Opposition Brief — Muniauction, Inc. v. Thomson Corp Corp (No. 08-847)

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Supreme Court. U.S.

01 ithe. FILED

\ \ 4,) eee

vi FEB 6 - 2003

No. 08-847 + OFFICE OF THE CLERK

IN THE

Supreme Court of the United States

MUNIAUCTION, INC.,

D/B/A GRANT STREET GROUP,

Petitioner,

Vv.

THOMSON CORPORATION, D/B/A

THOMSON FINANCIAL LLC AND/OR

THOMSON FINANCIAL MUNICIPALS GROUP,

AND I-DEAL, LLC,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE RESPONDENTS

IN OPPOSITION

Robert A. Long, Jr.

Counsel of Record

Richard L. Rainey

Scott C. Weidenfeller

James P. Sullivan

Covington & Burling LLP

1201 Pennsylvania Ave., NW

Washington, D.C. 20004

(202) 662-6000

February 2009 Counsel for Respondents

stone

eteahedll ais

QUESTION PRESENTED

Whether the evidence presented at trial was

sufficient to support a finding of joint infringement of

a business method patent under 35 U.S.C. § 271(a).

RULE 29.6 CORPORATE DISCLOSURE

STATEMENT

Respondent Thomson Corporation, d/b/a

Thomson Financial LLC and/or Thomson Financial

Municipals Group, was renamed Thomson Reuters

Corporation on April 17, 2008. Thomson Financial

Municipals Group is a division of Thomson Global

Markets Inc., a non-public corporation. ‘Thomson

Reuters Corporation is a Canadian company traded

on the Toronto and New York Stock Exchanges.

Under Thomson Reuters’s dual listed company

structure, Thomson Financial LLC and Thomson

Global Markets Inc. are also subsidiaries of Thomson

Reuters PLC, a United Kingdom company traded on

the London Stock Exchange and NASDAQ.

Respondent i-Deal, LLC is a subsidiary of

Ipreo Holdings LLC.

ill

TABLE OF CONTENTS

QUESTION PRESENTED. .....:00:cscsscccssseovversessersosss 1

RULE 29.6 CORPORATE

DISCLOSURE STATEMENT ..................... ii

TAs OF COI Ete oe ccccencesesccnssssndesiossssessencess il

TABLE OF AUTHORITIEBS..........cccccccscsosssscovesreses iv

STATEMENT OF THE CASE............ ee eeeeeeeeeee 1

REASONS FOR DENYING THE

nike rrassbvstbh ied Hiacenianenistenisariinee 4

I. The Petition Does Not Present An

Important Question Of Law That

Should Be Settled By This Court................ 4

II. Petitioner Has Waived Its

Retroactivity Argument.............c.cccceeceeeeees 13

Ill. Petitioner Is Not Entitled To A

a ee aeedeas 15

ee AAI isgstan te rttatrintarsericmsen oa nbelbienriinuns 17

TABLE OF AUTHORITIES

Page(s)

CASES

Aro Mfg. Co. v. Convertible Top

Replacement Co., 365 U.S. 336

(ER Sat Ries Ian ee eee 6, 8

B.B. Chem. Co. v. Ellis,

117 F.2d 829 (1st Cir. 1941), affd,

I gaia la ots div nsavvcaveciveanaons 7

BMC Res., Inc. v. Paymentech, L.P.,

498 F.3d 1373 (Fed. Cir. 2007) ............... passim

Boyle v. United Techs. Corp.,

487 U.S. 500 (1988) ..........---.- reed ease hcala 15

Bullock Elec. & Mfg. Co. v.

Westinghouse Elec. & Mfg. Co.,

136 F. 206. (GC Car. 1904).......cccccccccrscsvecssocess 8,9

Canton Bio-Med, Inc. v. Integrated

Liner Techs., Inc., 216 F.3d 1367

I hss ose sachnensnsauanevenaeess 5

Chevron Oil Co. v. Huson,

404 U.S. 97 (1971) ....eeeeee- ee ene 14

The Corn-Planter Patent,

90 U.S. (23 Wall.) 181 (1874)................cccccccesees 5

Cotton-Tie Co. v. Simmons,

ee eh rttkihnasin cxesecssxassseracseincsaanes 7

Crowell v. Baker Oil Tools, Inc.,

143 F.2d 1003 (9th Cir. 1944)............................ i)

Dawson Chem. Co. v. Rohm & Haas Co.,

gO Me | FG ne 7,9

Deepsouth Packing Co. v. Laitram

Cre; SGT BD. BAG CTD ive cvcvesievencstsscsccaseee 6,8

E.I. DuPont de Nemours & Co. v.

