Infringing Software Hosted from a Foreign Web Site May Infringe a U.S. Patent

In a recent decision of the U.S. District Court for the Southern District of Texas in Renhcol, Inc. v. Don Best Sports, et al., Judge Davis decided that patent claims directed to a "computer" and a "computer storage media" programmed to perform specific functions could be directly infringed in the United States under 35 U.S.C. §271(a) by foreign defendants even though the defendants and their computers and the computer storage media were located totally outside the United States. Judge Davis reasoned that because the computer and software could be accessed and controlled over the Internet by users in the United States, "the situs of use of the allegedly infringing computer storage medium [and computer] is the United States."

The defendants in the Renhcol case, one of whom was a Canadian corporation whose computer and software was located in Canada and one of whom was an Irish corporation whose computer and software was located in Ireland, moved for summary judgment of non-infringement under §271(a) because "the code for the accused websites is, and has always been, written outside the United States and the computers and servers that host the code are, and have always been, located outside the United States." Nonetheless, Judge Davis concluded that there was direct infringement under §271(a) by the defendants based upon the Blackberry case, NIP, Inc. v. Research in Motion, Ltd. In the NIP case, infringement of an apparatus claim was found under §271(a) although one element of the apparatus was located in Canada because the users in the United States "derive beneficial use from a device located overseas that infringes a claimed system."

In addition to finding possible direct infringement by the foreign defendants, liability for inducement of infringement and contributory infringement under 35 U.S.C. §271(b) and (c) was also found possible. The NIP case can be read to hold that beneficial control over and use of a computer system resident either partially or wholly outside the United States by a party within the United States constitutes infringing use by that party within the United States under §271(a). Thus, the requirement of direct infringement is satisfied and the foreign defendants could be liable for either inducement of infringement [to extent to which specific intent to induce infringement can be established] or contributory infringement as a result of making the infringing system available for use on the Internet and inducing its infringing use in the United States.

The lesson to be learned from the Renhcol case is that foreign businesses that place interactive software online from a foreign location for use by parties accessing the Internet in the United States may be faced with patent infringement claims in United States courts. While the situs of the computer server and software may be totally outside the United States, beneficial use and control by U.S. consumers may subject those foreign businesses to liability in the United States for possible direct infringement, inducement of infringement or contributory infringement.

Jay Taylor is a partner in Ice Miller's Intellectual Property Practice Group.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.