## Facts

- Centillion alleged that Qwest’s billing products infringed U.S. Patent No. 5,287,270, which claims a system for collecting, processing, and delivering service-provider transaction data (e.g., telephone billing) to customers for further processing on a personal computer.
- The asserted claims required both a service-provider “back-end” (storage, processing, and transfer of records and reports) and a customer “front-end” (a personal computer running software to perform additional processing).
- Qwest’s accused offerings had two parts: (1) Qwest back-office billing systems and (2) client-side applications that customers could install on their own personal computers.
- Qwest’s back-end generated monthly billing statements for subscribed customers and also produced on-demand reports when customers requested specific report parameters; customers could download results and analyze them on their PCs.
- Qwest provided support but did not direct customers’ specific report selections or how they operated the client software.
- The district court granted Qwest summary judgment of no infringement and granted Centillion summary judgment that the asserted claims were not anticipated.
- Centillion appealed noninfringement; Qwest cross-appealed the no-anticipation ruling.

## Issues

1. Whether Qwest’s customers “use” the claimed system under 35 U.S.C. § 271(a) when system elements are split between Qwest’s back-end and customer-owned PCs.
2. Whether Qwest itself directly infringes by “using” the system under § 271(a).
3. Whether Qwest directly infringes by “making” the claimed system when customers supply the PC portion.
4. Whether indirect infringement claims may proceed given the predicate requirement of direct infringement.
5. Whether summary judgment of no anticipation was proper.

## Decision

- The Federal Circuit vacated the summary judgment of noninfringement and remanded.
- The court held that Qwest’s customers “use” the claimed system under § 271(a) by putting the system into service to obtain billing data and reports, including through subscriptions and on-demand report requests.
- The court held Qwest did not directly “use” the claimed system because it did not put the system as a whole into service; it did not itself supply or operate the customer PC component.
- The court held Qwest did not “make” the claimed system because it did not assemble or provide all claimed components; customers provided the PC element.
- Because customers’ direct use could supply the predicate act, the court remanded for further proceedings on indirect infringement theories.
- The court reversed the summary judgment of no anticipation and remanded due to genuine disputes of material fact on anticipation.

## Legal Principles

- “Use” of a patented system under 35 U.S.C. § 271(a) requires putting the system as a whole into service and obtaining its benefits; it does not require physical possession or operation of each individual element.
- A customer can directly infringe a system claim by initiating system operation (including remote provider-side processing) to obtain results, even if the provider owns and operates part of the system.
- A provider does not directly “use” a system claim when it does not place the complete claimed system into service, particularly where a required end-user component is owned and controlled by customers.
- “Making” a claimed system requires assembling or supplying all required components; a defendant does not “make” the system when a required component is furnished and maintained by customers.
- Inducement and contributory infringement require an underlying act of direct infringement; where end users directly “use” the system, indirect infringement claims may proceed subject to proof of additional statutory elements.
- Summary judgment on anticipation is improper when the record shows genuine disputes of material fact as to whether a single prior art reference discloses each claim limitation.

## Conclusion

The Federal Circuit held that end users may directly infringe a system claim by putting the full system into service and obtaining its output, even when key components reside on a provider’s infrastructure, while rejecting direct infringement by the provider for “use” or “making” where the provider does not supply or operate required customer-side components; it remanded infringement issues and required further proceedings on anticipation due to disputed facts.


Centillion Data Sys., LLC v. Qwest Commc’ns Int’l, Inc., 631 F.3d 1279 (Fed. Cir. 2011)