Monsanto Co., 903 F. Supp. 680

green cule cas inense anuseupeiponeden 9

eBay Inc. v. MercExchange, L.L.C.,

NE ie I 60 ds cacieinvesiccesecconsctvetenvinonevins 13

Faroudja Labs., inc. v. Dwin Elecs.,

Inc., No. 9'7-20010,

1999 WL 111788 (N.D. Cal. 1999)...........0.0.... 9

Franks Casing Crew & Rental Tools,

Inc. v. Weatherford Int'l, Inc.,

889 F.3d 1370 (Fed. Cir. 2004) ................-c.se000 5

Fuller v. Yenizer,

i inc vansidvcicckdnntdunaenetmeniaaceniuneed 5

Goodyear Dental Vulcanite Co. v. Davis,

Te ee OID iaekcneesicdnnccnnnsccscinadsaenntabecontnn 5

Harlow v. Fitzgeralc!,

Be Be sickest sas tnccenesaccacvennvccsacesnnevs 15

Harper v. Va. Dep’t of Taxation,

Sle Ne Oy vvgckcincseractckenencéastrderinerxpeoiven 14

Hewlett-Packard Co. v. Bausch & Lomb

Inc., 909 F.2d 1464 (Fed. Cir. 1990)................. 4

James Heekin Co. v. Baker,

138 F. 63 (8th Cir. 1905).................... S sdueaberuneaes r

KSR Inti Co. v. Teleflex Inc.,

Be res Re ED encanas cc andcawsscncas<dscheccdvoadehecsed 3

Landgraf v. USI Film Prods.,

ee el ee a vies dash chicks Vodeaecdsenndvenssacatons 14

Level 8 Commce’ns, LLC v. Limelight

Networks, Inc., No. 2:07CV589

Care Sis BR, BU ID vocscecctsvensescrssscesevessssces 13

Marley Mouldings Ltd. v. Mikron

Indus., Inc., No. 02C2855,

2003 WL 1989640 (N.D. II]. 2008)................0... 9

Mercoid Corp. v. Mid-Continent Inv.

eRe Ee ae be Gh | nr 6

Meyer v. Holley,

537 U.S. 280 (2003) ......ccccccccscsssssscsesesescsveseeeees 11

Mobil Oil Corp. v. Filtrol Corp.,

BO1 F.2d 262 COs Cir. 1074).....0ccccsccvccoseccsceseess 9

On Demand Mach. Corp. v. Ingram

Indus., Inc., 442 F.3d 1331

ee cs ssbaveipcoccesvess 10, 15

Peerless Equip. Co. v. W.H. Miner, Inc.,

OS F.2d 96 (7th Cir. 1038) .....cccccccsscssccccsessoees 8,9

PharmaStem Therapeutics, Inc. v.

ViaCell, Inc., 491 F.3d 1342

ic iecyscanendensanevsuens 10, 12

Prouty v. Ruggles,

41 U.S. G46 Pet.) 386 (1842) .................ccccccccccece 5

Reynoldsville Casket Co. v. Hyde,

Oe Oe, FEN IE ivsecssaversessekesseciressavasivs 14, 15

Rowell v. Lindsay,

ee eR I EIN vs pctxeussshcossidccedovnsncnstsunensnincvens 5

Royer v. Coupe,

146 U.S. 524 (1892) ....ccccccscscssescesececcssseceeseseseens 5

Sprietsma v. Mercury Marine, Div. of

Brunswick Corp., 537 U.S. 51 (2002)............. 13

vii

Thomson-Houston Elec. Co. v. Ohio

Brass Co., 80 F. 712 (6th Cir. 1897) ................. 7

United Parcel Serv., Inc. v. Mitchell,

A ee i i aaa dna csanhskucansaccevanens 14

Wallace v. Holmes, 29 F. Cas. 74

(C.C. Conn. 1871) (No. 17,100)..................02. 6, 8

Warner-Jenkinson Co. v. Hilton Davis

Crem. Co., 620° U.S. 17 (1987) ....c0..ccccocescccsesess 5

Water-Meter Co. v. Desper,

PRU OP ao... cnsnssninndcapnsusewnodonaebavatts 5

STATUTES

35 U.S.C.

ee te oh) Sh 8 oe as neat 4

a a aa ae es 2, 5, 7

i I EN NE oT aD 6

EC cee ee OU Ee en ales 6,7

OTHER AUTHORITIES

5 DONALD S. CHISUM, CHISUM ON

PATENTS. § 17.03 CRODE) .........cccccescrcosccssssecssecsoene 6

Mark A. Lemley et al., Divided

Infringement Claims, 33 AIPLA Q.J.

