Posts Tagged: "supply chain"

The United States’ share of global semiconductor manufacturing capacity has dropped from 37 percent in 1990 down to 12 percent in 2021. Congress now seeks to secure chip supply chains to promote both economic competitiveness as well as U.S. national security.

On July 16, 2020, the U.S. Chamber of Commerce and national business associations of the UK, France, Germany, Korea, and Canada, published an Open Letter to Heads of States and Government leaders titled “Working Together to Discover and Deliver Innovative and Creative Solutions to the Pandemic’s Challenges”.  The letter highlighted the contributions made by businesses in response to COVID-19, noting that businesses have expended a considerable amount of time and resources to “accelerate the research, development and manufacture of protective equipment, advanced diagnostics, disinfection products, medical devices and potential treatments and vaccines.”

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.