Research In Motion, Ltd. of Canada, which lost a very big (both in terms of dollars and legal precedent) case to NTP, Inc., over NTP's patent for a distributed e-mail system, has now asked the United States Supreme Court to hear the case.
The big legal issue is how to determine patent infringement when distributed systems (for example, Internet protocols) span borders.
Specifically, the issue under United States patent law is whether a system claim (or method claim) of a United States patent can be infringed when some features of the working system are located outside United States territory, but most the system elements or method steps are located within the United States, as are users. In this case a part of the system (and at least one of the steps of the method) corresponds to RIM's relay located in Canada; the other elements or steps (BlackBerries and the operations performed on them) and the users at issue are located within the United States. Another issue is whether RIM's infringement was direct or contributory infringement. A third issue is whether any international law is implicated.
If only some elements or steps need to be in a country to infringe a patent in that country, the operator of a patented protocol spanning two or more countries might be sued for infringing the same patent in two or more countries. There is a grave danger that the patent holder could recover far more damages than it would otherwise be entitled to. To avoid this, the international law principle of comity might have to be invoked to determine which country has jurisdiction. On the other hand, if all the elements or steps must be in a single country in order to infringe a patent, this leaves a loophole whereby makers of distributed systems can ignore patents as long as some of the features are located in different countries.
When the Federal Circuit, which has jurisdiction over patent appeals in U.S. patent infringement cases, first heard the case it said that the system claim was indeed directly infringed. It then reheard the case and decided that the method claim was not infringed. Their opinion was based on precedent from two older cases. The first case held that a system claim for a navigation system used in international waters was infringed because it was controlled from the United States. The second case held that a manufacturing process claim was not infringed if one of the steps was performed in Japan.
As a result of the dubious analogy of these two precedents (there are no binding cases more on-point) the Federal Circuit has somewhat illogically distinguished between a claim for a distributed algorithm and the same claim restyled as a distributed system. My own opinion is that, until a treaty is signed to say otherwise, all the elements and steps should have to be within the United States in order to infringe a United States patent. This leaves a loophole in patent law, but that's better than the injustices and international law issues that are raised by courts reaching across borders to find infringement in remote Internet servers. Furthermore, if what RIM did is considered infringement it should classified as contributory not direct infringement. RIM's customers may be "using" the patent "within the United States," but RIM itself is not. RIM would however be contributing to the infringement by providing the BlackBerries and running their e-mail relay and thus would still be liable. In other circumstances with no contributory infningement, however, it would be a grave injustice to find direct infringement in the United States because one was simply operating one element or step of the United States patent overseas.
The case before the Supreme Couret is now denoted Research In Motion, Ltd. v. NTP, Inc., Supreme Court No. 05-763, opinion below, NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005).
Read more information on this case here.