I irri nents adhd inesnanieatnedsinendnucsiennss 13

Larry S. Nixon, Preparing and

Prosecuting a Patent to Win in

Litigation, 423 PLI/Pat 39 (1995)................... 13

STATEMENT OF THE CASE

This case concerns allegations of “joint

infringement” of a business method patent for

conducting online municipal bond auctions. The

decision of the United States Court of Appeals for the

Federal Circuit that Respondents did not infringe

the claims of Petitioner’s patent is correct and

consistent with applicable precedent. No further

review is warranted.

1. Respondents offer a system for conducting

online municipal bond auctions called

BidComp/Parity®. Pet. App. 19b. In a municipa!

bond auction, state and local government entities,

known as issuers, sell bonds to raise public funds. fd.

at 16b. Bidders in these auctions submit bids that

include a price for the bonds and a related interest

rate. Jd. From the issuer’s perspective, the best bid is

the one with the lowest “true interest cost” (“TIC”) to

the issuer. /d. Bidders can use BidComp/Parity® to

calculate TIC and submit bids, and issuers can use

BidComp/Parity® to view those bids. Jd. a* 19b.

An auction using Respondents’ system

involves steps performed by multiple parties. First, a

bidder uses a computer to input data needed to

calculate a bid. Jd. at 19b. BidComp/Parity® uses the

data to calculate a bid and stores the bid in a

database. Id. The bidder views the calculated bid on

its computer and decides whether to submit the bid

in the auction, which usually can be accomplished

either through BidComp/Parity® or through non-

electronic means. Id. The bid is then communicated

to the issuer, who can log onto BidComp/Parity® via

the Internet and access bid information from the

database. Id.

Respondents do not charge issuers a fee for

the use of BidComp/Parity®. The issuer decides

whether it will receive bids by electronic or non-

electronic means, specifies the information that will

be required for a bid, and selects the winner of the

auction. In auctions where the issuer elects to receive

both electronic and non-electronic bids, the bidder

chooses how to submit its bid.

2. Petitioner sued Respondents in the United

States District Court for the Western District of

Pennsylvania for infringing U.S. Patent No.

6,161,099 (“the ’099 patent”). The claims at issue in

the ’099 patent recite methods of performing original

issuer municipal bond auctions over an electronic

network using a web browser. Pet. App. 16b.

Petitioner alleged that Respondents’ use of

BidComp/Parity® to conduct auctions directly

infringed method claims of the ’099 patent, in

violation of 35 U.S.C. § 271(a). Pet. App. 20b.

The asserted claims of the 099 patent were

drafted in such a way that no single party can

perform every method step. Jd. at 33b. For example,

the first step calls for a bidder to enter data via a

computer, while the middle steps require an

auctioneer to calculate TIC and communicate bids to

an issuer. Jd. at 33b—34b. To prove that Respondents

practiced every method step, Petitioner sought to

rely on the joint infringement doctrine to attribute

the actions of bidders and issuers to Respondents.

See id. at 43d—44d (instructing jury that “some

connection” between parties sufficed to establish

joint infringement).

Following a trial, a jury found that the

asserted claims were not invalid, that Respondents

willfully infringed, and that Petitioner was entitled

to $38,482,008 in lost profits damages for

infringemer:t. Jd. at 45e—-50e. Respondents moved for

judgment as a matter of law or a new trial, arguing

among other things that joint infringement doctrine

did not support direct infringement liability and that

the 099 patent claims were obvious. The district

court denied the motion; awarded a total of

$84,624,637, including enhanced damages and

prejudgment interest; and granted a permanent

injunction against Respondents. Id. at 93g—94g.

3. The United States Court of Appeals for the

Federal Circuit reversed in part and vacated in part.

Id. at 37b. Relying on this Court’s decision in KSR

International Co. v. Teleflex Inc., 550 U.S. 398

(2007), the court of appeals held that six of the

fourteen asserted claims of the ’099 patent were

invalid as obvious. Pet. App. 22b—33b. The court

further held, as a matter of law, that Respondents

did not infringe the remaining eight claims. Jd. at

33b—37b.

