Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-14-01121/USCOURTS-ca13-14-01121-1/pdf.json

Parties Involved:
ION Geophysical Corporation
Appellant
WesternGeco L.L.C.
Appellee

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

WESTERNGECO L.L.C.,

Plaintiff-Cross-Appellant

v.

ION GEOPHYSICAL CORPORATION,

Defendant-Appellant

______________________ 

2013-1527, 2014-1121, 2014-1526

______________________ 

Appeals from the United States District Court for the 

Southern District of Texas in No. 4:09-cv-01827, Judge 

Keith P. Ellison.

--------------------------------------------------------------------

WESTERNGECO L.L.C.,

Plaintiff-Appellant

v.

ION GEOPHYSICAL CORPORATION,

Defendant-Appellee

______________________ 

2014-1528

______________________ 

Case: 14-1121 Document: 6-2 Page: 1 Filed: 09/21/2016
2 WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 

Appeal from the United States District Court for the 

Southern District of Texas in No. 4:09-cv-01827, Judge 

Keith P. Ellison.

______________________ 

Decided: September 21, 2016

______________________ 

GREGG F. LOCASCIO, Kirkland & Ellis LLP, Washington, DC, for WesternGeco L.L.C. Also represented by

WILLIAM H. BURGESS, JOHN C. O’QUINN; TIMOTHY GILMAN,

LESLIE M. SCHMIDT, New York, NY; LEE LANDA KAPLAN, 

Smyser, Kaplan & Veselka, LLP, Houston, TX.

DAVID J. HEALEY, Fish & Richardson, PC, Houston, 

TX, for ION Geophysical Corporation. Also represented by

BAILEY KATHLEEN HARRIS, JACKOB BEN-EZRA, BRIAN 

GREGORY STRAND; FRANK PORCELLI, KEVIN SU, Boston, 

MA; OLGA I. MAY, FRANCIS J. ALBERT, San Diego, CA; 

JUSTIN BARNES, Troutman Sanders LLP, San Diego, CA. 

_____________________ 

Before DYK, WALLACH, and HUGHES, Circuit Judges.

Opinion for the court filed by Circuit Judge DYK. 

Opinion dissenting in part filed by Circuit Judge 

WALLACH.

DYK, Circuit Judge. 

This case returns to us on vacatur and remand from 

the Supreme Court, “for further consideration in light 

of Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 

__ (2016).” WesternGeco LLC v. ION Geophysical Corp., 

No. 15-1085, 2016 WL 761619 (U.S. June 20, 2016) 

(Mem.). On remand, we vacate the district court’s judgment with respect to enhanced damages for willful infringement under 35 U.S.C. § 284 and reinstate our 

earlier opinion and judgment in all other respects. We 

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WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 3

remand for further proceedings consistent with this 

opinion and with the Supreme Court’s decision in Halo. 

BACKGROUND

The vacated decision, WesternGeco L.L.C. v. ION Geophysical Corp. (“WesternGeco II”), 791 F.3d 1340 (Fed. Cir. 

2015), addressed a patent infringement suit by WesternGeco L.L.C. (“WesternGeco”) against ION Geophysical 

Corp. (“ION”) for infringement of, inter alia, U.S. Patent 

Nos. 6,691,038, 7,080,607, 7,162,967, and 7,293,520. See 

WesternGeco L.L.C. v. ION Geophysical Corp. (“WesternGeco I”), 953 F. Supp. 2d 731 (S.D. Tex. 2013). The jury 

found infringement and no invalidity as to all asserted 

claims and awarded WesternGeco $93.4 million in lost 

profits and a reasonable royalty of $12.5 million. The jury 

also found that ION’s infringement had been subjectively 

reckless under the “subjective” prong of the thenprevailing two-part test articulated in In re Seagate, LLC, 

497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc).

After trial, WesternGeco moved for enhanced damages for willful infringement under 35 U.S.C. § 284. ION 

moved for judgment as a matter of law (“JMOL”) of no 

willful infringement, contending that WesternGeco had 

failed to prove that it was either objectively or subjectively reckless in its infringement. The district court held 

that ION was not a willful infringer meriting enhanced 

damages, finding that ION’s positions were reasonable 

and not objectively baseless and thus that the objective 

prong of the Seagate test had not been satisfied. WesternGeco I, 953 F. Supp. 2d at 753. Because the district 

court found no objective recklessness on the part of ION, 

it did not reach ION’s JMOL motion seeking to set aside 

the jury’s finding of subjective recklessness. Id. 

