Last week, on June 27, 2016, the Supreme Court agreed to review a very precise question about which Life Technologies Corp. and Promega Corp. are arguing. The question deals with infringement, specifically interpreting what a particular statute (35 U.S.C. § 271(f)(1)) involving U.S. manufacturers who supply components of patented inventions for use abroad really means. However, to fully understand why the two parties are at odds, we must start from the beginning. It all started with…
The technology at issue involves “short tandem repeats” or “STR” on DNA strands. A short tandem repeat occurs when a DNA nucleotide sequence is repeated within the DNA strand. For example, there could be a nucleotide sequence of TAA (thymine-adenine-adenine) that is repeated 10 times in a row in a particular location on the DNA strand. The location on the strand where the STR occurs is called the “STR locus”. While this happens often in our genome, the number of the repeated sequences varies greatly from human to human. For instance, a TAA sequence may be repeated ten times in me and fifteen times in you. These variations are known as “alleles” and are responsible for the genetic differences, or “polymorphism”.
Multiple variations of alleles at many loci can be used to create a DNA “fingerprint” for a specific individual in a technique named “STR profiling”. Before beginning the profile, it may be necessary to make copies of the DNA (a process called “amplification”) in order to get a detectable amount of it which is sufficient for analysis. Amplification can be achieved through polymerase chain reaction (PCR), which replicates the DNA using an enzyme. The amplification process is repeated until enough DNA has been duplicated for profiling.
When doing this amplification, it is much better to amplify more than one STR loci at a time (co-amplification) which creates a “multiplex” reaction. However, it is more complicated to make a multiplex than to perform a series of individual or “monoplex” amplifications. There are some variables that make co-amplifications of the STR loci unsuccessful and their discovery requires trial and error. At the time of the invention at issue, in the early 1990s, scientists could not predict whether a particular set of loci would successfully co-amplify.
The initial case involved five patents relating to multiplex amplification of the STR loci. Promega owns four of patents and is the exclusive licensee of the fifth, the Tautz patent. LifeTech manufactures genetic testing kits that provide components for doing multiplex amplification of DNA samples. Each of the LifeTech kits includes five elements: a primer mix, an enzyme called Taq polymerase, a PCR reaction mix with nucleotides, a buffer solution and control DNA. However, LifeTech only manufactures one of the components, the Taq polymerase, in the U.S. Then it ships the enzyme to its manufacturing facility in the UK, which assembles and sells the kits worldwide to law enforcement agencies for forensic identification and to clinical and research institutions for uses such as analyzing cancer cells.
In 2006, a subsidiary of LifeTech was granted a non-exclusive cross license to use the invention of the four Promega patents and the Tautz patent for “Forensics and Human Identity Applications.”
The District Court Trial
In 2010, Promega sued LifeTech alleging that LifeTech infringed the five patents by selling their kits which were not covered by the 2006 Cross License. LifeTech responded that it was licensed to practice all the patents and then counterclaimed that the asserted claims of the Promega patents – but not the Tautz patent – were invalid on enablement and obviousness grounds. Next, in September 2011, both parties cross moved for summary judgement on infringement and invalidity. The District court rejected LifeTech’s argument that it was licensed to sell and orally ruled their sales were outside the scope of use and therefore infringing because the license was limited for use in live forensic investigations conducted by police officers. The court also ruled on summary judgement that LifeTech’s sales of the STR kits for uses other than live forensic investigations conducted by police officers directly infringed some claims of the Tautz patent and some claims of the other four patents. Further, it rejected the enablement and obviousness challenges of the Promega patents.
The District Courts take on 35 U.S.C. §271(a) and §271(f)(1)
First, let’s begin with the text of the statutes: 35 U.S.C. §271(a) reads:
Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.
35 U.S.C. §271 (f)(1) reads:
Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
In a jury trial on willfulness and damages, the jury was asked what was the total dollar amount of LifeTech’s sales of STR kits that were United States sales, as that term had been defined for them. During the trial both sides agreed that LifeTech grossed $707,618,247 in worldwide sales of the STR kits during the nearly six-year infringement period. However, LifeTech took issue that Promega had confused the worldwide sales amount with actual damages available under the Patent Act and that Promega had failed to satisfy its burden of proof as to which products and sales were eligible for damages under 35 U.S.C. §271(a). The District court, despite LifeTech’s protests, asked the jury to consider liability for both §271(a) and §271(f)(1), explaining that “United States sales” included “all kits made, used, offered for sale, sold within the United States or imported into the United States, as well as kits made outside the United States where a substantial portion of the components are supplied from the United States.” LifeTech contested including the language from §271(f)(1) and maintained that an alleged infringer- like LifeTech and its foreign manufacturing facility – could not induce itself within the meaning of the statute. (Typically, inducement requires another actor.)
