Where Does Infringement Occur?  Lessons from Extraterritoriality Cases

Guest post by Josh Landau, Patent Counsel for CCIA

It seems like a truly simple question to answer: where is an act of infringement committed?  And it’s one that became more important after TC Heartland’s decision that venue is proper “in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”  There’s been a lot of discussion, here and elsewhere, of what “regular and established place of business” means, but less focus on where acts of infringement occur.

Fortunately, there is one place where the issue of where infringement happens has come up: extraterritorial infringement cases.

Methods Abroad in NTP

The Federal Circuit defined the location of infringement tautologically in NTP v. RIM, saying “[t]he situs of the infringement ‘is wherever an offending act [of infringement] is committed.’”  And for simple machines or processes that operate entirely in one place, this provides a simple and workable definition.  But what about more complex systems that have components or perform steps in disparate geographic locations, like the claims in NTP?

For system claims, NTP says that use occurs in “the place at which the system as a whole is put into service, i.e., the place where control of the system is exercised and beneficial use of the system obtained.”

But for method claims, we have to answer a different question.  The NTP court said that a process cannot be used “within” the United States unless each and every one of the steps is performed in the United States.  For a method claim, the place where infringement occurs is the place where each and every step is performed.

TC Heartland

While NTP was decided in reference to 35 U.S.C. § 271(a) and TC Heartland dealt with 28 U.S.C. § 1400(b), both sections include the notion of the location where the act of infringement occurs.  If the test for where use of a method claim occurs is a consistent test for both determining whether it’s within the United States and for whether it’s within a judicial district, then the NTP test would apply.

That would mean that the only place where venue may be proper for method claims with steps performed in multiple locations (e.g., cloud computing claims with both user and server limitations, or networking claims with client and server relationships) could be the district where the alleged infringer is incorporated.  If there’s a server in the Northern District of California and a user’s smartphone is in the Eastern District of Texas, then the method isn’t performed in either place under the NTP test.  That leaves a patent holder with the option of suing where the server is (assuming they can show a user within the same district as the server) or else suing where the company resides.

Indirect infringement

This is only for direct infringement, of course.  I’m unaware of comparable cases to NTP v. RIM that provide a definition for where indirect infringement takes place.  The limited set of extraterritoriality cases handling the issue don’t specifically address the location of the infringing act of indirect infringement; they focus more on whether a direct infringement has occurred within the United States in order to avoid raising concerns about extraterritorial applications of U.S. law.

So the question becomes: if I induce infringement by acts taken in the Northern District of California, but the direct infringement occurs elsewhere (or across multiple districts), did the act of inducing infringement occur in the place where I took the action that induced the infringement?  Or did it occur somewhere else?

The extraterritoriality cases with respect to inducement suggest that as long as there’s a directly infringing act in the district, actions taken outside the district to induce infringement would be subject to venue in the district.  However, as we saw above, there might not be a directly infringing act in the district, so inducement might not be available at all.  Contributory infringement might prove a stronger avenue, as it explicitly conceives of sale or importation of an article practicing the patent as the infringing act.

But all of this has to be taken in view of the existing difficulties for a plaintiff trying to assert induced or contributory infringement, such as the requirement to show specific intent to infringe or to show a lack of any substantial non-infringing use.  While a plaintiff might be able to use indirect infringement to manufacture venue for a method claim in order to choose a forum, it might not be a strong claim.

How much does this really matter?

It might not matter much.  While patents that only have method claims could have a limited set of venues in which they can be asserted, most patents include both method and apparatus claims and both sets are asserted together.  That could be enough to manufacture a “supplemental venue” over the method claims, even if there are method steps performed elsewhere.