ION appealed to our court, asking us, inter alia, to reverse the district court’s award of lost profits. WesternGeco cross-appealed, challenging the district court’s 

refusal to award enhanced damages. Our opinion issued 

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4 WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 

on July 2, 2015. WesternGeco II, 791 F.3d at 1340. In 

section III of that opinion, we reversed the lost profits 

award, holding that WesternGeco was not entitled to lost 

profits resulting from foreign uses of its patented invention. Id. at 1351. On this issue Judge Wallach dissented. 

Id. at 1354 (Wallach, J., dissenting-in-part). In section V 

of the opinion of the court, we unanimously affirmed the 

district court’s denial of WesternGeco’s motion for enhanced damages, holding that ION’s noninfringement and 

invalidity defenses were not objectively unreasonable and, 

as such, we agreed with the district court that the objective prong of the Seagate test had not been met. Id. at 

1353–54. 

WesternGeco petitioned for certiorari on February 26, 

2016. Petition for Writ of Certiorari, WesternGeco, LLC v. 

ION Geophysical Corp., 2016 WL 792196 (U.S. Feb. 26, 

2016) (No. 15-1085) (“Petition”). The petition, inter alia, 

requested that the petition be held in view of Halo Electronics, Inc. v. Pulse Electronics, Inc. and Stryker Corp. v. 

Zimmer, Inc., which were argued February 23, 2016, and 

involved the standard for enhanced damages. WesternGeco’s petition argued that “[i]f the result of Halo and 

Stryker is other than a complete affirmance and approval 

of Federal Circuit law, the Court should grant certiorari, 

vacate, and remand [(“GVR”)] for further consideration.” 

Id. at *31.

The Supreme Court decided Halo on June 13, 2016. 

Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. __, 136 S. 

Ct. 1923 (2016). The Supreme Court granted certiorari in 

this case and issued its GVR order on June 20, 2016, 

remanding the case to us “for further consideration in 

light of Halo.” WesternGeco, 2016 WL 761619, at *1. We

recalled our mandate on July 25, 2016. We now consider 

what action is appropriate in this case in view of the 

Supreme Court’s remand.

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WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 5

DISCUSSION

The Supreme Court’s Halo decision was solely concerned with the question of enhanced damages for patent 

infringement under 35 U.S.C. § 284 and does not affect 

other aspects of our earlier opinion.1 As such, we reinstate our earlier opinion except for section V. Section V of 

 

1 The opinion dissenting-in-part “join[s] the majority’s opinion to the extent it applies the Supreme Court’s 

decision in Halo on the issue of enhanced damages for 

willful infringement under 35 U.S.C. § 284 (2012),” but 

disagrees on the issue of lost profits, “for the reasons 

articulated in [the] original dissent.” Dissent at 2. In

fact, the issue of lost profits is not properly before us. 

WesternGeco’s petition for certiorari presented two questions. Petition, 2016 WL 792196, at *ii. The first was lost 

profits—namely, “[w]hether the court of appeals erred in 

holding that damages based on a patentee’s so-called 

‘foreign lost profits’ are categorically unavailable in cases 

of patent infringement under 35 U.S.C. § 271(f).” Id. The 

second was “[w]hether the Court should hold this Petition 

for Halo and Stryker.” Id. The scope of the Supreme 

Court’s GVR order was limited to the second question. 

WesternGeco, 2016 WL 761619, at *1. “The general rule is 

that, when the Supreme Court remands in a civil case, 

the court of appeals should confine its ensuing inquiry to 

matters coming within the specified scope of the remand.” 

Kotler v. Am. Tobacco Co., 981 F.2d 7, 13 (1st Cir. 1992); 

see also, e.g., Escalera v. Coombe, 852 F.2d 45, 47 (2d Cir. 

1988) (upon GVR, “[a]ny reconsideration at this juncture 

of our earlier opinion must be limited to the scope of the 

Supreme Court’s remand”); Hermann v. Brownell, 274 

F.2d 842, 843 (9th Cir. 1960) (on remand, “the jurisdiction 

of this Court is rigidly limited to those points, and those 

points only, specifically consigned to our consideration by 

the Supreme Court”).

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6 WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 

our earlier opinion was specifically directed to the question of enhanced damages, and it is that section that we 

now revisit.