The court of appeals considered the following

joint infringement question: “The issue is thus

whether the actions of at least the bidder and the

auctioneer may be combined under the law so as to

give rise to a finding of direct infringement by the

auctioneer.” Jd. at 34b. Applying the standard set out

in BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d

1373 (Fed. Cir. 2007), the court of appeals concluded

that Respondents were not liable for direct

infringement because they had not exercised “control

or direction” over bidders using BidComp/Parity®,

and therefore had not performed every step of

Petitioner's claimed method. Pet. App. 34b—37b.

REASONS FOR DENYING THE PETITION

I. The Petition Does Not Present An

Important Question Of Law That Should

Be Settled By This Court

Petitioner incorrectly contends that review by

this Court is appropriate because “a United States

court of appeals has decided an important question of

federal law that has not been, but should be, settled

by this Court.” Pet. 19 (quoting Sup. Ct. R. 10(c)).

The court of appeals’ decision does not satisfy that

standard. In attempting to demonstrate otherwise,

Petitioner misstates the law.

1. Contrary to Petitioner’s contention, the

court of appeals’ decision in this case does not “set

aside more than a century of legal precedent.” Pet. i.

In arguing that “ ‘[j]oint infringement’ had a century-

and-a-half long pedigree,” id. at 6, Petitioner

misstates the law by conflating joint infringement

(which is a form of direct infringement) and

contributory infringement (which is a form of

indirect infringement). By ignoring the distinction

between direct and indirect infringement, it is

Petitioner who casts aside established precedent and

the text of 35 U.S.C. § 271. See Hewlett-Packard Co.

v. Bausch & Lomb Inc., 909 F.2d 1464, 1468—69 (Fed.

Cir. 1990) (describing the judicially created

distinction between direct and indirect infringement,

and its subsequent codification in the Patent Act of

1952).

' Although Petitioner asserts (Pet. 2) that this case involves the

interpretation of 35 U.S.C. § 271(b), Petitioner abandoned all

(continued...)

To prove direct infringement, the plaintiff

must prove that a defendant has practiced every

element of the claimed invention. See 35 U.S.C.

§ 271(a); Warner-Jenkinson Co. v. Hilton Davis

Chem. Co., 520 U.S. i7, 29, 40 (1997).2 Where a

method or process patent claim is in issue, liability

for direct infringement thus requires proof that a

single defendant performed every step of the claimed

method. Royer v. Coupe, 146 U.S. 524, 530-31 (1892);

Goodyear Dental Vulcanite Co. v. Davis, 102 U.S.

222, 230 (1880) (“The sane result may be reached by

different processes, each of them patentable, and one

process is not infringed by the use of any number of

its stages less than all of them.”); Canton Bio-Med,

Inc. v. Integrated Liner Techs., Inc., 216 F.3d 1367,

1370 (Fed. Cir. 2000) (“Infringement of process

inventions is subject to the ‘all-elements rule’

whereby each of the claimed steps must be

performed in an infringing process... .”).

Joint infringement doctrine is a means of

establishing direct infringement of a method patent.

To take a simple example, suppose a method consists

of three steps, two of which are performed by a

indirect infringement claims at trial. Pet. App. 90g n.5. After

invoking § 271(b), Pet. 2, Petitioner ignores that provision and

relies on contributory infringement cases, including cases that

concern § 271(c).

2 See also Rowell v. Lindsay, 113 U.S. 97, 101—02 (1885); Water-

Meter Co. v. Desper, 101 U.S. 332, 335 (1879); Fuller v. Yentzer,

94 U.S. 288, 297 (1876); The Corn-Planter Patent, 90 U.S. (23

Wall.) 181, 224 (1874); Prouty v. Ruggles, 41 U.S. (16 Pet.) 336,

341 (1842); Franks Casing Crew & Rental Tools, Inc. v.

Weatherford Int'l, Inc., 389 F.3d 1370, 1378 (Fed. Cir. 2004).

defendant and one of which is performed by a third

party. If the behavior of the third party can be

legally attributed to the defendant, then the

defendant has directly infringed because the parties’

combined actions satisfy the all-elements rule. Joint

infringement doctrine thus defines the circumstances

in which the law attributes third-party behavior to

an accused infringer, such that the defendant is

deemed to have performed the third step itself.

A defendant who does not satisfy the all-

elements rule may nevertheless commit indirect

infringement, but only if there has been an instance

of direct infringement. Deepsouth Packing Co. v.

