Argument preview: Justices to grapple again with patent infringement overseas

Posted Mon, April 9th, 2018 2:43 pm by Ronald Mann

On the 1st early morning of the Supreme Court’s April session up coming week, the justices will return to troubles of extraterritorial patent infringement, hearing argument in WesternGeco v Ion Geophysical Corp. For the third time in modern decades, the court docket will take into account Area 271 of the Patent Act. The statute was adopted in response to the court’s 1972 keeping in Deepsouth Packing v Laitram Corp. that the Patent Act does not provide a solution for overseas patent infringement. Deepsouth was an early instance of a presumption in opposition to extraterritoriality, which has appear to loom quite significant in the Supreme Court’s modern jurisprudence. Ordinarily, beneath that canon of development, a statute applies only to carry out within the United States until Congress explicitly implies a contrary intent.

In the specific circumstance of Deepsouth, nevertheless, Congress moved speedily to reject a categorical defense for overseas infringement. Precisely,  Section 271 offers a narrow exception that permits a go well with for infringement of a domestic patent when factors are designed in the United States and transported abroad for assembly into the patented product. In Microsoft v AT&T, in 2007, the justices clarified how the statute applies when computer software is transmitted from the United States but copied overseas. Final term, in Lifetime Technologies v Promega, the justices thought of how numerous factors have to be transported overseas for the statute to use. The situation listed here is regardless of whether the damages for a violation of Area 271 can include things like not only royalties on the infringing assemblies, but also dropped gains for overseas contracts the patentholder would have obtained if the infringement had not occurred.

WesternGeco (formerly Western Geophysical) owns numerous patents that are applied to search for oil beneath the ocean floor. Ion made and transported abroad factors that, when assembled, infringed the WesternGeco patents. Appropriately, Ion was held liable beneath Area 271 and obligated to shell out WesternGeco a realistic royalty for the assemblies that it had exported (about $12 million). WesternGeco also confirmed that it would have acquired $90 million in gains from contracts that it would have designed with Ion’s customers had Ion not bought them the assemblies. Due to the fact patentholders ordinarily are entitled beneath Area 284 of the Patent Act to recover dropped gains in addition to royalties, the district court docket awarded the dropped gains. On attraction, however, the U. S. Court docket of Appeals for the Federal Circuit vacated the dropped-gains award, reasoning that WesternGeco would have carried out the dropped contracts overseas, and that awarding damages for the reduction of those people contracts was an impermissibly extraterritorial software of the patent legislation.

WesternGeco, the patentholder, argues that the presumption in opposition to extraterritoriality ought to have very little or no role listed here, since Area 271 was enacted as an exception to that presumption. From that perspective, a court docket that finds infringement that falls within the exception carved out by Area 271 ought to award traditional patent damages as a solution for that carry out. Any other final result, WesternGeco contends, would go away the patent holder undercompensated for indisputably sanctionable infringement.

For its section, the infringer, Ion, maintains that the presumption in opposition to extraterritoriality must be used individually to every single statutory provision. Due to the fact very little in Area 284 implies an intention to sanction extraterritorial carry out, the presumption in opposition to extraterritoriality ought to make courts cautious to award damages for hypothetical contracts that would have been carried out wholly exterior the boundaries of the United States. In an effort and hard work to rebut WesternGeco’s argument that denial of dropped gains leaves a patentholder undercompensated, Ion emphasizes that WesternGeco currently has gained a realistic royalty for the infringing assemblies. Awarding dropped gains that are numerous multiples of a realistic royalty, Ion implies, can’t be justified with out some reference in Area 284 justifying extraterritorial software.

Due to the fact the presumption in opposition to extraterritorial software is an entirely judicial gloss, it is not uncomplicated to forecast how the justices will react to these arguments. My guess is it would be most handy to view for the views of Justice Samuel Alito (who authored an opinion broadly implementing the presumption in opposition to extraterritoriality in 2016, in RJR Nabisco v. The European Community) and Justice Sonia Sotomayor (who wrote very last term’s opinion in Lifetime Technologies narrowly interpreting Area 271). I would count on those people justices to be as skeptical of the patentholder’s arguments as anyone.  Without their assist, Ion will have a difficult time eking out an affirmance of the Federal Circuit.


Posted in WesternGeco LLC v. ION Geophysical Corp., Highlighted, Deserves Circumstances

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Ronald Mann,
Argument preview: Justices to grapple once again with patent infringement overseas,
SCOTUSblog (Apr. 9, 2018, 2:43 PM), again-with-patent-infringement-overseas/

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