Posts Tagged: "extraterritorial"

The Supreme Court will hear WesternGeco LLC v. ION Geophysical Corp., which asks whether the Federal Circuit erred in holding that lost profits arising from prohibited combinations occurring outside of the United States are categorically unavailable in cases where patent infringement is proven under 35 U.S.C. § 271(f)… Because lost profits damages were awarded for lost contracts for services to be performed on the high seas, outside of the jurisdiction of U.S. patent law, the Federal Circuit reversed that $93.4 million award… In December 2017, the office of Solicitor General Noel Francisco filed a brief for the United States as amicus curiae. The Solicitor General argued that WesternGeco’s entitlement to damages should be informed by the traditional common-law rule that a victim of a tort should be returned to the position that victim would have occupied if not for the defendant’s legal wrong.

In yet another reversal of the Federal Circuit, the Supreme Court yesterday held that liability under § 271(f)(1) of the Patent Act requires more than one component part of a multicomponent patented invention to be shipped abroad for assembly, no matter how important or critical that one component may be. Life Techs. Corp. v. Promega Corp.,(U.S. Feb. 22, 2017) 580 U.S. ___, slip opinion at *8 (No. 14-1538)… Writing for the Court, Justice Sotomayor rejected the case-specific approach of the Federal Circuit. The Supreme Court analyzed the ambiguous term “substantial” in the full context of the statute. Based on this context approach, the Court reasoned that “substantial” is best understood in a purely quantitative sense, as opposed to the qualitative importance of the component approach championed by Promega.

It is a ubiquitous concept that U.S. IP rights cannot extend beyond the territorial borders of the U.S. But the IP world may be in for a change. If the Supreme Court upholds the Federal Circuits decision in Life Technologies Corporation, et al. v. Promega Corporation (No. 14–1538) currently pending before the Supreme Court, it will change the way companies engage in domestic and international business. The Supreme Court is specifically set to consider if supplying a component to a foreign manufacturer of a patented product creates liability under 35 U.S.C. § 271(f)(1).

The U.S. government weighs in on Life Technologies’ side because “the application of U.S. patent law to participation by U.S. exporters in foreign markets also raise issues concerning the competiveness of American companies abroad and the respective roles of the United States and other nations’ patent laws.” The government argues that the Federal Circuit has not given a workable definition to determine when a component is sufficiently important or essential as to be “a substantial portion of the components.” The government also argues that, in legislating § 271(f), Congress’s purpose was to outlaw evasion of a U.S. patent by conduct that tantamount to manufacturing the patented invention in the U.S. for export. The government argues that there is no clear expressed Congressional intent for § 271(f) to reach supplying a single staple article: when the product is made abroad except for such a staple article, Congress left that predominantly foreign conduct to be regulated by foreign law. Finally, the government argues that the presumption against extraterritoriality requires the courts to assume both that “legislators take account of the legitimate interests of other nations” and “foreign conduct is generally the domain of foreign law.”

Trader Joe’s sued Hallatt (d/b/a Pirate Joe’s) for trademark infringement in the Western District of Washington, invoking the court’s federal question and supplemental jurisdiction. Trader Joe’s alleged that: (1) Hallatt misled consumers into falsely believing Pirate Joe’s was authorized or approved by Trader Joe’s; (2) utilized a confusingly similar “South Pacific” trade dress for his Pirate Joe’s store; (3) displayed Trader Joe’s trademarks in connection with the sale of products at Pirate Joe’s; and (4) resold Trader Joe’s products without authorization and without adherence to Trader Joe’s’ strict quality control practices. Trader Joe’s claimed Hallatt’s behavior diluted its trademarks, confused consumers, and damaged Trader Joe’s reputation by associating it with high price, lower quality products. Trader Joe’s sought damages and to permanently enjoin Hallatt from reselling its goods or using its trademarks in Canada.