Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-13-01472/USCOURTS-ca13-13-01472-1/pdf.json

Parties Involved:
Halo Electronics, Inc.
Appellant
Pulse Electronics Corporation
Cross-Appellant
Pulse Electronics, Inc.
Cross-Appellant

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

HALO ELECTRONICS, INC.,

Plaintiff-Appellant

v.

PULSE ELECTRONICS, INC. AND

PULSE ELECTRONICS CORPORATION,

Defendants-Cross-Appellants

______________________ 

2013-1472, 2013-1656

______________________ 

Appeals from the United States District Court for the 

District of Nevada in No. 07-CV-0331, Judge Philip M. 

Pro.

______________________ 

Decided: August 5, 2016

______________________ 

CRAIG E. COUNTRYMAN, Fish & Richardson P.C., San 

Diego, CA for plaintiff-appellant. Also represented by

MICHAEL J. KANE, WILLIAM WOODFORD, Minneapolis, 

MN. 

MARK LEE HOGGE, Dentons US LLP, Washington, DC, 

for defendants-cross-appellants. Also represented by

SHAILENDRA K. MAHESHWARI, CHARLES R. BRUTON, 

RAJESH CHARLES NORONHA. 

______________________ 

Case: 13-1472 Document: 87-2 Page: 1 Filed: 08/05/2016
2 HALO ELECTRONICS, INC. v. PULSE ELECTRONICS, INC. 

Before LOURIE, O’MALLEY, and HUGHES, Circuit Judges.

LOURIE, Circuit Judge. 

This case has returned to us on remand from the Supreme Court of the United States. In its earlier appearance in this court, Halo Electronics, Inc. (“Halo”) appealed

from the decisions of the United States District Court for 

the District of Nevada (1) granting summary judgment 

that Pulse Electronics, Inc. and Pulse Electronics Corp. 

(collectively, “Pulse”) did not sell or offer to sell within the 

United States the accused products that Pulse manufactured, shipped, and delivered to buyers outside the United 

States and thus that Pulse did not directly infringe Halo’s 

U.S. Patents 5,656,985 (“the ’985 patent”), 6,297,720 (“the 

’720 patent”), and 6,344,785 (“the ’785 patent”) (collectively, “the Halo patents”) with respect to those products; and 

(2) holding that, with respect to the accused products that 

Pulse sold and delivered in the United States, Pulse’s 

infringement of the Halo patents was not willful, and thus 

declining to enhance damages under 35 U.S.C. § 284. See

Halo Elecs., Inc. v. Pulse Eng’g, Inc., 810 F. Supp. 2d 

1173, 1205–08 (D. Nev. 2011) (sale and offer for sale);

Halo Elecs., Inc. v. Pulse Elecs., Inc., No. 2:07-CV-00331, 

2013 WL 2319145, at *14–16 (D. Nev. May 28, 2013) 

(willfulness); Halo Elecs., Inc. v. Pulse Elecs., Inc., No. 

2:07-CV-00331, ECF No. 523 (D. Nev. May 28, 2013) (final 

judgment awarding damages without enhancement). 

Pulse cross-appealed from the district court’s decisions (1) construing the claim limitation “electronic surface mount package” in the Halo patents; (2) construing 

the claim limitation “contour element” in Pulse’s U.S. 

Patent 6,116,963 (“the ’963 patent”) that Pulse asserted in 

its counterclaim; and (3) holding that the asserted claims 

of the Halo patents were not invalid for obviousness. See

Halo Elecs., Inc. v. Pulse Eng’g, Inc., 721 F. Supp. 2d 989, 

998–1001 (D. Nev. 2010) (claim construction); Halo, 2013 

WL 2319145, at *1–7 (obviousness); Halo Elecs., Inc. v. 

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HALO ELECTRONICS, INC. v. PULSE ELECTRONICS, INC. 3

Pulse Elecs., Inc., No. 2:07-CV-00331, 2013 WL 4458754, 

at *1–3 (D. Nev. Aug. 16, 2013) (obviousness).

