Last week, I wrote the Federal Circuit should re-hear the BlackBerry Case (RIM v. NTP). Today, I propose a simple legislative change to move the debate concerning extra-territorial application of U.S. Patent laws to the legislature.
Section 271(a) of the patent act currently provides a definition of infringement.
Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.
Generally, in order show that a patent is infringed, the plaintiff must prove that the defendant (or his agent) performed each element of the claimed invention. In this case, RIM was found liable for infringement for using a patented method. However, as the diagram shows, RIM performs an element of its infringing activity in Canada.
From my point of view, RIM should not be held liable for patent infringement because a portion of the patented method was performed on foreign soil, and the statute requires that the use take place within the united states. The Court, however, read an exception into the statute — that internationally performed elements of the invention did not defeat an infringement charge so long as the "control and beneficial use" of the infringing system was within the United States.
Rather than legislating from the bench, I would propose the following draft amendment that incorporates the rule created by the court in RIM.
Proposed Amendment to 35 U.S.C. Section 271(j): Whoever without authority uses any patented invention, under the control and beneficial use of persons within the United States, shall be liable as an infringer so long as the preponderance of components of the invention are within the United States.
Does anyone have anything against my proposed legislation?
Update I: I have received several excellent comments on the proposed legislation.
(i) A major issue is the "preponderance" language that requires a preponderance of components to be located within the United States. This arises from the RIM v. NTP case where the court, in finding infringement, included as a factor that only one or two of the components of RIM’s system were located outside of the United States. Preponderance is a little vague and subject to too much interpretation — so we need a better word.
(ii) Initially, I only included the "use" of a patented invention within the statute. However, a reader asked that this be extended to include making and selling. I agree that these actions should be included as well.
(iii) A colleague pointed out that the statute should be more clearly written to indicate that it is the patented invention that is under the control and beneficial use of persons in the U.S.
Here is a new version of the Revised Amendment:
Revised Proposed Amendment to 35 U.S.C. Section 271(j): Whoever without authority makes, uses or sells any patented invention, where the patented invention is under the control and beneficial use of persons within the United States, shall be liable as an infringer so long as the clear majority of components of the invention are within the United States.
CE Petit added more comments. Rather than looking at the number of "components" of an invention he suggests looking at the number of elements of a given claim. "This is particularly relevant when some or all of a claim concerns a process or an intangible. Since ‘elements of claims’ are parseable as a matter of law by the court."
Petit’s version III of the Proposed Amendment to 35 U.S.C. Section 271(j) looks like this:
New Revised Proposed Amendment to 35 U.S.C. Section 271(j): Whoever without authority makes, uses, or sells any patented invention, where the invention is under the control and beneficial use of persons within the United States, shall be liable as an infringer so long as the clear majority of the elements of an otherwise infringed claim of the invention are within the United States.
I wonder what our blogging legislative guru has to say on this issue?
Update III: A couple of clients contacted me directly with more ideas and edits for the proposed legislation. Our newly edited version is here, with changes underlined.
271(j): Whoever without authority makes, uses, or sells any patented invention, where the invention is under the control and beneficial use of entities or persons within the United States, shall be liable as an infringer so long as either (i) at least one key claimed element is within the United States or (ii) at least one key claimed step takes place within the United States.
271(j) Definitions: A Key Claimed Element or Step is one that if missing, makes the invention inoperable, or that makes the claim patentable in view of cited prior art.
Let me know if you think that we should include other changes. Either leave a comment below or e-mail me (email@example.com).
Update IV: The real trick here is, as Ken Hobday correctly pointed out, eliminating the potential for a company to set up computer servers in some foreign land, practicing claimed methods using those servers, and then simply providing a point of access through the internet to U.S. customers. Any proposed legislation should be carefully examined to ensure that we capture this type of activity as infringement of U.S. patents. I’m not sure that the draft proposal is there yet.
Update V: Matt Buchanan made the point that we may be getting off-track. He has a solution that is directly related to the "extra-territorial server farm" problem.
Matt’s Proposal — 271(j): Whoever without authority makes, uses, or sells any patented invention by providing persons located in the United States electronic access to a process performed by an extraterritorial computer shall be liable as an infringer notwithstanding the extraterritorial location of the computer so long as the provision of electronic access and the performance of the process is required by the claim at issue.