Client Alert

Supreme Court Restricts the Extraterritorial Reach of U.S. Patent Law for Exported Goods

22 Feb 2017

Today, the Supreme Court in a landmark decision held that the supply of a single component of a multicomponent invention for manufacture abroad does not give rise to liability under 35 U.S.C. § 271(f)(1). See Life Techs. Corp. v. Promega Corp., 580 U.S. __ (2017). This ruling curbs the extraterritorial reach of U.S. patent law and provides increased certainty for U.S. producers, which can now export a single component of a foreign-manufactured, multicomponent patented product without running afoul of § 271(f)(1).

Liability Under 35 U.S.C. § 271(f)(1)

While the Supreme Court has recognized a presumption against extraterritoriality with respect to U.S. patent law,[1] 35 U.S.C. § 271(f)(1) contemplates some level of foreign activity contributing to infringement liability in the United States:

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.[2]

In today’s decision, the Supreme Court interpreted the phrase “a substantial portion of the components of a patented invention” to require a quantitative application (i.e,. more than one component). Thus, the Supreme Court reversed the Federal Circuit’s decision that “a substantial portion” should be interpreted qualitatively, such that the exportation of a single critical component, without which the infringing product could not function, can violate § 271(f)(1).

Background

Life Technologies Corp. (“LifeTech”) made or procured Taq polymerase, an enzyme used for amplifying DNA for analysis, in the United States and supplied that enzyme to a manufacturing center in the United Kingdom. There, the enzyme was packaged with four other components into a genetic testing kit to be sold worldwide, including in the U.S. Promega Corp. (“Promega”) sued for patent infringement, contending, among other things, that the genetic testing kit manufactured in the UK would infringe a U.S. patent. Promega argued that LifeTech’s shipment from the U.S. of the kit’s Taq enzyme made LifeTech liable for damages based on sales of the kit worldwide, under 35 U.S.C. § 271(f)(1).

The jury found for Promega, and awarded lost profits based on the worldwide sales of LifeTech’s kits. The district court overturned that verdict, holding that because §271(f)(1) refers to the supply of “all or a substantial portion of the components of a patented invention,” it could not apply to the export of a single component from the U.S.

In Promega Corp. v. Life Techs. Corp., 773 F.3d 1338 (Fed. Cir. 2014), the Federal Circuit reversed. Focusing on whether the polymerase represented a “substantial portion” of the kit, the court observed that “[w]ithout Taq polymerase, the genetic testing kit recited in the [Promega] patent would be inoperable” and that “LifeTech’s own witness admitted that the Taq polymerase is one of the ‘main’ and ‘major’ components of the accused kits.”[3] The appellate court thus found that § 271(f)(1) was satisfied by the supply of a single component: “The evidence demonstrates that LifeTech supplied a substantial portion of the patented invention—the polymerase—to its overseas facility as a component of its accused genetic testing kits.”[4]

The Supreme Court’s Ruling

In an opinion by Justice Sotomayor, the Supreme Court reversed the Federal Circuit’s decision. The Court held that “a substantial portion” has a quantitative, not a qualitative meaning, and thus the export of a single component of a multicomponent invention does not violate §271(f)(1).[5] The Court relied heavily on the context in which the disputed phrase appears in the statute, given that the Patent Act does not define the term “substantial” and that the ordinary meaning of the term can refer “either to qualitative importance or to quantitatively large size.”[6] The Court concluded that the neighboring words in the statute—“all” and “portion” —convey quantitative meaning.[7]

The Court also rejected Promega’s case-specific approach that would require both a qualitative and quantitative analysis to determine whether the “substantial portion” requirement is met under either test. According to the Supreme Court, such an approach would not only compound the ambiguity in applying §271(f)(1), but would not help resolve close cases. The Court reasoned:  because “few inventions . . . would function at all without any one of their components . . . . [h]ow are courts—or, for that matter, market participants attempting to avoid liability—to determine the relative importance of the components of an invention?”[8]

Given that its determination that “substantial portion” has a quantitative meaning, the Court further held that a single component cannot ever constitute “a substantial portion” for liability under the statute, again relying on the context in which the disputed phrase appears in the statute.[9] The Court also explained that the history of §271(f)’s enactment supported its holding.

Justice Alito, joined by Justice Thomas, concurred in part and concurred in the judgment, joining all of the Court’s opinion except its reliance on the legislative history of §271(f). Additionally, the concurrence noted that the Court’s decision does not establish how many components are necessary to give rise to liability under the statute.

Takeaways

The Supreme Court’s decision in LifeTech resolves at least some ambiguity – manufacturers now know that the supply of a single component of a patented invention from the United States will not violate 35 U.S.C. § 271(f)(1). But the relative simplicity of the invention in LifeTech led the Court to answer the narrow question it was asked, and thus it did not reach the broader question of how many “components” or what fraction of “components” make up a “substantial portion of the components of a patented invention.” In the words of the concurrence by Justices Alito and Thomas, “today’s opinion establishes that more than one component is necessary, but does not address how much more.”[10] That question will be left to subsequent courts to answer.



[1] See Microsoft Corp. v. AT&T Corp., 550 U.S. 437, 454-55 (2007) (“The presumption that United States law governs domestically but does not rule the world applies with particular force in patent law.”).

[2] 35 U.S.C. § 271(f)(1) (emphasis added).

[3] Promega Corp. v. Life Techs. Corp., 773 F.3d 1338, 1356 (Fed. Cir. 2014), cert. granted in part, 136 S. Ct. 2505 (2016).

[4] Id.

[5] Life Techs. Corp. v. Promega Corp., 580 U.S. __, slip op. at 11.

[6] See id. at 5.

[7] See id. at 5-6 (“‘All’ means the entire quantity, without reference to relative importance. . . . ‘Portion’ likewise refers to some quantity less than all.”).

[8] Id. at 7-8.

[9] See id. at 9-10.

[10] Id., Concurrence at 1 (emphasis in original).

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