We affirmed the summary judgment of no direct infringement of the Halo patents by the accused products

that Pulse manufactured, shipped, and delivered outside 

the United States because Pulse did not sell or offer to sell 

those products within the United States. Halo Elecs., Inc. 

v. Pulse Elecs., Inc., 769 F.3d 1371, 1377–81 (Fed. Cir. 

2014). In addition, applying the then-controlling standard for an award of enhanced damages and the related 

two-part test for willful infringement as stated in In re 

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

(en banc), and its progeny, we affirmed the judgment of no 

willful infringement of the Halo patents with respect to 

products that were delivered in the United States and, 

consequently, the district court’s decision not to enhance 

damages. Halo, 769 F.3d at 1381–83. On the crossappeal, because we found no reversible error in the contested claim constructions, we affirmed the judgment of 

direct infringement of the Halo patents with respect to 

products that Pulse delivered in the United States and 

the judgment of inducement with respect to products that 

Pulse delivered outside the United States, but that were 

ultimately imported into the United States by others, as 

well as the judgment of noninfringement of Pulse’s ’963

patent. Id. at 1383. We also affirmed the judgment that 

the asserted claims of the Halo patents were not invalid 

for obviousness. Id.

Both parties petitioned for rehearing en banc, which 

this court denied. Halo Elecs., Inc. v. Pulse Elecs., Inc., 

780 F.3d 1357 (Fed. Cir. 2015). Halo then filed a petition 

for a writ of certiorari in the Supreme Court. Halo’s 

petition presented two questions: 

1. Whether the Federal Circuit erred by applying a rigid, two-part test for enhancing patent infringement damages under 35 U.S.C. § 284, that 

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is the same as the rigid, two-part test this Court 

rejected last term in Octane Fitness, LLC v. ICON 

Health & Fitness, Inc., 134 S. Ct. 1749 (2014) for 

imposing attorney fees under the similarlyworded 35 U.S.C. § 285. 

2. Whether the Federal Circuit erred by holding 

that a U.S. defendant does not “sell” or “offer to 

sell” the patented invention “within the United 

States” under 35 U.S.C. § 271(a), even though it 

enters [into] a requirements contract with a U.S. 

customer that they negotiate and execute in the 

U.S., that is governed by California law, that 

specifies the material terms, and that creates legally binding obligations.

Petition for a Writ of Certiorari, at i, Halo Elecs., Inc. v. 

Pulse Elecs., Inc., 579 U.S. __, 136 S. Ct. 1923 (2016) (No. 

14-1513), 2015 WL 3878398, at *i. In addition, Pulse filed 

a conditional cross-petition for a writ of certiorari on the 

obviousness issue. Conditional Cross-Petition for a Writ 

of Certiorari, at i, Pulse Elecs., Inc. v. Halo Elecs., Inc., 

No. 15-121, 2015 WL 4550375, at *i (U.S. July 24, 2015).

The Supreme Court granted Halo’s petition in part, 

limiting its review to Question 1 relating to enhanced 

damages, and declining to review Question 2 relating to

sale and offer-for-sale. Halo Elecs., Inc. v. Pulse Elecs., 

Inc., 577 U.S. __, 136 S. Ct. 356 (2015). The Court also 

denied Pulse’s conditional cross-petition relating to obviousness. Pulse Elecs., Inc. v. Halo Elecs., Inc., 577 U.S. 

__, 136 S. Ct. 236 (2015).

On June 13, 2016, the Court announced its decision. 

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

S. Ct. 1923 (2016). The Court held that Section 284 of the 

Patent Act “gives district courts the discretion to award 

enhanced damages . . . in egregious cases of misconduct 

beyond typical infringement.” Id. at 1935. The Court 

rejected the Seagate test as “unduly rigid” and “impermisCase: 13-1472 Document: 87-2 Page: 4 Filed: 08/05/2016
HALO ELECTRONICS, INC. v. PULSE ELECTRONICS, INC. 5

sibly encumber[ing] the statutory grant of discretion to 

district courts.” Id. at 1932 (internal quotation marks 

omitted). Because we decided the enhanced damages

issue under the Seagate framework, the Court vacated our 

decision and remanded the case for further proceedings.

