Federal Circuit Clarifies Vicarious Liability Standard For System Claim Infringement

When can a customer's use of a system claim be vicariously attributed to the system component manufacturer? In CloudofChange v. NCR Corp., No. 2023-111, the Federal Circuit held that the manufacturer must direct or control the customer's use of the entire claimed system under Centillion, which is "fundamentally different" from the concept of use of a patent method or process under Akamai.

The patents at issue are directed to a system for a merchant to build its own point-of-sale (POS) system. The asserted system claims specifically require "an internet connection" and two separate entities: (1) a vendor providing a remote server; and (2) a subscriber (i.e., merchant) possessing POS terminals. CloudofChange asserted infringement by NCR's web-based POS building solution, which allows NCR's merchant-customers to build their own POS screens/menus. NCR provides the accused back-end server, but the merchant-customers are responsible for their own Internet connections and