I 

Before Halo, under our court’s two-part Seagate test, 

a patentee seeking enhanced damages for willful infringement was required to prove both an objective and a 

subjective prong. Under the objective prong, a patentee 

was required to “show by clear and convincing evidence 

that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid 

patent.” Seagate, 497 F.3d at 1371. “If this threshold 

objective standard [was] satisfied,” the patentee was then 

required to prove subjective recklessness, i.e., to “demonstrate that this objectively-defined risk (determined by 

the record developed in the infringement proceeding) was 

either known or so obvious that it should have been 

known to the accused infringer.” Id. If the patentee 

proved both prongs of willful infringement, the ultimate 

determination of whether to award enhanced damages

under § 284 and the extent of any enhancement were left 

to the district court’s discretion. See id. at 1368 (“[A] 

finding of willfulness does not require an award of enhanced damages; it merely permits it.”). 

The Supreme Court’s decision in Halo overturned the 

Seagate test because it “‘is unduly rigid, and it impermissibly encumbers the statutory grant of discretion to the 

district courts.’” 136 S. Ct. at 1932 (quoting Octane 

Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 

1749, 1755 (2014)). Halo held that district courts must 

have greater discretion in awarding enhanced damages in 

cases where the defendant’s infringement was egregious, 

cases “typified by willful misconduct.” Id. at 1934. “The 

Seagate test reflects, in many respects, a sound recognition that enhanced damages are generally appropriate 

under § 284 only in egregious cases.” Id. at 1932. 

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WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 7

But, the Court held, “[t]he principal problem with 

Seagate’s two-part test is that it requires a finding of 

objective recklessness in every case before district courts 

may award enhanced damages.” Id. In particular, the 

Court rejected Seagate’s strict requirement that a patentee prove the objective unreasonableness of an infringer’s 

defenses. Id.; see WBIP, LLC v. Kohler Co., No. 15-1038, 

2016 WL 3902668, at *15 (Fed. Cir. July 19, 2016) (under 

Halo, “[p]roof of an objectively reasonable litigationinspired defense to infringement is no longer a defense to 

willful infringement”). At the same time, Halo did not 

disturb the substantive standard for the second prong of 

Seagate, subjective willfulness. Rather, Halo emphasized 

that subjective willfulness alone—i.e., proof that the 

defendant acted despite a risk of infringement that was 

“‘either known or so obvious that it should have been 

known to the accused infringer,’” Halo, 136 S. Ct. at 1930 

(quoting Seagate, 497 F.3d at 1371)—can support an 

award of enhanced damages. “The subjective willfulness 

of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his 

infringement was objectively reckless.” Id. at 1933; see

also id. at 1930 (describing the second prong of Seagate as 

an evaluation of the infringer’s “subjective knowledge”). 

Additionally, the Court stressed throughout Halo

that, if willfulness is established, the question of enhanced damages must be left to the district court’s discretion. So too, Halo stressed that “[a]wards of enhanced 

damages . . . are not to be meted out in a typical infringement case, but are instead designed as a ‘punitive’ or 

‘vindictive’ sanction for egregious infringement behavior.” 

Id. at 1932. “[N]one of this is to say that enhanced damages must follow a finding of egregious misconduct. As 

with any exercise of discretion, courts should continue to 

take into account the particular circumstances of each 

case in deciding whether to award damages, and in what 

amount. Section 284 permits district courts to exercise

Case: 14-1121 Document: 6-2 Page: 7 Filed: 09/21/2016
8 WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 

their discretion in a manner free from the inelastic constraints of the Seagate test.” Id. at 1933–34. On remand 

from the Supreme Court, our court recently reconsidered 

enhanced damages in the case of Halo itself and, in returning the issue to the district court, emphasized the 

district court’s discretion. Halo Elecs., Inc. v. Pulse Elecs., 

Inc., No. 13-1472, 2016 WL 4151239, at *10 (Fed. Cir. 

Aug. 5, 2016). 

After Halo, the objective reasonableness of the accused infringer’s positions can still be relevant for the 

district court to consider when exercising its discretion. 

Halo looked to Octane Fitness for the relevant standard. 

Halo, quoting Octane Fitness, held that there is “‘no 

precise rule or formula’” to determine whether enhanced 

damages should be awarded and that district courts 

should generally “‘exercise[] [their discretion] in light of 

the considerations’ underlying the grant of that discretion.” Halo, 136 S. Ct. at 1932 (quoting Octane Fitness, 

134 S. Ct. at 1756). Octane Fitness in turn held that, in 

determining whether to award attorney’s fees under 

§ 285, a district court should “consider[] the totality of the 

circumstances.” Octane Fitness, 134 S. Ct. at 1756. In 

that connection Octane Fitness relied on “the comparable 

context of the Copyright Act,” id., noting that “[i]n Fogerty 

v. Fantasy, Inc., for example, [the Court] explained that in 

determining whether to award fees under a similar provision in the Copyright Act, district courts could consider a 

