Lost Profits for Infringement Abroad

In WesternGeco v. ION Geophysical, the Supreme Court is being asked to decide

Whether the court of appeals erred in holding that lost profits arising from prohibited combinations occurring outside of the United States are categorically unavailable in cases where patent infringement is proven under 35 U.S.C. § 271(f).

The case is at the petitions stage, and we have been awaiting the views of the US Government (via the Solicitor General).  The SJ has now weighed-in arguing that:

In the view of the United States, the petition for a writ of certiorari should be granted.

The lawsuit is related to WesternGeco’s patents on marine seismic surveys.  Adjudged infringer ION manufactures components of the system in the US, for assembly and use “on the high seas.”  A jury found liability under 271(f) – exporting components of a patented invention for assembly abroad.  The jury also awarded the patentee $12.5 million in reasonable royalties in addition to $93.4 million in lost profits based upon specific competitive contracts lost.  On appeal though, the Federal Circuit ruled that lost profits were inappropriate here because they were based upon the assembly-abroad and activities outside of the U.S. jurisdiction.   That Federal Circuit decision is the basis for WesternGeco’s petition for writ of certiorari here.

Looking at the SG’s brief – the basic argument is that a patentee has a right to collect full consequential damages adequate to compensate for the infringement.

The court of appeals erred by precluding recovery of lost-profits damages necessary to provide full compensation solely because those profits would have been earned on contracts to perform services outside of the territorial jurisdiction of United States. The presumption against extraterritoriality does not bar courts from taking notice of foreign evidence or events in fashioning appropriate relief for a domestic act of patent infringement.

Historically, the SG’s advice (grant/deny) has been given substantial weight by the court — making a grant of the writ much more likely in this case.