Laitram Corp., 406 U.S. 518, 526 (1972); Aro Mfg.

Co. v. Convertible Top Replacement Co., 365 U.S.

336, 341 (1961); Mercoid Corp. v. Mid-Continent Inv.

Co., 320 U.S. 661, 677 (1944) (Frankfurter, J.,

dissenting). The Patent Act subdivides indirect

infringement into inducement, 35 U.S.C. § 271(b),

and contributory infringement, id. § 271(c). “Section

271(c) covers the usual situation in_ which

contributory infringement arises: sale of a

component especially designed for use in a patented

combination or process.” 5 DONALD S. CHISUM,

CHISUM ON PATENTS § 17.03 (2004). Contributory

infringement is traced to Wallace v. Holmes, 29 F.

Cas. 74 (C.C. Conn. 1871) (No. 17,100), in which a

defendant was held to have infringed an oi] lamp

patent by selling a burner that had no other suitable

use, intending that the customer would assemble an

infringing apparatus by adding a chimney. Id. at 79—

80.3 Courts later found contributory infringement

where a defendant sold an apparatus intended to

enable direct infringement of a method patent. E.g.,

B.B. Chem. Co. v. Ellis, 117 F.2d 829, 833-34 (ist

Cir. 1941), affd, 314 U.S. 495; cf. 35 U.S.C. § 271(c)

(proscribing contributory infringement where a

person “offers to sell or sells ... a material or

apparatus for use in practicing a patented process’).

In short, there is a clear doctrina! distinction

between joint infringement and_ contributory

infringement: A joint infringer commits direct

infringement under 35 U.S.C. § 271(a), while a

contributory infringer commits indirect infringement

under 35 U.S.C. § 271(c) by intentionally enabling

another’s direct infringement.

Despite this clear distinction, Petitioner cites

joint infringement and contributory infringement

cases interchangeably, as if contributory

infringement precedent governed this joint

infringement case. Citing this Court’s decision in

Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S.

‘176 (1980), Petitioner contends that “[a]lthough

Dawson involved contributory infringement under 35

U.S.C. §271(c), this Court’s reasoning is equally

applicable in the context of ‘joint infringement.’ ” Pet.

5; see also id. at 19 (claiming that the decision below

“conflicts with the reasoning, if not the narrowest

holding, of this Court’s precedent, notably Dawson

3 See also Cotton-Tie Co. v. Simmons, 106 U.S. 89, 94—95 (1882);

James Heekin Co. v. Baker, 138 F. 63, 66 (8th Cir. 1905) (Van

Devanter, J.); Thomson-Houston Elec. Co. vy. Ohio Brass Co., 80

F. 712, 720—22 (6th Cir. 1897) (Taft, J.).

Chemical”). Petitioner then rewrites history by

suggesting that joint infringement arose from the

leading contributory infringement case of Wallace v.

Holmes. Pet. 6 (“ ‘Joint infringement’ had a century-

and-a-half long pedigree ... dating at least from the

1871 Wallace decision.”). Fetitioner also invokes a

pair of contributory infringement cases concerning

method patents as though they are applicable to this

joint infringement case. Pet. 6 (citing Peerless Equip.

Co. v. W.H. Miner, Inc., 93 F.2d 98 (7th Cir. 1938),

and Bullock Elec. & Mfg. Co. v. Westinghouse Eiec. &

Mfg. Co., 129 F. 105 (6th Cir. 1904)); see Peerless, 93

F.2d at 105 (finding contributory infringement);

Bullock, 129 F. at 112 (finding no contributory

infringement).

Petitioner’s reliance on these contributory

infringement cases is misplaced. In the simple

example given above, in which a defendant performs

two steps of a method patent and a third party

performs the final step, joint infringement doctrine

can yield direct infringement liability by combining

the actions of the parties and _ attributing:

performance of every step to the defendant. By

contrast, absent a finding of joint infringement, the

defendant cannot be liable for contributory

infringement because there is no direct infringement.

See Deepsouth, 406 U.S. at 526; Aro, 365 U.S. at 341;

but see Peerless, 93 F.2d at 105. In these

circumstances, where the patent owner can establish

direct infringement only by attributing the actions of

third parties to the alleged infrinyer, liability for

contributory infringement is either unnecessary or

unavailable.