‘nonexclusive’ list of ‘factors,’ including ‘frivolousness, 

motivation, objective unreasonableness (both in the factual 

and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence,’” id. at 1756 n.6 (emphasis added and 

internal citation omitted). Thus, objective reasonableness 

is one of the relevant factors. In short, as the Supreme 

Court itself has said, district courts should exercise their 

discretion, “tak[ing] into account the particular circumstances of each case,” and consider all relevant factors in 

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WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 9

determining whether to award enhanced damages. Halo, 

136 S. Ct. at 1933–34. 

II

Here, in granting ION’s motion for JMOL of no willful 

infringement, the district court found that WesternGeco 

had not proved that ION’s defenses to infringement were 

objectively unreasonable and consequently concluded that 

the first, objective prong of the Seagate test had not been 

met. WesternGeco I, 953 F. Supp. 2d at 751. As Halo has 

rejected the Seagate rule that a patentee’s failure to 

establish the objective recklessness of the defendant’s 

infringement precludes a finding of willfulness, we must 

vacate the district court’s determination of no willful 

infringement by ION. 

On remand the district court must consider two questions. The first of these is subjective willfulness. The jury

here was instructed on the Seagate standard for subjective willfulness.2 The jury found that WesternGeco had 

“prove[d] by clear and convincing evidence that ION 

actually knew, or it was so obvious that ION should have 

known, that its actions constituted infringement of a valid 

patent claim.” J.A. 77. We note that ION’s renewed 

motion for JMOL contended that the jury’s verdict of 

 

2 The jury was instructed to determine whether 

ION acted recklessly and to “consider all facts,” including 

“(1) Whether or not the infringer acted in accordance with 

the standards of commerce for its industry; (2) Whether or 

not there is a reasonable basis to believe that the infringer did not infringe or had a reasonable defense to infringement; (3) Whether or not the infringer made a goodfaith effort to avoid infringing the patent such as attempting to design a product the infringer believed did not 

infringe; [and] (4) Whether or not the infringer tried to 

cover up its infringement.” J.A. 11096.

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10 WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 

subjective willfulness was unsupported by substantial 

evidence. ION argued that “no reasonable jury could 

conclude that the subjective-prong of the willfulness 

inquiry was established by clear and convincing evidence.” WesternGeco I, No. 4:09-cv-01827, ECF No. 559, 

at 16 (ION’s renewed motion for JMOL of no willful 

infringement of Sept. 28, 2012). On remand, the district 

court must review the sufficiency of this evidence as a 

predicate to any award of enhanced damages, mindful of 

Halo’s replacement of Seagate’s clear-and-convincing 

evidence standard with the “preponderance of the evidence standard.” Halo, 136 S. Ct. at 1934.3 

 

3 ION did not waive its challenge to the willfulness 

verdict based on the lack of subjective willfulness by 

failing to raise it on the first appeal. At the time of the 

first appeal it had raised the issue in a JMOL motion but 

the district court did not decide that issue (the district 

court having ruled that there was a lack of objective 

willfulness, a ground then sufficient to set aside the 

willfulness verdict). Laitram Corp. v. NEC Corp., 115 

F.3d 947 (Fed. Cir. 1997) is similar to this case. There the 

jury found both infringement and willfulness. Id. at 949. 

The district court entered JMOL of non-infringement and 

did not reach the issue of willfulness. Id. On the patentee’s appeal we reversed the judgment of non-infringement 

and remanded. Id. On a second appeal by the accused 

infringer the question was whether the accused infringer 

had waived a challenge to willfulness (and enhanced 

damages) by failing to argue it as an alternative ground 

on the first appeal. Id. at 953–54. We held that there 

was no waiver because the jury’s finding of willfulness 

was “neither [itself] on appeal nor relevant to the sole 

issue that was: infringement . . . [and] properly considered 

moot—until the reversal of JMOL of non-infringement” on 

appeal. Id. at 954; see also Eichorn v. AT&T Corp., 484 

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WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 11

The second issue that the district court must consider 

on remand, if the jury’s finding of willful infringement is 

sustained, is whether enhanced damages should be 

awarded. Halo emphasized that the question of enhanced 

damages under § 284 is one that must be left to the district court’s discretion. The district court, on remand, 

should consider whether ION’s infringement constituted 

an “egregious case[] of misconduct beyond typical infringement” meriting enhanced damages under § 284 and, 

if so, the appropriate extent of the enhancement. Id. at 

1935. 