On remand, we recalled our mandate and reopened 

the case on July 14, 2016. Because the Supreme Court’s 

review was limited to the issue of enhanced damages and 

left undisturbed the judgments on other issues, we 

reaffirm the summary judgment of no direct infringement 

of the Halo patents by the accused products that Pulse 

manufactured, shipped, and delivered outside the United 

States, and we also reaffirm all aspects of the crossappeal. On those issues, we restate herein the reasoning 

stated in our earlier opinion. Because the district court

applied the Seagate test in declining to enhance damages, 

however, we vacate its unenhanced damages award with 

respect to products that were delivered in the United 

States, and remand for further proceedings consistent 

with the Supreme Court’s opinion on enhanced damages. 

BACKGROUND

Halo is a supplier of electronic components and owns 

the ’985, ’720, and ’785 patents directed to surface mount 

electronic packages containing transformers for mounting

on a printed circuit board inside electronic devices such as 

computers and internet routers. The Halo patents are all

derived from an application filed on August 10, 1995. At 

issue here are claims 6–8 and 16 of the ’985 patent, claims 

1 and 6 of the ’720 patent, and claims 40 and 48 of the 

’785 patent (collectively “the asserted claims”). Claim 6 of 

the ’985 patent is representative and reads as follows:

6. An electronic surface mount package for 

mounting on a printed circuit board in an electronic device, said electronic surface mount 

package comprising:

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a one piece construction package having a side 

wall and an open bottom,

a plurality of toroid transformers carried within said package by a soft silicone material, said 

toroid transformers each having wires wrapped 

thereon, 

a plurality of terminal pins molded within and 

extending from the bottom of said package, 

each of said pins extending through a bottom of 

said side wall and having a notched post upon 

which said wires from said transformers are 

wrapped and soldered thereon, respectively. 

’985 patent col. 4 ll. 19–33.

Pulse, another supplier of electronic components, designs and sells surface mount electronic packages and

manufactures those products in Asia. Some of Pulse’s

products were delivered by Pulse to customers in the 

United States, but the majority of them were delivered 

outside the United States, for example, to contract manufacturers for companies such as Cisco. Those contract 

manufacturers incorporated the electronic packages 

supplied by Pulse into end products overseas, including

internet routers manufactured for Cisco, which were then 

sold and shipped to consumers around the world.

For those products that Pulse delivered abroad, all 

purchase orders were received at Pulse’s sales offices

abroad. Halo, 810 F. Supp. 2d at 1207. However, Pulse 

engaged in pricing negotiations in the United States with 

companies such as Cisco, and Pulse’s employees in the 

United States approved prices that its agents quoted to 

foreign customers when the quoted prices fell below

certain thresholds. Pulse also engaged in other activities 

in the United States, including meeting regularly with 

Cisco design engineers, sending product samples to Cisco 

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HALO ELECTRONICS, INC. v. PULSE ELECTRONICS, INC. 7

for pre-approval, attending sales meetings with its customers, and providing post-sale support for its products.

Although Cisco outsourced its manufacturing activities to foreign contract manufacturers, Cisco negotiated 

with its component suppliers the prices that its contract 

manufacturers would pay when purchasing component 

parts. As one of Cisco’s component suppliers, Pulse 

executed a general agreement with Cisco that set forth 

manufacturing capacity, low price warranty, and lead 

time terms. J.A. 15135–37. However, that general 

agreement did not refer to any specific Pulse product or 

price. Cisco typically sent a request for quote to its component suppliers and Pulse responded with the proposed 

price and minimum quantity for each product as identified by its part number. After further negotiation, Cisco 

issued the agreed-upon price, projected demand, and 

percentage allocation to Pulse for each product for the 

upcoming quarter. The percentage allocation divided

Cisco’s projected quarterly demand among its suppliers. 

