Cloudofchange, LLC v. NCR Corp
Authored by: Jeremy J. Gustrowsky
In a significant decision for technology providers, the Federal Circuit reversed a $13.2 million jury verdict against NCR Corporation, clarifying who can be held liable for patent infringement when a system is used by multiple parties. The case, CloudofChange, LLC v. NCR Corp., centered on NCR’s “NCR Silver” web-based point-of-sale (POS) system, which allows merchants to build and edit their own POS screens using software hosted on NCR’s servers. CloudofChange accused NCR of directly infringing U.S. Patent Nos. 9,400,640 and 10,083,012, which cover a web-based POS builder system.
A central issue in the case was whether NCR itself “used” the patented system, or whether only its merchant customers did. CloudofChange argued that NCR controlled and benefited from the entire system, pointing to the fact that merchants could only use NCR Silver if they maintained their own internet connection and POS hardware, as required by NCR’s Merchant Agreement. CloudofChange also claimed that NCR benefited from the system through subscription fees, product improvements, and access to transaction data generated by merchants. They asserted that this level of involvement and benefit meant NCR was the true “user” of the patented system, not just a provider of software.
The Federal Circuit, however, disagreed with CloudofChange’s interpretation. The court emphasized that, under its precedent (particularly the Centillion case), “use” of a system for patent infringement requires that a party both controls the system as a whole and obtains the direct benefit of its operation. The court found that it was the merchants—not NCR—who put the entire system into service by initiating actions at their POS terminals and receiving the direct benefit of the software. The fact that NCR required merchants to maintain internet access did not mean NCR controlled the merchants’ use of the system; rather, it was the merchants who decided when and how to use the system’s features.
CloudofChange also tried to argue that NCR should be vicariously liable for its merchants’ use of the system, since the Merchant Agreement required merchants to maintain internet access. The court rejected this argument, clarifying that simply requiring internet access as a condition of using the software does not amount to directing or controlling the entire use of the system. The court distinguished between “use” of a system claim and “use” of a method claim, noting that for system claims, the focus is on who puts the entire system into service and benefits from it—not who provides individual components or sets usage requirements.
In its analysis, the court also addressed CloudofChange’s argument that NCR benefited from the system through indirect means, such as collecting subscription fees and data. The court made clear that the relevant “benefit” for direct infringement is the benefit of using the patented system for its intended purpose, not the broader business advantages a vendor might gain. Because NCR’s merchants were the ones who actually operated the system and received its direct benefits, NCR could not be held liable for direct infringement.
As a result, the Federal Circuit reversed the district court’s denial of judgment as a matter of law and vacated the jury’s infringement verdict. This decision provides important guidance for companies offering cloud-based or multi-component systems, clarifying that liability for direct infringement requires control and benefit from the entire system—not just providing one part or setting requirements for use.