CONCLUSION

For the foregoing reasons, we vacate the judgment of 

the district court of no willful infringement by ION and 

remand for further consideration of enhanced damages 

under § 284. As to other aspects of the district court’s 

judgment, we hereby reinstate those aspects of our earlier 

judgment set forth in sections I–IV of our earlier opinion, 

which were not affected by the Supreme Court’s order. 

 

F.3d 644, 657–58 (3d Cir. 2007); Indep. Park Apartments 

v. United States, 449 F.3d 1235, 1240–41 (Fed. Cir. 2006); 

Crocker v. Piedmont Aviation, Inc., 49 F.3d 735, 738–41 

(D.C. Cir. 1995).

Thus, this case is distinguishable from our recent decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., 

where the accused infringer failed to raise the issue at the 

JMOL stage in district court or “challenge the propriety of 

the jury finding of subjective willfulness” on appeal. No. 

13-1472, 2016 WL 4151239, at *10 (Fed. Cir. Aug. 5, 

2016). We do not suggest that appellees in the future can 

avoid waiver by limiting discussion on the first appeal to 

just one aspect of the overall issue of enhanced damages 

since under the Supreme Court’s decision in Halo, objective and subjective willfulness are no longer distinct 

issues.

Case: 14-1121 Document: 6-2 Page: 11 Filed: 09/21/2016
12 WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 

AFFIRMED-IN-PART, REVERSED-IN-PART, 

VACATED-IN-PART, AND REMANDED

COSTS

Costs to neither party.

Case: 14-1121 Document: 6-2 Page: 12 Filed: 09/21/2016
United States Court of Appeals 

for the Federal Circuit ______________________ 

WESTERNGECO L.L.C.,

Plaintiff-Cross-Appellant

v.

ION GEOPHYSICAL CORPORATION,

Defendant-Appellant

______________________ 

2013-1527, 2014-1121, 2014-1526

______________________ 

Appeals from the United States District Court for the 

Southern District of Texas in No. 4:09-cv-01827, Judge 

Keith P. Ellison.

--------------------------------------------------------------------

WESTERNGECO L.L.C.,

Plaintiff-Appellant

v.

ION GEOPHYSICAL CORPORATION,

Defendant-Appellee

______________________ 

2014-1528

______________________ 

Case: 14-1121 Document: 6-2 Page: 13 Filed: 09/21/2016
2 WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 

Appeal from the United States District Court for the 

Southern District of Texas in No. 4:09-cv-01827, Judge 

Keith P. Ellison.

______________________ 

WALLACH, Circuit Judge, dissenting-in-part. 

I join the majority’s opinion to the extent it applies 

the Supreme Court’s decision in Halo on the issue of 

enhanced damages for willful infringement under 35 

U.S.C. § 284 (2012). See Halo Elecs. Inc. v. Pulse Elecs., 

Inc., 136 S. Ct. 1923 (2016). However, for the reasons 

articulated in my original dissent, see WesternGeco L.L.C. 

v. ION Geophysical Corp. (WesternGeco II), 791 F.3d 1340, 

1354–64 (Fed. Cir. 2015) (Wallach, J., dissenting-in-part), 

I dissent-in-part from today’s panel opinion, which 

reinstates our earlier opinion “in all other respects.” Maj. 

Op. at 2. 

The majority misunderstands the import of its prior 

holding, stating that my original dissent-in-part was from 

the panel’s “holding that WesternGeco was not entitled to 

lost profits resulting from foreign uses of its patented 

invention.” Id. at 4. It is of course uncontroversial that 

patentees are not entitled to lost profits resulting from 

foreign uses of a patented invention. See Brown v. 

Duchesne, 60 U.S. (19 How.) 183, 195–96 (1856) (“[T]he 

use of [the invention] outside of the jurisdiction of the 

United States is not an infringement of his rights, and he 

has no claim to any compensation for the profit or 

advantage the party may derive from it.”). 

Patentees are entitled, however, to lost profits 

resulting from infringement under the laws of the United 

States, which is what the jury found below, WesternGeco 

II, 791 F.3d at 1342 (“The jury found infringement . . . .”), 

what the district court found, id. at 1343 (“[T]he [district] 

court granted summary judgment of infringement.”), and 

what was affirmed by this court on appeal, id. at 1347–49 

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WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 3

(noting, inter alia, “the correctness of the infringement 

finding”). 

