IP Law Daily Direct infringement of luggage-inspection patent still an open question; non-infringement ruling vacated
Tuesday, December 19, 2017

Direct infringement of luggage-inspection patent still an open question; non-infringement ruling vacated

By Mark Engstrom, J.D.

Genuine disputes of material fact precluded a finding of direct infringement, as a matter of law, against Travel Sentry and various licensees, who allegedly infringed the method claims of two patents that were directed to the use of dual-access locks to improve the inspection of airline luggage, the U.S. Court of Appeals for the Federal Circuit has ruled. Because a genuine dispute of material fact remained on the issue of whether Travel Sentry had directed or controlled the performance of the final two steps of the claimed methods in U.S. Patent Nos. 7,021,537 and 7,036,728, such that Travel Sentry and its licensees had directly infringed the asserted claims, the district court’s judgment of non-infringement was vacated and the case was remanded for further proceedings (Travel Sentry, Inc. v. Tropp, December 19, 2017, O’Malley, K.).

Invention and accused system. Inventor David Tropp, through his company Safe Skies LLC, administered a lock system that allowed the Transportation Security Administration (TSA) to unlock, inspect, and relock checked baggage. Travel Sentry administered a similar system that enabled a traveler to lock a checked bag while allowing the TSA to open the lock, search the bag, and relock it. The identifying mark on Travel Sentry’s locks was a red diamond logo, for which Travel Sentry held a registered trademark.

Travel Sentry entered into license and distribution agreements with several lock manufacturers, lock distributors, and luggage manufacturers, and received payments in exchange for the right to use and market its locks and master keys. Travel Sentry retained the right to monitor the quality of the locks that bore its mark and to control the distribution of the master keys, which had a distinctive shape and color.

The representative claim of the asserted patents recited a method of improving the inspection of airline luggage using four steps: (1) making available to consumers a special lock having a combination lock portion and a master key lock portion; (2) marketing the special lock to consumers; (3) an identification structure that would indicate that a luggage-screening entity had agreed to subject a special lock to a special procedure; and (4) the luggage screening entity that acted under a prior agreement to look for the identification structure while screening for luggage.

Prior rulings. The district court ruled that Travel Sentry could be liable for direct infringement only if it controlled the TSA’s performance of the last two claim steps. Thereafter, the district court granted summary judgment of non-infringement to Travel Sentry and its licensees, and it denied the inventor’s cross-motions for summary judgment of infringement. The district court reasoned that summary judgment was appropriate because there was "simply no evidence that Travel Sentry had any influence whatsoever on the third and fourth steps of the method that was carried out by the TSA, let alone ‘mastermind[ed]’ the entire patented process."

According to the district court, the Federal Circuit’s 2015 decision in Akamai Technologies, Inc. v. Limelight Networks, Inc. ("Akamai V"), 797 F.3d 1020, did not expand the scope of direct infringement under 35 U.S.C. §271(a), and did not disturb the "BMC Res./Muniauction test." The lower court essentially concluded that the decision in Akamai V was strictly limited to its own facts, and thus left existing law under §271(a) intact.

Current appeal. The primary issue before the Federal Circuit was whether a genuine dispute of material fact remained as to whether the TSA’s performance of the final two steps of the representative method claims was attributable to Travel Sentry such that Travel Sentry was responsible for directly infringing those claims.

In Akamai V, which was decided on remand from the U.S. Supreme Court, the Federal Circuit "revisit[ed] the contours" of §271(a) and ruled that an entity would be held responsible for the performance of method steps by others in two sets of circumstances: (1) when the entity directed or controlled the performance of others and (2) when the actors formed a joint enterprise. At the heart of the appeal in this case was the first of those circumstances.

The Akamai V court also concluded that liability under §271(a) could be found when an alleged infringer: (1) conditioned participation in an activity or the receipt of a benefit upon performance of a step or steps of a patented method and (2) established the manner or timing of that performance. In those circumstances, the third party’s actions were attributed to the alleged infringer such that the alleged infringer became the actor who was chargeable with direct infringement.