The Federal Circuit doesn’t seem to have addressed this question, but other courts have.  Prior to the creation of the Federal Circuit, the 7th Circuit determined that when a patent has both method and apparatus claims, venue is proper for both the method and apparatus claims even if only the apparatus claim is infringed within the judicial district.  See General Foods Corporation v. Carnation Company, 411 F. 2d 528 (7th Cir. 1969).  The Carnation court’s concern was that, otherwise, “an action for patent infringement in a situation such as we have here would be tried piecemeal, some claims in one jurisdiction and others in another.”

But the Carnation court didn’t address the fact that the statute allows using the district “where the defendant resides” as an alternative to the district where acts of infringement occur.  In other words, the case wouldn’t have to be tried piecemeal at all, but could always be heard in one location—the place of incorporation of the defendant.  If the only interest weighing against severing the venue-less method claims into their own case and transferring that case is the interest in hearing claims with similar scopes in the same court, then the proper remedy is a requirement to transfer all of the claims to a location where venue is proper, not to create a “supplemental venue” provision.

 

Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

38 thoughts on “Where Does Infringement Occur?  Lessons from Extraterritoriality Cases

  1. Our legal system in buenos Aires, Argentina has similar issues with most of the cases. They have to interpret different concepts as “prior usage” “infringement” and other situations that changed during the last ten years. It happens with patents and trademarks and also with copyrights. Congratulations for this blog and its content.

  2. Tam won his case to trademark the name of his cr@ppy band.

    1. Thank you Malcolm.

      We already know how you feel, but do you have any legal insight to share on the case?

      [guffaw]

      1. Yes, I’ve got dozens of insights and I’ve written them up and posted them to the other thread using declarative sentences, in English.

        Have fun kicking up dust and soiling yourself, Billy, as usual.

        1. You missed the key word there, Malcolm: “legal.”

        2. Even besides the lack of “legal,” your rants on the other pages are most definitely not any model of “insight” as already noted on that thread.

          You seek to pat yourself on the back and give yourself far too much credit for your “declararive sentences, in English.”

          Those – and you – are just not all that and a bag of chips.

    2. Have you heard them play? I have. They are very good IMHO. Why do you say they are crappy?

  3. link to hightowerlowdown.org

    Corporate “repair prevention” schemes steal the right to fix our own belongings

    And please, k0ol-aid drinkers: don’t blame a “weak” patent system for this kind of game-playing. The toxic level of greed is the core problem.

    1. It’s the weak patent system.

      😉

      1. Of course “anon” and his ridiculous c0horts at the IPO, AIPLA and PCA also fully support stealing everyone’s right to think about new correlations or share those correlations with people using pre-existing data sharing technologies. So no surprises there.

        Keep the laughs coming, “anon”! Then do your little “I’m totally concerned about separation of powers” charade. That’s always a fun one.

        1. You are yet again incorrect on so many levels.

    2. From the article: “They’re out to corporatize the very idea of ‘owning.’

      Funny that Malcolm wants to pick a fight with me, perhaps the number one regular here as an advocate of owning what you buy.

      The next sentence from that article:

      Today, just about every manufactured product containing software– from an electric toothbrush to an SUV–has no-repair clauses and/or digital locks. It’s now standard industry practice for manufacturers to insert a spurious claim into their sales agreements that the company retains legal possession of key components of the products they sold to us, and only it can make repairs.

      Now mind you, the article touches upon an important concept, but does so in an extremely p00rly and emotive-laden manner (presupposing its own ‘righteousness” with improper insertions of emotive buzzwords like “spurious.”

      But the additional incongruity from Malcolm is the notion that HE injects against software patents, and then he wants to turn around and claim that his odd notions are (somehow) distinct from what would naturally happen if you placed software outside of the patent system.

      It is just like his rather odd penchant to whine about the ultra rich and inject class-w@rfare rants all the while zealously campaigning against the form of innovation MOST ACCESSIBLE to the non-wealthy.

      But back to the p00rly written article:

      Congress has passed no laws barring buyers from opening up, ripping out, adding in, fixing, rewiring, upgrading, or tying bells onto stuff they’ve bought.