The key issue left unaddressed in the now-reinstated 

opinion’s analysis is: When a patent holder successfully 

demonstrates both patent infringement under United 

States law and foreign lost profits, what degree of 

connection must exist between the two before the foreign 

activity may be used to measure the plaintiff’s damages?1 

 

1 According to the majority, “the issue of lost profits 

is not properly before [this court],” Maj. Op. at 5 n.1, 

because “[t]he scope of the Supreme Court’s [grant 

certiorari, vacate, and remand (‘GVR’)] order was limited 

to the second question [presented],” i.e., “‘[w]hether the 

Court should hold this Petition for Halo and Stryker 

[Corp. v. Zimmer, Inc., 136 S. Ct. 356 (2015) (mem.)],’” Id.

(quoting Petition for Writ of Certiorari, WesternGeco LLC 

v. ION Geophysical Corp., No. 2015-1085, 2016 WL 

792196, at *1 (U.S. Feb. 26, 2016)). However, the 

majority reads the Supreme Court’s GVR Order too 

narrowly. First, although the Supreme Court did not 

grant certiorari on the question of foreign lost profits in 

Halo, “a denial of certiorari has no precedential value.” 

Cty. of Sonoma v. Isbell, 439 U.S. 996, 996 (1978). 

Second, the Order does not limit this court’s review to a 

specific issue or question presented, as many GVR orders 

do. See, e.g., Herrmann v. Rogers, 358 U.S. 332, 332 

(1959) (limiting the appellate court’s review on remand to 

a finite issue of Idaho property law). The GVR Order, in 

its entirety, provides:

On petition for writ of certiorari to the United 

States Court of Appeals for the Federal Circuit. 

Petition for writ of certiorari granted. Judgment 

vacated, and case remanded to the United States 

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4 WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 

Put another way, left unanswered is the question of where 

we must draw the line as to when patented products or 

services made, used, or sold abroad (or some combination 

of these) may be considered in calculating damages 

flowing from infringement under Title 35 of the United 

States Code. The issue is not one of infringement, where 

 

Court of Appeals for the Federal Circuit for

further consideration in light of Halo . . . . 

Justice ALITO took no part in the consideration or 

decision of this petition.

WesternGeco LLC v. ION Geophysical Corp., No. 2015-

1085, 2016 WL 761619, at *1 (U.S. June 20, 2016). The 

Supreme Court’s only directive was that this court 

reconsider the prior opinion “in light of Halo,” id., which 

overturns the two-part test for enhanced damages and the 

tripartite framework for appellate review in In re Seagate 

Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en 

banc). See generally Halo, 136 S. Ct. 1923 (2016). The 

Supreme Court neither directly addressed the merits of 

this court’s holding on the issue of damages associated 

with both infringement under United States law and use 

on the high seas, nor does it preclude their consideration. 

See Halo Elecs., Inc. v. Pulse Elecs., Inc., Nos. 2013-1472, 

-1656, 2016 WL 4151239, at *2 (Fed. Cir. Aug. 5, 2016) 

(“[T]he Supreme Court’s review was limited to the issue of 

enhanced damages and left undisturbed the judgments on 

other issues . . . .”); see also Maj. Op. at 5 (“The Supreme 

Court’s Halo decision was solely concerned with the 

question of enhanced damages for patent infringement 

under 35 U.S.C. § 284 and does not affect other aspects of 

our earlier opinion.” (footnote omitted)). 

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WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 5

foreign use generally does not count,2 but one of damages, 

where it may. 

Rather than grapple with this difficult question of 

proximity, the majority avoids it altogether, considering 

the foreign lost profits in this case to relate solely to 

foreign use and to be wholly disconnected from the 

infringement found by the jury. By reinstating our earlier 

decision, the majority repeats, out of context, the 

statement from Power Integrations that “‘the entirely 

extraterritorial production, use, or sale of an invention 

patented in the United States is an independent, 

intervening act that, under almost all circumstances, cuts 

off the chain of causation initiated by an act of domestic 

infringement.’” WesternGeco II, 791 F.3d at 1351 (quoting 

Power Integrations, Inc. v. Fairchild Semiconductor Int’l, 

Inc., 711 F.3d 1348, 1371–72 (Fed. Cir. 2013)).3 

 

2 Indeed, even in the infringement context, “foreign 

activity . . . can have an impact on the rights of a United 

States patent owner.” Lexmark Int’l, Inc. v. Impression 

Prods., Inc., 816 F.3d 721, 784 (Fed. Cir. 2016) (en banc) 

(10-2 decision) (Dyk, J., dissenting).

