Posts Tagged: "section 271(f)(2)"

The Pathway to Foreign Damages for Patent Infringement

Automobiles, smartphones, laptops, medical devices, among other end products, contain scores of individual components supplied by vendors. For end products sold domestically, vendors for the components are often U.S. companies. They design and develop their products in the United States. They deploy teams of marketing and sales personnel in the United States to win incorporation of their components into end products for the U.S. market. They enter general business agreements in the United States with end product companies in the United States. They comply with U.S. certifications, standards and qualifications that make their components fit for the U.S. market. They provide customer support in the United States to end customers located in the United States. In short, they actively compete for a share of the U.S. market for their technological components. Yet, when it comes to facing liability for patent infringement, they claim to be exempt. They claim they don’t make any products in the United States—the products are made by contract-manufacturers located abroad. They claim they don’t actually sell any products in the United States either—the actual purchase orders and invoices, as well as shipment and delivery for specific units, occurs between foreign subsidiaries and contract manufacturers, also located abroad. A case currently pending before the Federal Circuit could upset these tactics: Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 2019-1246, 2019-1247 (Fed. Cir.).  At the heart of the case is the question of whether patent law has grown out-of-sync from the supply-chain realities of making, selling and marketing technological components for end use in the United States today. For instance, invoicing and shipment for particular units may be farmed out abroad. That creates an ostensibly easy way for companies selling technological components to claim they are neither making nor selling any product in the United States. But it ignores that domestic infringement can nevertheless cause foreign damages. Indeed, the recent decision of the Supreme Court in WesternGeco LLC v. ION Geophysical Corp.138 S. Ct. 2129 (2018) expressly held that foreign damages caused by domestic infringement are recoverable.