United States: Infringement Under Section 271(F)(1): More Than One Piece Of The Puzzle Required

In patent cases where the accused infringer supplies some or all of the component parts of an accused product from the United States to an overseas location for final assembly, Section 271(f) of the Patent Act, 35 U.S.C.A. § 271(f), gives the patentee an opportunity to recover damages from the infringer based on the export of only a part of the patented invention.To potential infringers, this provision creates the potential for exposure to substantial damages even when only a fraction of the invention is made, sold or used in the U.S. This "windfall" effect can be perceived as particularly prejudicial to the accused infringer when the exported component is a staple or commodity article not "especially made" for the invention. In this light, the U.S. Supreme Court's decision in Life Technologies Corp. v. Promega Corp., 137 S. Ct. 734 (2017), is a welcome development in the court's doctrine for accused and potential infringers. The decision limits the extraterritorial reach of U.S. patents—and the patentee's ability to recover damages for international sales—by holding that the supply of a single component of a multicomponent invention for manufacture abroad cannot give rise to infringement under Section 271(f)(1).

The technology at issue in the case relates to multiplex amplification methods that generate DNA profiles. The profiles can be used by law enforcement agencies for forensic identification and by clinical and research institutions. Promega owned four patents in this space and held an exclusive license for a fifth. Promega sublicensed the fifth patent to Life Tech for the manufacture and sale of genetic kits for use by licensed law enforcement personnel.1 Each kit includes five components. Life Tech manufactured four of the components in the United Kingdom. It produced the remaining component, Taq polymerase, in the U.S. The kits were assembled in the U.K. and sold outside the U.S..

District Court: One Piece Is Not Enough

Four years into the license, Promega brought a patent infringement lawsuit against Life Tech arising from the sale of the kits to clinics and markets outside of the licensed fields of use. More specifically, Promega claimed Life Tech's supply of Taq polymerase from the U.S. to the U.K. facility constituted an act of infringement under Section 271(f)(1). In relevant part, that section reads:

Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

During trial—and over the objection of Life Tech—the District Court instructed the jury to consider liability under both Section 271(a) and Section 271(f)(1), explaining that "United States sales" included "all kits made, used, offered for sale, sold within the United States or imported into the United States, as well as kits made outside of the United States where a substantial portion of the components are supplied from the United States." The jury found that Life Tech had willfully infringed the patent and awarded Promega $52 million. Life Tech moved for judgment of noninfringement as a matter of law, arguing that the phrase "all or a substantial portion" in Section 271(f)(1) does not encompass the supply of a single component of a multicomponent invention. The court granted the motion, explaining that the statute's reference to "a substantial portion of the components" does not embrace the supply of a single component.

Federal Circuit: One "Essential" Piece Will Do

On appeal to the U.S. Court of Appeals for the Federal Circuit, Life Tech argued infringement under Section 271(f)(1) requires that at least two components be supplied from the U.S.. The Federal Circuit explained that nothing in the ordinary meaning of the word "portion" suggests that it requires "a certain quantity or that a single component cannot be a 'portion' of a multicomponent invention." Indeed, the Federal Circuit concluded that the ordinary meaning of "substantial portion" suggests that a single "important" or "essential" component can be a "substantial portion of the components" of a multicomponent patented invention within the meaning of the statute. Relying on expert testimony from Life Tech's witnesses that Taq polymerase was the "major" or "main" component of the accused kits—and noting that the kits could not operate without it—the Federal Circuit found the evidence supported the jury's conclusion that a "substantial portion" of the components of Life Tech kits were manufactured in the U.S..

Supreme Court: "Substantial" Is Quantitative

The sole question posed to the Supreme Court was whether "supplying a single, commodity component of a multicomponent invention from the United States is an infringing act under 35 U.S.C.A. § 271(f)(1)." In an opinion by Justice Sonia Sotomayor, the court answered "no" to this question, thus reversing the Federal Circuit's decision and remanding the case for further proceedings.2

The court held that the term "substantial portion" in Section 271(f)(1) has a quantitative, not a qualitative, meaning. More specifically, the court held that the phrase "substantial portion" in the statute does not cover the supply of a single component of a multicomponent invention.

After concluding that the U.S. Patent Act does not define the term "substantial," the court began its statutory construction analysis by examining the term's ordinary meaning. The court acknowledged that the term may, in isolation, refer to qualitative importance or quantitative size. But it said that a reading of the term in the context of the statute points to a quantitative meaning. The court noted that the terms "all" and "portion"—both used within the same sentence where "substantial" appears—refer to determinations of quantity, not quality. Furthermore, it noted that the phrase "substantial portion" is modified by the phrase "of the components of a patented invention." The grammatical structure suggests that it is the supply of all or a substantial portion "of the components" of a patented intention that triggers liability for infringement, the court reasoned. According to the court, a qualitative reading would render the phrase "of the components" unnecessary the first time it is used in the section. Following canons of statutory construction, the court favored the quantitative reading, which provided meaning to each term in the statutory provision. Following canons of statutory construction, the court favored the quantitative reading, which provided meaning to each term in the statutory provision.

