Each week, Troutman Sanders' Federal Circuit review summarizes the Federal Circuit precedential patent opinions from the prior week.   

This week:

  • Negotiations within the U.S. for sales outside the U.S. do not constitute infringement. 

Negotiations within the U.S. for sales outside the U.S. do not constitute direct infringement.

Halo Electronics, Inc. v. Pulse Electronics, Inc. and Pulse Electronics Corp., No. 2013-1472, (Fed. Cir. Oct. 22, 2014) (Lourie, CJ.).  Click Here for a copy of the opinion.

Halo sued Pulse for infringing Halo's U.S. Patent Nos. 5,656,985, 6,297,720, and 6,344,785 (the "Halo patents") directed to surface mount electronic packages for printed circuit boards used inside electronic devices such as computers and internet routers. Pulse manufactured surface mount electronic packages in Asia, delivered most of the accused products outside of the U.S. and delivered some accused products to customers in the U.S.  Some of the products delivered outside of the U.S. ultimately ended up within the U.S. as components of finished end products.

For the accused products delivered outside of the U.S., the district court granted summary judgment that Pulse did not sell or offer to sell those accused products within the U.S. and, thus, did not directly infringe the Halo patents. For the accused products delivered within the U.S., the district court held that while Pulse directly infringed the Halo patents, Pulse's infringement was not willful. For the accused products delivered outside the U.S. that were ultimately imported into the U.S., the district court found the Pulse induced others to infringe the Halo patents.

Halo appealed and Pulse cross-appealed. The Federal Circuit affirmed the summary judgment of no direct infringement of the Halo patents, as Pulse did not sell or offer to sell the later imported products within the U.S. The Court found that a generic business agreement that did not contemplate any specific product or negotiated prices did not constitute a sale or offer to sell within the U.S. The Court rejected Halo's argument that the sales effectively occurred in the U.S. simply because Halo suffered economic harm within the U.S. as a result of those sales.  Specifically, "incurring of harm alone does not control the infringement inquiry." Further, the negotiations held within the U.S. contemplated only sales outside of the U.S., and thus, were not an "offer to sell" within the U.S.

The Court affirmed the judgment of no willful infringement of the Halo patents with respect to products that Pulse delivered within the U.S., because Pulse relied on an obviousness defense that was not objectively baseless. While Pulse received letters from Halo offering to license the Halo patents, these letters did not accuse Pulse of infringement.  Upon receiving the letters, Pulse asked its engineer to review the Halo patents, and the engineer concluded that the patents were invalid in view of prior Pulse products. Accordingly, Pulse did not willfully infringe the Halo patents.

Judge O'Malley, joined by Judge Hughes in a concurring opinion, suggested that the Court should reevaluate its standard for the imposition of enhanced damages, which are only available "in a case of willful or bad-faith infringement," in light of the Supreme Court's recent decisions in Highmark Inc. v. Allcare Health Management Systems, Inc., 134 S. Ct. 1744 (2014) and Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014).  See also, 35 U.S.C. § 284 (2012). Judge O'Malley also mentioned that, based on Octane Fitness, it may be time for the Court to reevaluate the application of the clear and convincing standard in proving willfulness as opposed to the ordinary standard in civil cases (i.e., by a preponderance of the evidence). Finally, Judge O'Malley questioned whether juries ought to continue making the willfulness finding. and convincing standard in proving willfulness as opposed to the ordinary standard in civil cases (i.e., by a preponderance of the evidence). Finally, Judge O'Malley questioned whether juries ought to continue making the willfulness finding.

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Each week, we succinctly summarize the preceding week of Federal Circuit precedential patent opinions. We provide the pertinent facts, issues, and holdings. Our Review allows you to keep abreast of the Federal Circuit's activities – important for everyone concerned with intellectual property. We welcome any feedback you may provide.

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