Fandango, a company that sells movie tickets via telephone and the internet, had a front row seat of its own last month as a North Carolina federal judge dismissed a lawsuit alleging that the company has been teaming up with movie theaters to co-produce a patent infringement.
The case hinges on a question of patent law hotly debated by the parties: whether two independent parties can be held liable for collectively infringing a patented business method when neither one does so acting alone.
The plaintiff in the case, Robert Mankes, owns the patent on a reservation system that allows event vendors to sell their inventory over the internet while still controlling it in-house. Mankes argues that Fandango copies some of the steps in his system, and uses financial incentives to induce movie theaters to complete the rest of the steps. Between them, he claims, all the steps in his system are copied, although neither party copies all of the steps by itself.
U.S. District Court Judge Louise Flanagan rejected Mankes’ argument, however, ruling that a patent holder would need to prove that all the steps of the claimed method were infringed either by a single entity or by a party in combination with another entity acting under the direction or control of the accused infringer. Since there was no evidence that Fandango directly controlled the movie theaters, Flanagan found there was no direct infringement.
Mankes argued that Fandango should be found liable for inducing patent infringement because it offered theaters incentives to use its system, but Flanagan disagreed with that theory as well, finding that the U.S. Court of Appeals for the Federal Circuit had recently rejected an analogous argument. Mankes argued that his theory was supported by an earlier Federal Circuit case, but Flanagan ruled that the favorable language in that opinion was not relevant to that court’s opinion and therefore not binding.
“Defendant cannot be liable for inducement absent direct infringement by the theaters,” Flanagan wrote.
A parallel lawsuit filed by Mankes against another company, Vivid Seats, was also dismissed in the same opinion. Fandango dismissed its counterclaims against Mankes.
Joey Morris and Mike Mitchell of Smith Anderson in Raleigh represented Fandango, along with Sharon Davis of Rothwell, Figg, Ernst & Manbeck in Washington, D.C. Morris declined to comment on the decision.
Anthony Biller and James Lawrence of Coats + Bennett in Cary represented Mankes. Biller said that he believes that the language of the federal Patent Act, general principles of tort law, and public policy considerations all supported his client’s position. Biller also described the law concerning multiparty infringement as being currently “in flux” and said that his client plans to appeal the dismissal of both lawsuits.
“We believe that either the Federal Circuit sitting en banc or the U.S. Supreme Court should address and remedy these concerns and anomalies from particular Federal Circuit panel decisions,” Biller wrote in an email.
The nine-page decision is Mankes v. Fandango, L.L.C. (Lawyers Weekly No. 15-02-0229). A full opinion digest is available online at nclawyersweekly.com.
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