Cisco then communicated the price and allocation to its 

contract manufacturers in Asia, and the contract manufacturers were expected to apply the Cisco price and 

allocation when ordering components from Pulse and 

other suppliers. 

Upon receipt of purchase orders abroad, Pulse delivered the electronic package products from its manufacturing facility in Asia to Cisco contract manufacturers, also 

located in Asia, which then paid Pulse. After assembling 

the end products, the contract manufacturers submitted 

invoices to Cisco that itemized the cost of Pulse products 

and other components that were incorporated into the 

Cisco end products. Cisco then paid the contract manufacturers for the end products. 

Pulse allegedly knew of the Halo patents as early as

1998. In 2002, Halo sent Pulse two letters offering licenses to its patents, but did not accuse Pulse of infringement

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in those letters. J.A. 5953–54. The president of Pulse 

contacted a Pulse engineer, who spent about two hours 

reviewing the Halo patents and concluded that they were 

invalid in view of prior Pulse products. Pulse did not seek 

an opinion of counsel on the validity of the Halo patents

at that time and continued to sell its surface mount 

electronic package products. A Pulse witness later testified that she was “not aware of anyone in the company . . . 

that made a conscious decision” that “it was permissible 

to continue selling” those products. J.A. 2245.

In 2007, Halo sued Pulse for patent infringement. 

Pulse denied infringement and challenged the validity of

the Halo patents based on obviousness and other grounds. 

Pulse also counterclaimed that Halo infringed Pulse’s ’963 

patent directed to microelectronic connectors.

The district court first construed the disputed claim 

limitations in the Halo patents and Pulse’s ’963 patent. 

Relevant to this appeal, the court construed “electronic 

surface mount package” in the preamble of the Halo 

patent claims as non-limiting. Halo, 721 F. Supp. 2d at 

999–1001. The court then further construed the term to 

mean “an electronic device configured to attach to the 

surface of a DC voltage only printed circuit board.” Id. In 

addition, the court construed “contour element” in the 

’963 patent claims to mean “a raised or recessed feature 

that physically contacts the bend of an electrical lead both 

before and after the modular plug is inserted into the 

cavity.” Id. at 998–99. In view of that latter construction, 

the parties stipulated to a judgment of noninfringement of 

the Pulse ’963 patent. Halo Elecs., Inc. v. Pulse Elecs., 

Inc., No. 2:07-CV-00331, ECF No. 215 (D. Nev. Sept. 2, 

2010). 

Pulse moved for summary judgment that it did not directly infringe the Halo patents by selling or offering to 

sell products that Pulse manufactured, shipped, and 

delivered outside the United States. The district court 

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granted the motion, holding that those products were sold 

and offered for sale outside the United States and beyond 

the scope of § 271(a). Halo, 810 F. Supp. 2d at 1206–08. 

The parties next proceeded to trial on Halo’s claims of 

(1) direct infringement by products that Pulse shipped

into the United States and (2) inducement of infringement 

by products that Pulse shipped outside the United States 

but were incorporated into end products that were ultimately imported into the United States. The jury found

that: (1) Pulse directly infringed the Halo patents with

products that it shipped into the United States; (2) it

induced others to infringe the Halo patents with products 

that it delivered outside the United States but ultimately 

were imported into the United States in finished end 

products; (3) it was highly probable that Pulse’s infringement was willful; and (4) the asserted claims of the Halo 

patents were not invalid for obviousness. Halo, 2013 WL 

2319145, at *1; Halo Elecs., Inc. v. Pulse Elecs., Inc., No. 

2:07-CV-00331, ECF No. 482 (D. Nev. Nov. 26, 2012). The 

jury awarded Halo $1.5 million in reasonable royalty 

damages. Id.

