A case currently pending petition to the United States Supreme Court could further define the scope of potential patent infringement liability for U.S. based companies that sell products intended to be used abroad. If the Supreme Court reverses the lower court in WesternGeco LLC v ION Geophysical Corp
., it could expose infringers to much greater liability for infringing acts occurring outside of the United States.
On December 6, 2017 the Solicitor General filed an amicus curiae brief
expressing its view that the Supreme Court should grant WesternGeco’s petition for a writ of certiorari. The question presented by the petition for cert, as submitted by the Solicitor General, is whether a patentee that has proved a domestic act of patent infringement may recover lost profits that it would have earned outside of the United States if the infringement had not occurred.
In the facts of this case, ION sold a component manufactured in the United States to foreign customers who incorporated the component in marine seismic survey systems used entirely outside of the United States. WesternGeco’s patents allegedly cover those marine seismic survey systems. A jury determined that ION infringed WesternGeco’s patent under 35 U.S.C. 271(f), which permits infringement where a component is sold “in or from the United States…[with the seller] intending that such component will be combined outside of the United States.” Based on this infringement finding, the jury awarded damages of $12.5M in royalties and $93.4M in lost profits.
Then on appeal, the Federal Circuit vacated the entire award of lost profits holding that the exporter of a component cannot be liable for an infringing use of that component abroad. A dissenting opinion was filed by Judge Wallach which relied on general tort theories of damages to arrive at a conclusion that lost profits can be recoverable under these facts. The Federal Circuit denied rehearing en banc, with three judges dissenting from the majority’s holding for the reason given in Wallach’s original dissent.
Polsinelli’s Intellectual Property Litigation attorneys will closely watch this case and report on any substantive developments. If you have questions about this issue and its implications to your business, please contact the author or your Polsinelli attorney.