Given the distinction between joint

infringement and contributory infringement, and the

inapplicability of contributory infringement cases

such as Dawson Chemical, Wallace, Peerless, and

Bullock to this joint iniringement case, it is evident

that the court of appeals’ decision involves no

departure from precedent. To the contrary, the

“control or direction” standard announced in BMC

Resources, Inc. v. Paymentech, 1.P., 498 F.3d 1373,

1378-81 (Fed. Cir. 2007), and applied in this case

accords with decisions from other courts.

4 See, e.g., Mobil Oil Corp. v. Filtrol Corp., 501 F.2d 282, 291-92

(9th Cir. 1974) (“We question whether a method claim can be

infringed when two separate entities perform different

operations and neither has control of the other’s activities.”);

Crowell v. Baker Oil Tools, Inc., 143 F.2d 1003, 1004 (9th Cir.

1944) (“It is obvious that one may infringe a patent if he employ

an agent for that purpose or have the offending articles

manufactured for him by an independent contractor.”); Marley

Mouldings Ltd. v. Mikron Indus., Inc., No. 02C2855, 2003 WL

1989640, at *3 (N.D. Ill. 2003) (denying summary judgment of

non-infringement and noting “a material issue of fact as to

whether [defendant] has control over [third party’s] activities

with the performance of the first two steps of the process”);

Faroudja Labs., Inc. v. Dwin Elecs., Inc., No. 97-20010, 1999

WL 111788, at *5—-*6 (N.D. Cal. 1999) (finding no infringement

of patented method for converting motion picture film to high-

quality television signal, where defendant did not perform first

method step or “work[] in concert” with those who did); E-J.

DuPont de Nemours & Co. v. Monsanto Co., 903 F. Supp. 680,

734—35 (D. Del. 1995) (holding that defendant did not infringe

patented process for making stain-resistant carpet fibers, where

defendant performed first step and third party pertormed

remaining steps).

2. Petitioner misstates the holding of the

court of appeals in this case. Rather than

proclaiming the creation of a “new ‘on behalf of

standard” for joint infringement, Pet. 13, the Federal

Circuit’s decision is a correct and _ fact-bound

application of existing precedent.

The Federal Circuit squarely addressed joint

infringement doctrine for the first time in BMC

Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373

(Fed. Cir. 2007).5 The Federal Circuit there held that

performance of a method step by a third party is

attributable to a defendant who exercises “control or

direction” over the third party. Jd. at 1380-81; see

also id. at 1381 (“A party cannot avoid infringement,

however, simply by contracting out steps of a

patented process to another entity. In those cases,

the party in control would be liable for direct

infringement. It would be unfair indeed for the

mastermind in such situations to escape liability.”).

5 Petitioner gives too much weight to dicta from On Demand

Machine Corp. v. Ingram Industries, Inc., 442 F.3d 1331 (Fed.

Cir. 2006). Pet. 2-3, 6, 12, 14, 27, 32 (citing On Demand). As the

Federal Circuit has explained, the joint infringement question

was not “squarely presented” in On Demand. See PharmaStem

Therapeutics, Inc. v. ViaCell, Inc., 491 F.3d 1342, 1358 n.1 (Fed.

Cir. 2007). Although Respondents disagree with Petitioner’s

reading of On Demand, it is unnecessary here to parse the

Federal Circuit’s dicta, which BMC held “did not change the

traditional standard requiring a single party to perform all

steps of a claimed method” to infringe directly. 498 F.3d at

1380; see also id. (“On Demand did not change this court’s

precedent with regard to joint infringement.”).

The decision in this case — by a panel of the

Federal Circuit that included two members of the

BMC panel — simply applied BMC’s “control or

direction” standard. Concluding that Respondents

did not exercise control or direction over participants

in online municipal bond auctions, the court of

appeals found no joint infringement of the asserted

claims of Petitioner's business method patent. Pet.

App. 36b—37b.

Petitioner seeks to inflate the importance of

this case by asserting that the court of appeals has

supplanted the “control or direction” standard. Pet.

13. The language of the court of appeals’ decision is

to the contrary. The Federal Circuit’s brief discussion

of joint infringement repeats some variant of BMC’s

“control or direction” language no fewer than four

times. Pet. App. 35b—36b. Although Petitioner refers

to “[t]he Federal Circuit’s new ‘on behalf of

standard,” Pet. 13, essentially identical language

appears in BMC. 498 F.3d at 1379 (“In the context of

patent infringement, a defendant cannot thus avoid

hability for direct iniringement by having someone

else carry out one or more of the claimed steps on its

behalf.”) (emphasis added). In short, the decision

below involved nothing more than application of the

BMC standard to a particular set of facts. No further

review is warranted.®

6 The Federal Circuit referred to vicarious liability in BMC, 498

F.3d at 1379, and in this case, Pet. App. 36b. Cf. Meyer v.