3 As recognized elsewhere in Power Integrations, 

the central issue in foreign lost profits cases is not 

whether the use or sale is “entirely extraterritorial,” but 

the nature and degree of connection between the 

underlying infringement and the (perhaps entirely 

extraterritorial) foreign activity that most proximately led 

to the lost profits. See 711 F.3d at 1371 (noting that 

plaintiffs cited no case law supporting the use of “sales 

consummated in foreign markets, regardless of any 

connection to infringing activity in the United States,” 

when calculating damages (emphasis added)); Power 

Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 

589 F. Supp. 2d 505, 511 (D. Del. 2008) (expressing 

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6 WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 

The statement in Power Integrations, however,

addressed the patentee’s argument that “having 

established one or more acts of direct infringement in the 

United States,” the plaintiff should be able to “recover 

damages for [the defendant’s] worldwide sales of the 

patented invention because those foreign sales were the 

direct, foreseeable result of [the defendant’s] domestic 

infringement.” 711 F.3d at 1371. If the statement is read 

too broadly, such that it prohibits any consideration of 

foreign activities when measuring damages, it conflicts 

with Supreme Court precedent holding that ordinary 

sales abroad can in some cases be used to measure 

damages resulting from domestic infringement. See 

Goulds’ Mfg. Co. v. Cowing, 105 U.S. 253, 254–55 (1881); 

Dowagiac Mfg. Co. v. Minn. Moline Plow Co., 235 U.S. 

641, 650 (1915) (discussing Goulds’); see also WesternGeco 

L.L.C. v. ION Geophysical Corp., 621 F. App’x 663, 664 

(Fed. Cir. 2015) (9-3 decision denying the petition for 

rehearing en banc) (Wallach, J., dissenting); WesternGeco 

II, 791 F.3d at 1354–64 (Wallach, J., dissenting-in-part). 

Such a conflict should serve as a red flag, indicating that 

the approach taken by the panel may belong to the class 

of “‘unduly rigid’” rules the Supreme Court has repeatedly 

cautioned against, including in its decision that led to the 

present remand. Halo, 136 S. Ct. at 1932 (quoting Octane 

Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 

1749, 1755 (2014)).

Not only is the approach taken by the majority unduly 

rigid, it is in substantial tension with Supreme Court 

guidance on the specific issue of (1) infringement under 

 

concern that the “estimate [of the plaintiff’s expert 

witness] of $30 million in damages was not related to 

parts that were manufactured, used, or sold in the United 

States by [the defendant]”). 

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WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 7

United States law followed by (2) use on the high seas. 

Duchesne—the very case cited by the majority for the 

proposition that lost profits based on foreign use are not 

compensable—illuminates at least one circumstance 

under which such foreign use is “compens[able]”: Where 

the patented invention is “manufactured” or “sold” in the 

United States, the defendant is “justly answerable for” 

the resulting “advantage which [he] derived from the use

of th[e] improvement . . . on the high seas.” 60 U.S. (19 

How.) at 196 (emphases added); see also WesternGeco II, 

791 F.3d at 1362 (Wallach, J., dissenting-in-part) 

(discussing Duchesne). The compensation in such a case 

is not for the foreign use itself, but for the damages 

caused when the defendant “diminished the value of [the 

plaintiff’s] property” by “compet[ing] with the plaintiff,” in 

the United States, “where the plaintiff was entitled 

to . . . exclusive use.” Duchesne, 60 U.S. (19 How.) at 196

(emphasis added).

In reinstating its earlier decision, the majority 

expresses no concern for the consequences that may result 

from that decision. Creative lawyers, for example, may 

seek to insulate their clients from infringement liability 

by structuring market transactions so as to distance the 

infringer from the foreign activities, seeking to mirror the 

present case in which ION sells the device in question “to 

its customers, who perform surveys” on the high seas “on 

behalf of oil companies.” WesternGeco II, 791 F.3d at 

1343. When done for liability-avoidance reasons, such a 

change in form can increase costs without altering the 

underlying economic substance of the transaction. 

Such efforts—and perhaps other unforeseen industry 

responses—would not only be wasteful, but would also 

result in unfairness to the patent owner, whose loss from 

the infringement remains the same regardless of the 

number of entities involved or the complexity of the 

underlying transactions. So long as there is a sufficient 

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8 WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 

connection between the infringement and the foreign 

activity, plaintiffs who successfully establish infringement 

under United States law should be able to rely on foreign 

activities to measure those damages adequate to “return 

the patent owner to the financial position he would have 

occupied but for the infringement.” Carborundum Co. v. 

Molten Metal Equip. Innovations, Inc., 72 F.3d 872, 881 

(Fed. Cir. 1995). 

