MediaTek Inc. v. Freescale Semiconductor, Inc., Case No. 11-cv-5341-YGR (Judge Rogers)
We all know that United States patent law is not supposed to extend to wholly extraterritorial acts of infringement – that is, acts of infringement that occur entirely outside the United States. See 35 U.S.C. § 271(a). So what happens when the accused infringing components were manufactured outside the United States, sold to a manufacturer outside the United States, and incorporated by that manufacturer into a product outside the United States? On the face of it, doesn't that seem like a classic example of extraterritorial infringement outside the scope of the United States patent laws? Not necessarily. At least not if the contract governing the sales of the accused components was negotiated and executed in the United States, according to Judge Rogers.
Defendant Freescale negotiated and signed a sales agreement with Amazon in the United States. Both Freescale and Amazon are United States entities. The sales agreement governed all products purchased by Amazon as well as Amazon's designees, which included foreign manufacturers like Foxconn and Ensky. The agreement also included an attachment listing the prices for the products to be sold by Freescale.
Judge Rogers noted that while Foxconn received the alleged infringing products in China for incorporation into the Amazon Kindle, also manufactured in China, Foxconn purchased those products pursuant to the sales agreement. Amazon, a United States entity, controlled the pricing terms for the purchases and, per the sales agreement, restricted Freescale's ability to negotiate pricing with those foreign designees. There was also evidence that the products were paid for by Amazon and that Amazon was listed as the customer for those products. Based on these facts, Judge Rogers denied Freescale's motion for summary judgment of noninfringement that was predicated on the argument that the accused products at issue were subject to extraterritorial sales.
Judge Rogers distinguished her case from that reviewed by the Federal Circuit in MEMC Electronic Materials, Inc. v. Mitsubishi Materials Silicon Corp., 420 F.3d 1369 (Fed. Cir. 2005). There, the accused products were manufactured in Japan and sold to Samsung Japan. The products, however, were ultimately shipped to Samsung Austin, in Texas. The Federal Circuit held that there was no "offer for sale" to Samsung Austin despite evidence showing that defendant: (1) manufactured the accused product according to Samsung Austin's specifications; (2) e-mailed Samsung Austin the test data for shipment authorization; (3) coordinated with Samsung Austin independent of Samsung Japan regarding shipment dates and quantity; (4) packaged the products for shipment and applied a shipment label for Samsung Austin; and (5) provided crucial follow-up technical support. The Federal Circuit reasoned that there were no negotiations occurring in the United States between defendant and Samsung Austin and that the e-mails containing test data were not offers for sale since they did not contain any price terms. Finally, the Court observed that the "actual" sales were made between Samsung Japan and the defendant: (1) Samsung Japan alone issued the purchase order to defendant; (2) Samsung Japan designated a third-party packaging company to transport the accused products to Samsung Austin; (3) Samsung Japan arranged for the packaging, labeling, and shipping of the products; and (4) Samsung Japan paid defendant for the products.
Judge Rogers explained that section 271(a) does not reach products that were sold overseas but ultimately imported into the United States. Here, the accused products were governed by an agreement, including price terms and pricing restrictions, negotiated by two United States companies in the United States. That, she concluded, was enough to trigger section 271(a).
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