Holley, 537 U.S. 280, 285 (2003) (“[W]hen Congress creates a

tort action, it legislates against a legal background of ordinary

tort-related vicarious liability rules and consequently intends

(continued...)

3. Petitioner is wrong to contend that

confus‘on among district courts applying the Federal

Circuit’s joint infringement standard justifies review

in this Court. Pet. 14-19, 20-21. Less than two years

have passed since the Federal Circuit announced the

“control or direction” standard for joint infringement.

See PharmaStem, 491 F.3d at 1358 n.1 (noting that

BMC, decided in 2007, was the first Federal Circuit

case that “squarely presented” the joint infringement

issue). To the extent that tne Federal Circuit’s

standard gives rise to any confusion in the district

courts, it is appropriate for the Federal Circuit to

address that confusion in the first irstance. As the

Federal Circuit decides additional joint infringement

cases ard applies its “control or direction” standard

to new facts, the operation of that standard will be

clarified and any confusion in the lower courts will

dissipate.

4. Petitioner’s concern over the enforceability

of business method patents is readily addressed

through proper claim drafting. BMC, 498 F.3d at

1381 (“The concerns over a _ party avoiding

infringement by arms-length cooperation can usually

be offset by proper claim drafting. A patentee can

usually structure a claim to capture infringement by

its legislation to incorporate those rules.”). Petitioner argiv:es

that the phrase “vicarious liability” implies that a third party

must perform every method step to find joint infringement. Pet.

14. In so arguing, Petitioner disregards clear language in the

Federal Circuit’s decision. See Pet. App. 34b (“The issue is thus

whether the actions of at least the bidder and the auctioneer

may be combined under the law so as to give rise to a finding of

direct infringement by the auctioneer.”) (emphasis added).

a single party.”); Level 3 Comme’ns, LLC v. Limelight

Networks, Inc., No. 2:07CV589, slip op. at 11 (E.D.

Va. Dec. 29, 2008) (“[T]he claims of the Farber

patents are drafted in such a way as to allow

infringement to be claimed on the basis of the actions

of a single party, rendering jurisprudence regarding

infringement by multiple parties in Muniauction and

BMC inapposite.”). Patent practitioners have long

recognized the need to draft claims so only a single

entity performs them. See, e.g., Mark A. Lemley et

al., Divided Infringement Claims, 33 AIPLA Q.J.

255, 272-75 (2005) (instructing practitioners to

“Draft Unitary Claims”); Larry S. Nixon, Preparing

and Prosecuting a Patent to Win in Litigation, 423

PLI/Pat 39, 53-54 (1995) (cautioning against

“writ[ing] claims so that only a combination of

different entities falls within the scope of any claim”).

There is no reason for courts to distort joint

infringement doctrine in order to salvage poorly

drafted business method patents. Cf. eBay Inc. v.

MercExchange, L.L.C., 547 U.S. 388, 397 (2006)

(Kennedy, J., concurring) (noting the “potential

vagueness and suspect validity of some of these

[business method] patents”).

II. Petitioner Has Waived Its Retroactivity

Argument

Petitioner also argues that the BMC joint

infringement standard should not have been applied

retroactively in this case. Pet. 28-35. This argument

has been waived because Petitioner did not raise it in

its brief on the merits (or its rehearing petition, for

that matter) in the court of appeals. See Sprietsma v.

Mercury Marine, Div. of Brunswick Corp., 537 U.S.

51, 56 n.4 (2002); United Parcel Serv., Inc. v.

Mitchell, 451 U.S. 56, 60 n.2 (1981).

Moreover, Petitioner’s retroactivity argument

lacks merit. Once the Federal Circuit applied the

“control or direction” standard in BMC, it was

obliged to apply that standard in all pending cases.