In response to Pulse’s post-trial motion, the district 

court applied the Seagate test and concluded that the 

objective component of the willfulness inquiry was not 

satisfied because Pulse “reasonably relied on at least its 

obviousness defense” and Pulse’s unsuccessful obviousness defense was not “objectively baseless.” Halo, 2013 

WL 2319145, at *15. The court therefore held that Pulse’s 

infringement was not willful, id. at *16, and thus did not 

enhance damages under § 284, Halo, No. 2:07-CV-00331,

ECF No. 523 (D. Nev. May 28, 2013) (final judgment 

awarding damages without enhancement). 

Pulse also moved for JMOL of invalidity for alleged 

obviousness of the Halo patent claims, which the district 

court denied. Halo, 2013 WL 2319145, at *1–7; Halo, 

2013 WL 4458754, at *1–3. The court reasoned that, 

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because Pulse did not file a pre-verdict motion under Fed. 

R. Civ. P. 50(a) on the issue of obviousness, Pulse had 

waived its right to challenge the jury’s implicit factual 

findings underlying the nonobviousness general verdict. 

Id. While noting that “each of the elements present in the 

asserted patent claims also were present in the prior art, 

except the standoff element” in two of the asserted claims,

Halo, 2013 WL 2319145, at *3, the court presumed that 

the jury resolved all factual disputes relating to the scope 

and content of the prior art and secondary considerations

in Halo’s favor and concluded that the asserted claims 

were not invalid for obviousness based upon those presumed factual findings, id. at *3–7. 

Halo appealed and Pulse cross-appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

I. Sale and Offer for Sale

We review the district court’s grant or denial of summary judgment under the law of the regional circuit, here

the Ninth Circuit. Lexion Med., LLC v. Northgate Techs., 

Inc., 641 F.3d 1352, 1358 (Fed. Cir. 2011). Applying the 

law of the Ninth Circuit, we review the grant or denial of 

summary judgment de novo. Humane Soc’y of the U.S. v. 

Locke, 626 F.3d 1040, 1047 (9th Cir. 2010). Summary 

judgment is appropriate when, drawing all justifiable 

inferences in the nonmovant’s favor, “there is no genuine 

dispute as to any material fact and the movant is entitled 

to judgment as a matter of law.” Fed. R. Civ. P. 56(a); 

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

Halo argues that the district court erred in granting 

summary judgment of no direct infringement with respect 

to products that Pulse delivered abroad. Halo contends 

that those products were sold and offered for sale within 

the United States because negotiations and contracting

activities occurred within the United States, which reCase: 13-1472 Document: 87-2 Page: 10 Filed: 08/05/2016
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sulted in binding contracts that set specific terms for price 

and quantity. Halo argues that the location of the sale or 

offer for sale should not be limited to the location of 

delivery. Halo also argues that it suffered economic harm 

in the United States as a result of Pulse’s sales. 

Pulse responds that the products at issue were sold or 

offered for sale outside the United States because those 

products were manufactured, ordered, invoiced, shipped, 

and delivered abroad. Pulse maintains that its pricing 

discussions with Cisco in the United States were merely 

forecasts and were not a guarantee that Pulse would 

receive any actual order from any of Cisco’s contract 

manufacturers. Pulse also responds that the district 

court’s holding is consistent with our case law and the 

presumption against extraterritorial application of United 

States laws. Pulse contends that Halo improperly sought

to expand the geographical scope of § 271(a) to reach 

activities outside the United States. 

We agree with Pulse that the district court did not err 

in granting summary judgment of no direct infringement 

with respect to those products that Pulse manufactured, 

shipped, and delivered outside the United States because 

those products were neither sold nor offered for sale by 

Pulse within the United States. 

A. Sale 

Section 271(a) of the patent statute provides in relevant part that “whoever without authority makes, uses, 

offers to sell, or sells any patented invention, within the 

United States . . . infringes the patent.” 35 U.S.C. 