Activity/benefit. In this case, the Federal Circuit noted that Akamai V and Eli Lilly and Co. v. Teva Parenteral Medicines, Inc., 845 F.3d 1357 (Fed. Cir. 2017) highlighted the importance of correctly identifying the relevant "activity" or "benefit" that was being conditioned on the performance of one or more claim steps. The cases also emphasized that the context of the claims and the conduct in a particular case would "inform whether attribution is proper under Akamai V’s two-prong test." Ultimately, the appellate court found that a reasonable jury could conclude that the TSA’s performance of the final two claim steps was attributable to Travel Sentry such that Travel Sentry was liable for direct infringement under §271(a).

According to the Federal Circuit, the district court had committed three errors in its analysis of the inventor’s claims against Travel Sentry: (1) it misidentified the relevant "activity" at issue, broadly defining it as "the luggage screening mandated by Congress"; (2) it misapprehended what types of "benefits" could satisfy the first prong of Akamai V; and (3) it mischaracterized what was required for one to "condition" a third party’s participation in an activity or receipt of a benefit on the third party’s performance of one or more claim steps.

The district court did not explain why the relevant "activity" was "luggage screening" generally, the court noted, and Travel Sentry failed to proffer a compelling defense of that definition on appeal. Further, the district court’s characterization was inconsistent with the Memorandum of Understanding (MOU) between Travel Sentry and the TSA.

The MOU described "a far more specific set of objectives," the appellate court explained; and in signing the MOU, the TSA agreed to make good faith efforts to "distribute the passkeys and information provided by Travel Sentry on the use of the passkeys"; to "use the passkeys to open checked baggage secured with Travel Sentry certified locks whenever practicable"; and to have its employees "relock Travel Sentry locks after bags are inspected." Those purposes clearly indicated that the "activity" in which the TSA would participate was "screening luggage that TSA knows can be opened with the passkeys provided by Travel Sentry." The district court had erred, the Federal Circuit held, by defining the relevant activity in an unduly broad manner.

In addition, the district court’s mischaracterization of the relevant activity "tainted its view" of the "benefits" that Travel Sentry had conditioned on the TSA’s performance of the final two claim steps. In the court’s view, a reasonable juror could conclude that the TSA "benefit" that was contemplated in the MOU was the ability to open identifiable luggage using a master key, which would obviate the need to break open locks.

Viewing the MOU and other evidence in the light most favorable to the inventor, the Federal Circuit found that reasonable jurors could conclude that: (1) TSA received a benefit from being able to identify Travel Sentry-marked luggage and, where necessary, open that luggage using passkeys that Travel Sentry provided, and (2) that benefit was the type that was contemplated in Akamai V. In sum, the court found that the district court had erred in concluding that the first prong of Akamai V could not be satisfied, on summary judgment, based on the undisputed facts of the case.

Manner/timing. The Federal Circuit concluded that, drawing all justifiable inferences in the inventor’s favor, a reasonable jury could find that Travel Sentry had established the manner or timing of TSA’s performance.

It was undisputed that Travel Sentry had entered into the MOU with the TSA, the court explained, had provided the TSA with passkeys and instructional materials on how to identify locks that were licensed with Travel Sentry’s trademark, and had replaced passkeys. Further, the MOU identified the steps that the TSA would have to follow to use Travel Sentry’s standard and obtain the associated benefits, and it was undisputed that the TSA had used Travel Sentry’s lock system.

Finally, the record evidence indicated that Travel Sentry had established and licensed an identifying trademark. In addition, it controlled the design of its locks and passkeys. Based on the evidence of record, the court concluded that a trier of fact could reasonably find that Travel Sentry had established the manner of the TSA’s performance of the third and fourth steps of Tropp’s independent method claims.

Conclusion. In the Federal Circuit’s view, the district court had erred in granting summary judgment of non-infringement in favor of Travel Sentry and its licensees. The appellate court thus vacated the judgment of the district court and remanded the case for further proceedings.

The case is Nos. 2016-2386; 2016-2387; 2016-2714; 2017-1025.

Attorneys: William L. Prickett (Seyfarth Shaw LLP) for Travel Sentry, Inc. Paul Whitfield Hughes (Mayer Brown LLP) for David A. Tropp. Peter Ian Bernstein (Scully, Scott, Murphy & Presser) for Briggs & Riley Travelware, LLC. Carolyn V. Juarez (Neugeboren O’Dowd PC) for eBags, Inc.

Companies: Travel Sentry, Inc.; Briggs & Riley Travelware, LLC; eBags, Inc.

MainStory: TopStory Patent FedCirNews

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