      Actually , they have.

      Nothing wrong with being “pupulist,” (the article is unsigned, so maybe it was a group effort by: link to hightowerlowdown.org ) but please, inform yourself when you what to go on a rant…

      1. what would naturally happen if you placed software outside of the patent system.

        “Naturally”?

        LOL

    3. MM, thanks for this.

      Back in the day, there was an effort to enact an UCC2 that would allow software vendors total control over the software the “sold,” including the right to unilaterally shut it down remotely if the T&C’s in the license agreement were not complied with.

      I was appalled then –and opposed.

      This “kind” of behavior by sellers of products that include software to operate must be prosecuted, IMHO, by government attorneys. The recent exhaustion cases should help.

      This is a national disgrace, and the thinking of the Big Boys must be condemned for what it is, a travesty.

      1. We STILL have issues – notably with sales disguised as “leases.”

  4. An interesting contrast is the internet gambling cases. The servers were located off-shore (preferably in a non-extradition Country, where also lawful), but the “poker game” was considered to be played on the user screen in for example NYC – for the purpose of the criminal statutes concerning illegal gambling or “betting.” In other words, no wrapping around the intellectual axle, as to where all steps are performed, etc, but the more IMHO common sense approach of the ‘acts’ being performed on the user screen.

    Furthermore, isn’t this creating an off-shoring incentive, to simply locate the server farm, in for example, Mexico, and drag some private fiber back across the border? We have no clue where for example, the patently-o server is located, and it would not make much a difference anyways, from the functionality offered to the user.

    1. 95% of “internet gambling” patents are ineligible junk. Another 4.9% are obvious junk that a five year old can see through. How deep does the fork have to go in before you can see that it’s done?

  5. As a practical matter, especially since D.C.s have considerable discretion to transfer cases to a more convenient venue forum, it seems highly unlikely that different courts will have to handle different claims of the same patent with the same parties.
    Also, even if only method claims are involved the “acts of infringement” may in some cases be a test or demonstration of apparatus or software by the accused manufacturer or supplier itself. It may not have to be a method performance of a customer. The “regular and established” is not a requirement for the acts of infringement.

    1. Regarding Mr. Landau’s last point and Mr. Morgan’s first point, I would say that the patent statute creates a cause of action for infringement of a patent, not separate causes of action for each individual claim. If venue is proper because a system claim is infringed in the district, then venue is proper for the infringement cause of action, and that court can adjudicate issues of infringement for the rest of the patent claims.

      1. Why would you say “not separate causes of action for each individual claim.“….?

        You are aware that each patent claim is separate one from the others, right?

        1. Yes, I am. You are aware that to the extent more than one claim of a patent is being infringed, you are required to bring your infringement claims for all of the claims of a patent in one suit, otherwise, the subsequent suits will be subject to dismissal for “claim preclusion” or “claim splitting,” right? See Kearns v General Motors and Senju Pharm. v Apotex.

          1. I have no problem with the “claim preclusion” or “claim splitting.”

            But nice reminder, nonetheless.

  6. My post keeps getting stuck in the **** filter. I’ll try breaking it up:

    (part 1)
    I’ve been thinking about territoriality issues for awhile. I’ll share my thoughts for discussion.

    Focusing on where the infringement “occurs” is the wrong issue. It leads to nonsensical results, such as where a valid method claim in two jurisdictions is “performed” in neither of them because the chain of steps are split across the two jurisdictions.

    The proper inquiry ought to be something along the lines of:
    1) Were all the claim elements performed by the accused?
    2) Did these acts affect the US market as a primary consequence (or not incidental)?
    3) Does the defendant have established ties to the US?
    4) What remedies can the court order within US territory to address it?

    In other words, the question of territoriality should be delayed until the step of remedies. That’s where national borders come into play as necessarily confining the court’s power. Trying to apply territoriality at earlier stages creates confusion and bad results. This inquiry makes the court’s job simpler, results more predictable, and reaches the same result in most scenarios (the exception being problematic scenarios that courts struggle with under current rules).

