Eolas, Microsoft and Pellegrini

The recently filed petition in Pellegrini may ultimately decide the damage award in Eolas v. Microsoft.  Both cases discuss the international application of U.S. Patent Law, and the requirements of 35 U.S.C. 271(f)(1).

271(f)(1) provides for liability for causing components of a patented invention to be supplied for assembly abroad:

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. 35 U.S.C. 271(f)(1).

At the district court level, Eolas won a $500 million verdict for Microsoft’s alleged patent infringement.  A portion of the award fell under 271(f).  In Eolas, no physical component of the patented invention had shipped from the U.S.  However, the District Court ruled that Microsoft’s shipment of information on a “golden master” disk created a sufficient nexus with the U.S.  The Eolas case is now on appeal.

Similarly in Pellegrini, no physical components were shipped from the U.S.  However, the evidence indicates that the accused infringer made sales and controlled manufacture of components from the U.S.  Unlike in Microsoft, the Federal Circuit found no infringement because no physical components of the patented invention were shipped from the U.S. 

Now, Pellegrini has asked the Supreme Court to review its case.  In addition to solidifying the meaning of the infringement statute, the outcome may also help determine the utimate damages in Eolas.

UPDATE: Professor Joe Miller reminded me of another related case that is pending appeal: AT&T v. Microsoft, (S.D.N.Y. 2004).  That case involved another “Golden Master” disk shipped by Microsoft.  In AT&T, the court held that object code contained on the disk constituted a component under 271(f) even though the object code on the disk was replicated abroad before being incorporated into the final product.