steps. Travel Sentry entered into the MOU with TSA, outlining the steps TSA needs to follow, provided TSA with master keys, and provided instructional materials on how to identify the certified locks. TSA must perform the final two claim steps – identifying the luggage and opening it using the provided keys – to participate in the activity of screening luggage with Travel Sentry locks. TSA’s failure to follow these precise steps and use the provided keys would prevent it from receiving the promised benefits.

Because there are genuine disputes of material fact regarding whether Travel Sentry directs or controls the performance of the final two steps of the claimed invention – and whether TSA’s performance of the steps is attributable to Travel Sentry such that Travel Sentry is liable for direct infringement under § 271(a) – the Court vacated the entry of summary judgment and remanded for further proceedings.

An agency or contractual relationship, legal obligation, technical prerequisite or supervision are not necessary to establish direction or control of a third-party’s performance of a method claim step to establish direct infringement by a single-actor. Providing materials and instructions to a another, coupled with a tangible or intangible benefit, may be a sufficient to establish attribution for a claim of infringement under § 271(a).

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