The U.S. Supreme Court delivered relief to worried chemicals manufacturers and other commodity producers today when it reversed a patent court decision that held a company liable for exporting a commonly used laboratory chemical that it combined into a patented product overseas.
Exporting a single commodity can't trigger patent liability, the court ruled in Life Technologies v. Promega, because that doesn't comply with the requirement that an infringer export "all or a substantial portion" of the "components" needed to create a patented product.
Manufacturers of commodity chemicals and electronic components including Agilent Technologies, which filed a brief in the case, were particularly worried they might get tagged with patent liability for exporting items that wound up in infringing products overseas. The U.S. Government also filed a brief opposing the application of the law to a single component.
Congress expanded the boundaries of offshore liability in Section 271(f) of the Patent Code in response to a 1972 Supreme Court decision, Deepsouth Packing Co. v. Laitram Corp., that essentially granted immunity to companies that exported the components of a patented invention overseas and assembled them there. Patent law typically covers only products sold within the U.S., but after Deepsouth Congress amended the law to include conduct within the U.S. that allows companies to produce infringing products overseas. The law covers "components" that comprise "all or a substantial portion" of the patented invention. A second section of the law also covers a single product especially made or adapted for use in a patented device.
In a brief decision penned by Justice Sonia Sotomayor and relying on close textual analysis, the court concluded that Congress intended to cover only "components" plural unless a single component was specially made to create an infringing product. The Taq polymerase at issue in Life Technologies is commonly used in genetic research and biotechnology and wasn't unique to the genetic testing kits Promega sued over, the court ruled.
A trial court had ruled similarly but the U.S. Court of Appeals for the Federal Circuit, the court of appeal for patent cases, reversed, ruling that a single component could account for a "substantial portion" of a patented invention if it were important enough. The Supreme Court disagreed, as it has done repeatedly when the Federal Circuit expands the rights of patent holders.
"Few inventions, including the one at issue here, would function at all without any one of their components," Sotomayor wrote. Further, it would be asking too much of courts and juries to weigh the relative importance of a single component to a patented invention, she wrote:
Having determined the phrase “substantial portion” is ambiguous, our task is to resolve that ambiguity, not to compound it by tasking juries across the Nation with interpreting the meaning of the statute on an ad hoc basis.
The decision clarifies the law somewhat but leaves substantial unanswered questions, said Doris Johnson Hines, a partner with Finnegan in Washington. It's clear the court went with the concept of judging "components" by quantity and not their qualities, Hines said, "but it's unclear to me what a component of a claimed invention is."
Lawyers can draft a patent to claim complex "components" or break them down into smaller parts, she said, for example claiming the touchpad, handset and cords of a telephone as part of a telephone videoconferencing system instead of just a telephone and a video monitor. What if a company exported handsets and cords for use in an infringing videoconferencing system overseas? Would they meet the "substantial portion" test where a single "telephone" would not?
Eight justices joined the decision, with Chief Justice John Roberts abstaining. But Justice Samuel Alito, joined by Clarence Thomas, objected to one portion of the decision where Sotomayor departed from strict textual analysis to discuss the legislative history behind the Patent Act amendments penalizing offshore patent infringement.
It is clear from the text that Congress wanted to do fix an apparent problem caused by Deepsouth Packing “but to go at least a little further," Alito wrote. "How much further is the question in this case, and the genesis of §271(f) sheds no light on that question.” He also noted that the decision says one component can’t trigger liability, but doesn’t specify how many more are necessary.
