Federal Circuit Invites En Banc Review in McKesson v. Epic Systems

In a 2-1 decision issued on April 11, 2011 affirming summary judgment of non-infringement of McKesson’s method patent, concurring Judge Bryson suggested that the case raised issues warranting en banc review. Judge Newman wrote a vigorous dissent highlighting the patent policy considerations involved. Judge Linn authored the majority opinion which held that as a matter of law where multiple parties together perform the steps of a method patent claim , there can be no direct infringement, and hence no induced infringement, unless one party exercises control or direction over the entire method so that every step can be attributed to the controlling party. The McKesson method claim is an interactive process by which patients can communicate via the internet with their doctors to obtain their personal medical history, treatment information and scheduling information. The defendant Epic is a software developer that licensed software to healthcare providers that enabled this patient/doctor communication. Epic itself did not do any of the steps of the method. A licensed healthcare provider performed all of the steps except for one step performed by the patient. That step was initiating a communication with the provider. Concluding that no single entity controlled or directed all of the steps, the Court found no proof of direct infringement and that Epic could not then be liable for inducement. In her lengthy dissent, Judge Newman wrote that the majority failed to apply precedent that predated the decisions cited by the majority. She said that in applying the “single entity rule” to interactive method patents, the result is that such patents could not be enforced under any theory of infringement. In concluding her dissent , she wrote: “It is a cynical, and expensive, delusion to encourage innovators to develop new interactive procedures, only to find that the courts will not recognize the patent because the participants are independent entities.” Because of the exploding number of interactive methods and processes that are being developed and the policy implications of the McKesson decision, the Federal Circuit would very likely review the case en banc if McKesson accepts Judge Bryson’s invitation. An en banc review might see several amicus briefs, perhaps even one from the government in view of the Obama administration’s recently stated focus on innovation as a stimulus to economic recovery.