WesternGeco v. Ion: Supreme Court holds that foreign lost profits available for infringement under 271(f)

By Jason Rantanen

WesternGeco LLC v. Ion Geophysical Corp. (2018), 2018 U.S. LEXIS 3842   Download Opinion
Majority: Thomas (author), Roberts, Kennedy, Ginsburg, Alito, Sotomayor, and Kagan. Dissent: Gorsuch, joined by Breyer.

In its final patent-related opinion of this term, the Supreme Court held that 35 U.S.C. § 284 permits the award of lost foreign profits.  In reaching its conclusion, the Court rejected the position of the Federal Circuit that the presumption against extraterritoriality precluded the award.  Full disclosure: I joined an amicus brief written by Emory Professor Timothy Holbrook that argued that the presumption against extraterritoriality applied here.

From pages 7-8 of the majority opinion:

In sum, the focus of §284, in a case involving infringement under §271(f)(2), is on the act of exporting components from the United States. In other words, the domestic infringement is “the objec[t] of the statute’s solicitude” in this context. Morrison, 561 U. S., at 267. The conduct in this case that is relevant to that focus clearly occurred in the United States, as it was ION’s domestic act of supplying the components that infringed WesternGeco’s patents. Thus, the lost-profits damages that were awarded to WesternGeco were a domestic application of §284.

The Court expressly declined to address the issue of proximate causality, which as Tom Cotter points out, would seem to provide an important limitation on the abilities of patent owners to obtain lost profits for § 271(f)(2) infringement. Slip Op. at 9, n. 3 (“In reaching this holding, we do not address the extent to which other doctrines, such as proximate cause, could limit or preclude damages in particular cases.”).  Given all this, I expect that parties will now focus heavily on proximate cause issues when arguing about remedies for § 271(f)(2) liability.

Tom Cotter has a detailed post about the decision on his Comparative Patent Remedies blog.

 

4 thoughts on “WesternGeco v. Ion: Supreme Court holds that foreign lost profits available for infringement under 271(f)

  1. 1

    Question: Does this decision apply to a patented-in-the-U.S.-only process?

    1. 1.1

      Steve,

      Can you flesh out your question a little?

      Since this case was about the exporting of components, I am not seeing how your question can fit – how are you seeing a process patent fit into a component-supplying case?

      1. 1.1.1

        Thanks Anon,

        Well, I actually, purposely kept my question, “open,” in order to not limit the direction(s) it might take … including because 271(f) doesn’t as far as I can tell — and the justices didn’t — exclude processes from their decision.

        But one possible example that comes to mind:

        Say a domestic company comes up with a 10-step process that turns lead into gold. Problem is, for whatever reason(s), they’re only able to perform the first 5 steps in the US.

        For the last 5 steps, they hire a German company which is able to perform them.

        So the domestic co ships their partially converted lead to the German co; which completes the process. The domestic co then sells the gold to buyers worldwide; including US buyers.

        But it turns out that this process was actually invented and US-only patented a few years earlier by another company.

        Who, if anyone, has to pay who … for (doing) what?

        1. 1.1.1.1

          Over at the other blog, a panel of guests include one that poses a question much like yours.

          His takeaway is that nothing in the law limits “components of an invention” to be physical components (that can be shipped) to a machine, apparatus, manufacture, or system.

          I am not as certain that process steps are something that can be considered to be such an item. Taken as a whole (look at section c as well), the law appears to be written for articles – things (goods that can be shipped as opposed to actions that can be taken).

          Your point is a good point – worthy of discussion. I will note that innovation may be made to appear in more than one form (see Chakrabarty), so there may be room to consider “thing” to be “thing being done.”

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