    This does not mean that infringement suddenly encompasses behavior that occurs completely outside the US. The other elements still have to be satisfied for infringement to attach.

    1. Consider how it works in these scenarios:
      RIM v NTP – 1) yes, by acts performed in US and CA; 2) yes, primary effect was on US mobile customers; 3) yes, defendant primarily does business in the US; 4) court can order remedies against defendant’s US assets (but not CA assets).

      Invisalign v ClearCorrect (in federal court not ITC) – 1) yes, in US and Pakistan; 2) yes, target market was US orthodontics patients; 3) yes, ClearCorrect operates in US; 4) yes, court can order remedies against defendant’s US assets (but not Pakistan assets).

      Suppose a Mexican radio station broadcasts in Mexico for Mexican listeners with infringing radio equipment, and the patent claim includes the act of receiving the signal on a radio. The signal is also received in parts of the US. Can the Mexican broadcaster be sued for infringement in US court? Not according to the new test. 1) yes, the claim elements are all performed in Mexico and US. 2) no, the broadcast is primarily for listeners in Mexico. Any US listeners are incidental to the primary purpose of the radio broadcast. 3) no, the defendant is located and operates entirely in Mexico. 4) no remedies available within US territory.

    2. (part 2)
      Consider how it works in these scenarios:
      RIM v NTP – 1) yes, by acts performed in US and CA; 2) yes, primary effect was on US mobile customers; 3) yes, defendant primarily does business in the US; 4) court can order remedies against defendant’s US assets (but not CA assets).

      Invisalign v ClearCorrect (in federal court not ITC) – 1) yes, in US and Pakistan; 2) yes, target market was US orthodontics patients; 3) yes, ClearCorrect operates in US; 4) yes, court can order remedies against defendant’s US assets (but not Pakistan assets).

    3. Your point of 2) seems askew to the nature of (direct) patent infringement (strict liability) – the notion of “incidental” is one that the Efficient Infringers crowd would love to insert into patent law.

      1. Quite the opposite. The question isn’t whether the infringing acts were incidental. The question is whether the primary affect of these actions on the US market was incidental. Any company doing business in the US will fail this part of the test.

        Strict liability is still preserved; intent is not relevant. Regardless of what you intend, the question is whether the end result of the behavior primarily affects the US market.
        It’s even broader than current infringement tests: it covers behavior that impacts the US market, even though some of the acts occur overseas.

        The language can be tweaked as desired.

        1. Current understanding of “stream of commerce” already captures what you appear to want (in your clarifying reply).

  7. (trying again to get past the filter…)
    I’ve been thinking about territoriality issues for awhile. I’ll share my thoughts for discussion.

    Focusing on where the infringement “occurs” is the wrong issue. It leads to nonsen sical results, such as where a valid method claim in two jurisdictions is “performed” in neither of them because the chain of steps are split across the two jurisdictions.

    The proper inquiry ought to be something along the lines of:
    1) Were all the claim elements performed by the accused?
    2) Did these acts affect the US market as a primary consequence (or not incidental)?
    3) Does the defendant have established ties to the US?
    4) What remedies can the court order within US territory to address it?

    In other words, the question of territoriality should be delayed until the step of remedies. That’s where national borders come into play as necessarily confining the court’s power. Trying to apply territoriality at earlier stages creates confusion and strange results. This inquiry makes the court’s job simpler, results more predictable, and reaches the same result in most scenarios (the exception being problematic scenarios that courts struggle with under current rules).

    This does not mean that infringement suddenly encompasses behavior that occurs completely outside the US. The other elements still have to be satisfied for infringement to attach.

    Consider how it works in these scenarios:
    RIM v NTP – 1) yes, by acts performed in US and CA; 2) yes, primary effect was on US mobile customers; 3) yes, defendant primarily does business in the US; 4) court can order remedies against defendant’s US assets (but not CA assets).