Formulating a proper proximity standard—i.e., a 

standard that can be used to determine the sufficiency of 

the connection between infringement under United States 

law and foreign lost profits—is no easy task. There are 

some guideposts, however. For example, our case law has 

established that a party will not necessarily be able to 

recover damages equal to lost foreign sales simply 

because those lost sales would not have occurred “but for” 

the domestic infringement. Power Integrations, 711 F.3d 

at 1370 (finding the connection insufficient despite the 

argument of Power Integrations that it was entitled to 

damages based upon lost foreign sales it “would have 

made but for Fairchild’s domestic infringement” 

(emphasis added)). It has established that “[w]here a 

physical product is being employed to measure damages 

for the infringing use of patented methods,” the patentee 

may recover “when and only when” one of the actions 

specified in 35 U.S.C. § 271(a) (e.g., selling) “for that unit” 

takes place in the United States, “even if others of the 

listed activities for that unit (e.g., making, using) take 

place abroad.” Carnegie Mellon Univ. v. Marvell Tech. 

Grp., Ltd., 807 F.3d 1283, 1306 (Fed. Cir. 2015). 

A unifying theme from these cases and others cited in 

my original dissent is that the appropriate measure of 

damages must bear some relation to the extent of the 

infringement in the United States. Thus, on the one 

hand, where the volume of non-infringing sales is 

independent of the extent of United States infringement, 

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WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 9

those sales should not be used as a measure of damages 

flowing from the domestic infringement. For example, 

where a product is designed in the United States by an 

“infringing use of [the] patented method[],” id., and units 

of the product are then “manufactured, sold, and used 

abroad,” the number of units produced abroad bears little 

or no relationship to the extent of the infringement in the 

United States, id. at 1305 (internal quotation marks and 

citation omitted). This is because once a product is 

designed, an unlimited number of non-infringing units 

may be produced from that design. 

At the other extreme, there may be a one-to-one 

relationship, or nearly so, between the infringement in 

the United States and the non-infringing foreign activity. 

In this case, each non-infringing unit or activity bearing 

such a one-to-one relationship with the infringing unit or 

activity is relevant to the damages calculation. See, e.g.,

R.R. Dynamics, Inc. v. A. Stucki Co., 727 F.2d 1506, 1519 

(Fed. Cir. 1984) (Where a certain number of infringing 

“carsets” are manufactured in the United States and that 

same number is sold in a foreign country, each noninfringing foreign sale is relevant.); cf. State Indus., Inc. v. 

Mor-Flo Indus., Inc., 883 F.2d 1573, 1575 (Fed. Cir. 1989)

(Where a patented method is used to produce each noninfringing water heater, the number of water heaters sold 

is relevant to the damages calculation.). 

The present case appears to lie somewhere in between 

these extremes. As described by the majority, the patentpracticing devices sold by ION are combined (and then 

used) in non-infringing streamer systems on the high 

seas, in a manner that would infringe if the combination 

occurred within the United States. See WesternGeco II, 

791 F.3d at 1348. Because each streamer system contains 

some number of devices, id. at 1343, the volume of 

infringing activity in the United States bears some 

relationship to the number of streamer systems used on 

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10 WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 

the high seas, and the number of streamer systems in 

turn bears some relationship to the volume of lost sales. 

At the same time, however, because a given streamer 

system could presumably be used more than once, the 

volume of infringing activity in the United States may not 

bear a one-to-one relationship with the volume of lost 

sales. As with damages questions generally, complex 

factual issues such as these may exist regarding the 

relationship between the infringing acts and the units or 

activities used to measure the patentee’s resulting losses. 

The importance of such complex factual issues to the 

damages calculation explains why discretion is afforded to 

district courts and juries in arriving at an appropriate 

damages figure. See AstraZeneca AB v. Apotex Corp., 782 

F.3d 1324, 1333 (Fed. Cir. 2015) (“The amount of damages 

awarded to a patentee . . . is . . . reviewed for clear error, 

while the methodology underlying the court’s damages 

computation is reviewed for abuse of discretion.” 

(emphases added)); Lucent Techs., Inc. v. Gateway, Inc., 

580 F.3d 1301, 1310 (Fed. Cir. 2009) (“We review the 

jury’s determination of the amount of damages, an issue 

of fact, for substantial evidence.” (emphasis added)). An 

unduly rigid rule barring the district court from 

considering foreign lost profits even when those lost 

profits bear a sufficient relationship to domestic 

infringement improperly cabins this discretion, 

encourages market inefficiency, and threatens to deprive 

plaintiffs of deserved compensation in appropriate cases. 

Accordingly, I again respectfully dissent-in-part. 

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