No Assembly, No Infringement – Federal Circuit Declines to Expand “Final Assembler” Theory of Direct Infringement

ACCELERATION BAY LLC v. TAKE-TWO INTERACTIVE SOFTWARE

Before Moore, Reyna, and Hughes. Appeal from the United States District Court for the District of Delaware.

Summary: The “final assembler” theory of direct infringement does not apply to defendants who neither manufacture nor install components to complete a claimed system.

Acceleration Bay owns patents relating to multi-participant computer networks, such as multi-player game environments. Acceleration Bay sued Take-Two and others for direct infringement for allegedly establishing infringing networks for customers playing Grand Theft Auto V and other games. Because Take-Two did not make or sell each claimed component, Acceleration Bay relied on a “final assembler” theory of infringement. Under a “final assembler” theory, a defendant can directly infringe even when its product does not meet every claim limitation in a claimed system if the defendant “makes” the claimed system when it installs its product into an existing network. Take-Two moved for summary judgment of non-infringement, arguing that the final assembler theory did not apply. The district court agreed and granted summary judgment of non-infringement. Acceleration Bay appealed.

The Federal Circuit affirmed the district court. Acceleration Bay argued that the “final assembler” theory applied because Take-Two’s software controlled customers’ consoles, which caused the claimed components to satisfy the functional elements of the claims. The Federal Circuit disagreed, finding that the final assembler theory did not apply because Take-Two did not manufacture any hardware or install any hardware to a network. Therefore, the Federal Circuit affirmed the district court’s grant of non-infringement.

Editor: Paul Stewart