    Invisalign v ClearCorrect (in federal court not ITC) – 1) yes, in US and Pakistan; 2) yes, target market was US orthodontics patients; 3) yes, ClearCorrect operates in US; 4) yes, court can order remedies against defendant’s US assets (but not Pakistan assets).

    Suppose a Mexican radio station broadcasts in Mexico for Mexican listeners with infringing radio equipment, and the patent claim includes the act of receiving the signal on a radio. The signal is also received in parts of the US. Can the Mexican broadcaster be sued for infringement in US court? Not according to the new test. 1) yes, the claim elements are all performed in Mexico and US. 2) no, the broadcast is primarily for listeners in Mexico. Any US listeners are incidental to the primary purpose of the radio broadcast. 3) no, the defendant is located and operates entirely in Mexico. 4) no remedies available within US territory.

    Same scenario, but suppose the Mexican station broadcasts intending to reach US listeners. Step 3 still fails (defendant has no ties to the US) so no infringement.

    I haven’t tested it under every scenario yet, but it seems to leads to better, simpler results in the cases I’ve looked at. And it gets at the real issue, which is economic exploitation of patent rights within US territory. Where the conduct occurs is not relevant; it’s where the economic effects occur that matters. With some tolerance of unintended secondary effects, e.g. where a system is primarily meant for and used in EU but some outputs trickle into the US without the seller encouraging such behavior.

  8. Paul Morgan, unfortunately, the filter got me again when I was replying to your post in the Oil States thread. I don’t expect to be able to reply to you for a couple of days.

  9. That would mean that the only place where venue may be proper for method claims with steps performed in multiple locations (e.g., cloud computing claims with both user and server limitations, or networking claims with client and server relationships) could be the district where the alleged infringer is incorporated.

    Or the “professionals” in the s0 ftie w0ftie “arts” can learn to draft claims competently like everyone else. System claims, in general, are cr@ppy claims. NTPs claims were cr@ppy claims. Claims that purport to protect “new” communications between computers on an existing network are, in pretty much every instance that’s been challenged by a competent attorney, complete g@rbage and ineligible.

    This is a non-issue for purveyors of junk. Get the purveyors and the junk out of the system and everybody can get back to promoting progress again instead of wallowing in the rising backwaters of “logic on a computer” gobbledygook.

    1. Your feelings are noted.

      1. Not my feelings, “anon.” Just facts that you and your cohorts would rather not discuss.

        Here’s you guys: “Lookie over here! The Court of Chancery in Sherwood Forest used the word “patent” in a case from 1623! Therefore Congress can’t define the term ever again!”

        Deep.

        1. No Malcolm – your posts are ONLY your feelings.

          You have zero grasp of facts.

          As for discussing facts, let’s try: link to patentlyo.com

          Of course, your inte11ectual honesty in actually engaging on those facts will be its usual NIL….

          1. You have zero grasp of facts

            Odd, then, how often I get the big questions right.

            But wait! That’s only because the “scoreboard is broken” or some other explanation that is totally not just an expression of your precious and profoundly tender fee-fees.

            Riiiiiiiight.

            1. That thing about broken scoreboards comes to mind (as if it difficult to predict that the Supreme Court will be anti-patent and all) – don’t sprain your shoulder patting yourself on the back.

              And no, that had nothing to do with “fee-fees.”

              As I said, the only thing you pound IS the table of feelings (so no surprise with your standard Accuse Others meme shining through)

              1. That thing about broken scoreboards comes to mind

                Of course it does. It’s right there at the top of your ridiculous raggedy script, right above “people who don’t love patents as much as I do are Amish communists.”

                1. Lovely Accuse Others…. Malcolm, along with your second most favorite meme of deliberately getting wrong what others post.

                  I am so glad that you thought for days on that “comeback.”

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