I would like to take a break from discussing intellectual property law treaties in this blog to discuss the last intellectual property decision that was issued by the Supreme Court in its October 2017 term. The case dealt with the award of lost profits for extraterritorial patent infringement in WesternGeco LLC v. ION Geophysical Corp. on June 22, 2018.
The case concerned four patents that were directed to ocean surveying equipment. The accused infringer began competing with the patent owner in 2007 by manufacturing specialized components for a competing system and sending those components abroad. The competing systems would be assembled outside of the U.S.
The fact the systems were being assembled overseas was important because, typically, U.S. patent law does not apply to activities that occur outside of the U.S. If a patent owner wants to prevent a competitor from engaging in those activities, then the patent owner must obtain patent protection in the country in which the allegedly infringing activities are occurring and must use that county’s court system to enforce its patent rights.
However, the U.S. has two special statutory provisions (i.e., 35 U.S.C. § 271(f)(1) and (2)) that cover these types of activities. Specifically, the Court analyzed the second provision, which concerned the export of specially designed components that could be used to produce products that would directly infringe a patent if they were assembled in the U.S.
The Court determined that the statutory provision-at-issue actually regulated activities that occurred in the U.S. (i.e., manufacturing these special components and exporting those components for assembly in another country). As a result, the award of lost profits for those infringing activities was found to be appropriate in this case.