The jury returned a verdict that LifeTech was a willful infringer finding that (1) all of LifeTech’s worldwide sales were attributable to infringing acts in the United States; (2) ten percent of those sales were for unlicensed uses; and (3) Promega was entitled to $52 million in lost profits. LifeTech then moved for JMOL claiming that Promega “failed to prove the applicable damages for patent infringement”, which the court granted because Promega did not present sufficient evidence to sustain the verdict under §271(a) and §271(f)(1). Therefore, the district court vacated the prior jury finding on infringement and denied Promega’s motion for reconsideration, or in the alternative, a new trial.
The Federal Circuit Decision
In Promega Corp. v. Life Technologies Corp. (Fed. Cir. December 14, 2014), the Federal Circuit concluded that the Promega patents are invalid for lack of enablement, the 2006 Cross License does not cover all of LifeTech’s sales of the accused products and Life Tech is liable for infringement of the Tautz patent under §271(a) and §271(f)(1).
Promega argued that its patents were enabled because the language limitations of the claims encompass a potentially limitless number of primer and multiplex reactions that are not enabled by the specification. They maintained that because they used “comprising” in the preamble, it allowed for including other steps, elements or materials in addition to the elements or components described in the claim. The court held that even though this is considered “open ended language” the claim, to construe it as Promega would like – as potentially limitless- “would expand the claim at key limitations that would cover undisputable advances in this unpredictable art.” Therefore, the claims are invalid because they do not enable a skilled artisan to practice the invention.
As for the Cross License, the court was not persuaded by LifeTech’s interpretation that because forensic research, education and training are necessary parts of any “live” forensic investigation by a law enforcement agency, the license also covers STR kits used by universities and other parties for any purpose related to forensic research, education, and training. This expands the scope of the license to authorize unspecified broader applications which is against the language of the agreement.
The final question was whether LifeTech infringed the Tautz patent. Again, this involves 35 U.S.C. §271(a) and §271(f)(1). LifeTech acknowledges that by selling the kits, it infringed under section §271(a). However, the question was whether the District Court was correct in ruling that §271(f)(1), first requires the involvement of another, unrelated party to “actively induce the combination of components” and that no other party was involved in LifeTech’s assembly of the accused kits, and second, a “substantial portion of the components” requires at least two components to be supplied from the United States and that LifeTech supplied only a single component—the Taq polymerase—from the United States.
The Federal Circuit disagreed with the District Court that “a single component supplied from the United States, no matter how important or central to the invention, can never constitute ‘a substantial portion’ of the components of a patented invention.” Accordingly, the court found there is substantial evidence in the record to find that LifeTech is liable for infringement under § 271(f)(1).
The Supreme Court
Ultimately, this is the question on which the Supreme Court will focus:
Whether the Federal Circuit erred in holding that supplying a single, commodity component of a multi-component invention from the United States is an infringing act under 35 U.S.C. § 271(f)(1), exposing the manufacturer to liability for all worldwide sales.
It will be up to the Supreme Court Justices to decide if the export of the Taq polymerase was sufficient to be considered a “substantial portion of the components” under the statute and whether LifeTech will have to pay the $52 million to Promega.
On one hand, LifeTech argues that the Federal Circuit ruling was in conflict with the text and structure of the Patent Act as well as the presumption of extraterritoriality. Expanding the reach of the extraterritoriality in patent law, it claims, would distort the incentives for multinational companies to supply components from facilities in the United States, potentially causing long-term economic damage and disrupting the international system of national patents. On its side were the Solicitor General and amici curiae who also believe that if the ruling were upheld, it would likely interfere with modern global supply logistics and disproportionately burden U.S. manufacturers with global operations.
On the other, Promega argues that the statute dictates there should be a qualitative rather than quantitative view on “actively induced” infringement. It does not believe that this strategy would burden the global markets because it would be unlikely to find that a single component of a multi-component invention was a “substantial portion” in the future. Further, it states that this rare occurrence only happened because LifeTech admitted that the Taq polymerase played a major role in the kits.
Those most interested in this decision are going to be manufacturers with component parts especially assembled into kits abroad. However, the decision on whether a single element is considered substantial will certainly be monitored by lawyers, businesses and manufactures alike.
For more information and the filings of the parties at the Supreme Court please see SCOTUS Blog.