Supreme Court: Patent Law Treds Into Political World of Outsourcing

Pellegrini Patent Figure

Gerald Pellegrini is an inventor in Worcester, Massachusetts.  For the past few years, he has been engaged in a patent dispute with Analog Devices, headquartered in Norwood, Massachusetts.  Now, the case has reached the United States Supreme Court.


Outsourcing of manufacturing and other jobs continues at an unprecedented pace, resulting in the loss of a great many jobs in the United States. American companies often retain their nerve center in the U.S., but delegate the physical labor to employees and contractors located abroad. Foreign outsourcing allows American companies to reduce their payroll and tax burden, and to avoid the more stringent U.S. environmental requirements. Now, the Court of Appeals for the Federal Circuit (CAFC) has offered an interpretation of the patent statute that provides American companies another incentive to outsource — avoidance of U.S. patent laws. Under the CAFC’s interpretation of the patent act, companies that would ordinarily be guilty of patent infringement can now copy patented products with impunity by simply shifting the manual labor of manufacturing outside the U.S.

Gerald Pellegrini, inventor of a specialized motor drive circuit, has taken steps to challenge the CAFC’s opinion as legally wrong and also bad public policy. Last week, Pellegrini filed a petition asking the U.S. Supreme Court to hear an appeal of the Analog Devices case. This patent infringement lawsuit, originally filed by Pellegrini in 2002, was partially dismissed because Analog’s accused products were manufactured by subcontractors outside the United States and were never physically present in the United States. Pellegrini is asking the Supreme Court to rule that a company who manufactures and sells components of a patented product from the U.S. cannot avoid liability for infringement simply by using outside foundries to fabricate their products.

The statute at issue is 35 U.S.C. Section 271(f)(1). This statute was enacted twenty years ago to prevent U.S. companies from avoiding patents by supplying components for foreign assembly.