The court also declined to follow the "case specific" approach that Promega had advocated. By doing so, it refused to task juries with interpreting the meaning of the statute on a case-by-case basis to determine whether a single component is a "substantial portion." Further, the court said Promega's suggested case-specific approach may not necessarily help resolve close cases because, as the court explained, "few inventions ... would function at all without any one of their components." In light of that reality, the court asked, "How are courts—or, for that matter, market participants attempting to avoid liability—to determine the relative importance of the components of an invention?"

The court next addressed whether, as a matter of law, a single component can constitute a "substantial portion" so as to trigger liability under Section 271(f)(1). It concluded that the statute's use of the term "components"—in the plural form— indicates that multiple components constitute the "substantial portion." The court also found that analysis of the statutory structure and the interplay between Sections 271(f)(1)and (2) suggests that reading Section 271(f)(1) to refer to more than one component allows the two sections to work in tandem. In relevant part, Section 271(f)(2) provides that to supply or cause to supply a noncommodity component "especially made or especially adapted for use in the invention" in or from the U.S. constitutes an act of infringement. In view of this, reading Section 271(f)(1) to cover any single component would not only leave little room for Section 271(f)(2), but would also undermine Section 271(f)(2)'s reference to a single component that is "especially made or especially adapted for use in the invention." Thus, the court concluded that one component does not constitute "a substantial portion" of a multicomponent invention under Section 271(f)(1).

Lastly, the court explained that the history of the statute supported its conclusion. It noted that Section 271(f)(1) was enacted to fill a gap in the enforceability of patent rights by reaching components that are manufactured in the U.S. but assembled overseas. That gap was created when the court ruled in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972), that no infringement could be found where all the components of a multicomponent invention were manufactured in the U.S. but assembled into the claimed invention abroad. According to the court, its decision comports with Congress' intent to hold a supplier liable:

under Section 271(f)(1) for supplying from the United States all or a substantial portion of the components of the invention, when those components are combined abroad. The same is true even for a single component under Section 271(f)(2) if it is especially made or adapted for use in the invention and not a staple article or commodity.

The court said that when all but a single commodity component of the invention are supplied from abroad, the statute does not apply. As noted by Justice Samuel Alito, Congress' intent was not just to fill the gap created by Deepsouth but to go a little further. How much further, Justice Alito noted, is not explained by the history of the statute or by the court's decision in this case. Thus, the question of how much more than one component—or how close to all the components—is necessary to establish "a substantial portion" of a multicomponent invention remains to be resolved.

Strategic Considerations

The case is important not only with respect to litigation, but also for patent prosecution and licensing practices. Whenever possible, it is critical for prosecutors to draft product and device claims in a way that takes accounts for how the invention will be practiced. For example, if the patent drafter knows that the device or product is manufactured and assembled or formulated in different countries, incorporating claims of varying scope as to the number of components required to infringe may provide the patentee breadth with respect to the manner in which infringement theories can be formulated. In addition, it is advisable to consider obtaining patent protection not only in the countries where the invention is sold, but also in countries where the invention is known—not just to the patentee but to competitors—to be important for manufacturing or assembling the components. Similar care should be taken when drafting licensing agreements. Where possible, companies licensing technology should consider broad approaches to location and fields of use. For example, the underlying license between Life Tech and Promega was construed to be limited to the supply of the kits for "live" law enforcement. The District Court concluded that such use excluded sales of kits for use in training technical personnel in educational and other training settings for educating technical personnel on the appropriate use of the kits. Certainly, more expansive language carving out the use of the kits not just during an active investigation, but also during reasonably related training, would have gone a long way to avoid protracted litigation. Similarly, licensees should aim to obtain licenses that cover not only the locations where the licensed products are expected to be made and sold, but also places where intermediate activities, such as assembly and perhaps event intermediate storage, take place.

In litigation, the decision has particular importance for companies that engage in distributed manufacturing in the U.S. and abroad. In theory, the ruling limits contributory liability for accused multinational infringers, as it requires the supply of more than a single component to support a finding of infringement. Accused infringers exporting more than one component that can be characterized as a staple or commodity of a multicomponent system are left to await further developments on what constitutes a "substantial portion" under the statute. Further clarification about how to quantify components is needed to determine what evidence is required to avoid liability. Plaintiffs considering infringement theories based on the export of a single component, on the other hand, may want to refocus their inquiry on whether the component may fall within the scope of Section 271(f)(2) as an "especially made" component. If an argument under Section 271(f)(2) is not available but the single component is key to the operation of the patented invention, plaintiffs may have a more challenging time making their case.

Endnotes

1. The parties to the original license were Promega and Applied Biosystems. Applied Biosystems, was also a defendant and petitioner in the case, and is now a wholly owned subsidiary of Life Tech.

2. Justice Alito and Justice Clarence Thomas concurred with the opinion in all but one part. Chief Justice John Roberts did not take part in the decision.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
2 Nov 2017, Webinar, Washington, DC, United States

Join us for a two-part webinar series exploring recent developments in machine learning and other technologies that have greatly advanced artificial intelligence (AI) since its origins more than 50 years ago.

9 Nov 2017, Webinar, Washington, DC, United States

As part of Strafford Publications’ webinar series, Finnegan attorneys Adriana Burgy, Chris Johns, and Kai Rajan will discuss the Examiner Count System and provide strategies for interacting with examiners.

15 Nov 2017, Conference, California, United States

Finnegan is a Gold sponsor of the second annual Digital Media & IP Forum, hosted by World Congress.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.