See Harper v. Va. Dep’t of Taxation, 509 U.S. 86, 97

(1993) (“When this Court applies a rule of federal law

to the parties before it, that rule is the controlling

interpretation of federal law and must be given full

retroactive effect in all cases still open on direct

review and as to all events, regardless of whether

such events predate or postdate our announcement

of the rule.”); Reynoldsville Casket Co. v. Hyde, 514

U.S. 749, 752 (1995) (“{[W]hen (1) the Court decides a

case and applies the (new) legal rule of that case to

the parties before it, then (2) it and other courts

must treat that same (new) legal rule as ‘retroactive,’

applying it, for example, to all pending cases,

whether or not those cases involve predecision

events.”).7

Petitioner suggests that the usual

retroactivity rules should not apply to patent

decisions of the Federal Circuit, Pet. 31, but there is

no authority for its proposal to divorce patent cases

7 Petitioner’s invocation of Chevron Oil Co. v. Huson, 404 U.S.

97 (1971), Pet. 29-30, 35, is unavailing. See Landgraf v. USI

Film Prods., 511 U.S. 244, 279 n.32 (1994) (“While it was

accurate in 1974 to say that a new rule announced in a judicial

decision was only presumptively applicable to pending cases, we

have since established a firm rule of retroactivity.”) (citing

Huson and Harper).

from “the fundamental rule of ‘retrospective

operation’ that has governed ‘[jjudicial decisions .

for near a thousand years.’” Harper, 509 U.S. at 94

(quoting Kuhn v. Fairmont Coal Co., 215 U.S. 349,

372 (1910) (Holmes, J., dissenting)). Petitioner

invokes this Court’s discussion of qualified immunity

in Reynoldsville Casket,® Pet. 29, but fails to offer a

meaningful connection between patent law and

qualified immunity. |

Ill. Petitioner Is Not Entitled To A GVR Order

Finally, Petitioner asks this Court to “grant a

writ of certiorari and vacate and remand (‘GVR’) this

case to the Federal Circuit with instructions ordering

a new trial limited to the specific issue of ‘joint

infringement.” Pet. 36. Petitioner did not ask the

court of appeals for a remand in its brief on the

merits or its petition for rehearing, and therefore

this argument, like Petitioner’s — retroactivity

argument, has been waived. See supra Part II.

Petitioner's GVR request is also foreclosed by

this Court’s decision in Boyle v. United Technologies

Corp., 487 U.S. 500, 513 (1988) (holding that “[i]f the

8 514 U.S. at 757-59 (explaining that retroactivity of a new

constitutional rule will not be dispositive in an unlawful-arrest

case where defendant police officer invokes qualified immunity,

the new rule not having been “clearly established” at the time of

the arrest, see Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982)).

9 Petitioner’s retroactivity argument is also self-defeating. It

seeks to rely on On Demand Machine Corp. v. Ingram

Industries, Inc., 442 F.3d 1331 (Fed. Cir. 2006), Pet. 32, a

decision that was not issued until almost five years after

Petitioner filed this lawsuit. See Pet. App. 20b.

evidence presented in the first trial would not suffice,

as a matter of law, to support a jury verdict under

the properly formulated defense, judgment could

properly be entered for the respondent at once,

without a new trial”). Petitioner argues that the

court of appeals should have remanded for a jury

determination as to whether Respondents exerted

“control or direction” over participants in online

municipal bond auctions. Pet. 37. But the court of

appeals held, as a matter of law, that Respondents

do not exercise the “control or direction” needed to

establish joint infringement: “In this case, Thomson

neither performed every step of the claimed methods

nor had another party perform steps on its behalf,

and MuniAuction has identified no legal theory

under which Thomson might be vicariously liable for

the actions of the bidders. Therefore, ‘Thomson does

not infringe the asserted claims as a matter of law.”

Pet. App. 387b. (emphasis added). Accordingly,

Petitioner is not entitled to a retrial.

The court of appeals’ holding is correct. In a

BidComp/Parity® auction, the issuer determines the

content of a valid bid and the means by which it

must be submitted. Where an issuer allows both

electronic and non-electronic bid submission, bidders

choose whether to submit bids via Respondents’ web-

based system. Respondents do not exert “control or

direction” over bidders or issuers in their

performance of these and other method steps. It

would be a curious auction indeed in which the

auctioneer controlled the behavior of both buyers and

sellers.

The evidence recounted by Petitioner, Pet. 39—

41, fails to establish control. While Respondents

control their own BidComp/Parity® software, see id.,

this is not “control” in the legally relevant sense. Pet.

App. 36b (“That Thomson controls access to its

system and instructs bidders on its use is not

sufficient to incur liability for direct infringement.”).

The contracts between Respondents, bidders, and

cooperation’ [that] will not give rise to direct

infringement by any party.” Pet. App. 35b.

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted,