Federal Circuit Revives Long-Running Qwest Patent Case

, The Litigation Daily

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In the late 1990s and early 2000s, several phone companies struck patent licensing deals with Centillion Data Systems, a company with a patent for processing and delivering billing information from providers to customers. Qwest Communications International Inc. (now doing business as CenturyLink Inc.) opted to fight back.

Now, just when it appeared that Qwest could finally declare victory, the U.S. Court of Appeals for the Federal Circuit has revived the case for the second time in two years and put it on track for trial.

In a 10-page decision issued on Monday, the Federal Circuit partially vacated a October 2012 summary judgment win for Qwest. The appeals court held that the trial judge properly granted Qwest summary judgment of noninfringement as to one of the two billing systems at issue in the case. But as to the other Qwest system, the court held that a jury needs to decide infringement.

Centillion sued Qwest in 2004 in U.S. district court in Indianapolis. The case involves two electronic bill payment systems Qwest offered to its customers, Logic and eBill Companion. The supposedly infringing systems consist of four parts — three back-office components operated by Qwest and an application that customers install on their computers. At one point, Centillion sought $53 million in damages plus enhancement for willful infringement, according to a summary of the case provided by Qwest's lawyers at Morrison & Foerster.

A key question in the case has been whether Centillion could show that a single entity — either Qwest or the customer — controlled the four-step patented system as a whole. The judge assigned to case, Larry McKinney, ruled in 2009 that Centillion couldn't meet that burden and awarded summary judgment to Qwest. The Federal Circuit reversed in January 2011, ruling that customers control all four steps and that Qwest can therefore be held liable on a theory of indirect infringement. That decision provided guidance on the murky legal doctrine of joint infringement, as PatentlyO explained here.

On remand, McKinney once again found a way to dismiss the case. In an October 2012 opinion, he ruled that even under the framework adopted by the Federal Circuit, a jury couldn't find indirect infringement on Qwest's part. The judge also ordered Centillion to pay Qwest's court costs, which totaled about $250,000.

In Monday's ruling, the Federal Circuit reversed McKinney as to Qwest's eBill Companion system, but affirmed as to Logic. In an interview, Centillion counsel Victor Wigman of Blank Rome said that eBill Companion accounts for most of the alleged damages. The appeals court also vacated the ruling on court costs.

Morrison & Foerster's Vincent Belusko, who represents Qwest, declined to comment.

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