§ 271(a) (emphases added); Microsoft Corp. v. AT&T 

Corp., 550 U.S. 437, 441 (2007) (“It is the general rule 

under United States patent law that no infringement 

occurs when a patented product is made and sold in 

another country.”). We first consider whether the products that Pulse manufactured, shipped, and delivered to 

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buyers abroad were sold within the United States for 

purposes of § 271(a). 

Our earlier cases addressing the issue of the location 

of a sale arose in the context of personal jurisdiction. In 

North American Philips Corp. v. American Vending Sales, 

Inc., 35 F.3d 1576 (Fed. Cir. 1994), a case involving domestic sales by defendants who shipped products from 

Texas and California free on board (f.o.b.) to buyers in 

Illinois, and concerning whether a trial court in Illinois 

had personal jurisdiction over the defendants, we held

that patent infringement occurs where the infringing 

sales are made. Id. at 1577–79 (citing Beverly Hills Fan 

Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1570–71 (Fed. 

Cir. 1994)). We stated that:

[T]he “selling” of an infringing article has both a 

physical and a conceptual dimension to it. That is 

to say, it is possible to define the situs of the tort 

of infringement-by-sale either in real terms as including the location of the seller and the buyer 

and perhaps the points along the shipment route 

in between, or in formal terms as the single point 

at which some legally operative act took place, 

such as the place where the sales transaction 

would be deemed to have occurred as a matter of 

commercial law.

Id. at 1579. We rejected the defendants’ argument that 

the location of the sale was limited to “the place where 

legal title passe[d] rather than the more familiar places of 

contracting and performance.” Id. (citing Burger King 

Corp. v. Rudzewicz, 471 U.S. 462, 478–79 (1985)). And we 

held that the sale in that case occurred in Illinois where 

the buyer was located, but “not necessarily only there.” 

Id. Thus, under North American Philips, a sale may occur 

at multiple locations, including the location of the buyer, 

for purposes of personal jurisdiction. 

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In subsequent cases in which we addressed the issue

of liability under § 271(a) rather than personal jurisdiction, we applied similar analyses to determine where a 

sale occurred based on factors that included places of 

contracting and performance. Litecubes, LLC v. N. Light 

Prods., Inc., 523 F.3d 1353, 1370 (Fed. Cir. 2008); MEMC 

Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp., 

420 F.3d 1369, 1377 (Fed. Cir. 2005). Although the place

of contracting may be one of several possible locations of a 

sale to confer personal jurisdiction, we have not deemed a 

sale to have occurred within the United States for purposes of liability under § 271(a) based solely on negotiation 

and contracting activities in the United States when the 

vast majority of activities underlying the sales transaction occurred wholly outside the United States. For such 

a sale, one must examine whether the activities in the 

United States are sufficient to constitute a “sale” under

§ 271(a), recognizing that a strong policy against extraterritorial liability exists in the patent law. See Microsoft, 

550 U.S. at 455 (“The traditional understanding that our 

patent law operate[s] only domestically and do[es] not 

extend to foreign activities is embedded in the Patent Act 

itself.” (alterations in original) (citation and quotation 

marks omitted)); MEMC, 420 F.3d at 1375–76 (“[T]he 

reach of section 271(a) is limited to infringing activities 

that occur within the United States.”). 

The patent statute does not define the meaning of a 

“sale” within the United States for purposes of § 271(a). 

We have stated that “the ordinary meaning of a sale 

includes the concept of a transfer of title or property.” 

NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 

1319 (Fed. Cir. 2005). Indeed, Article 2 of the Uniform 

Commercial Code, which is recognized as a persuasive 

authority on the sale of goods, provides that “[a] ‘sale’ 

consists in the passing of title from the seller to the buyer 

for a price.” U.C.C. § 2-106; see also Black’s Law Dictionary 1364 (8th ed. 2004) (defining “sales” as “[t]he transfer 

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of property or title for a price”). Section 2-106 separately

defines a “contract for sale” as including “both a present 

sale of goods and a contract to sell goods at a future time.” 

While we have held that a sale is “not limited to the 

transfer of tangible property” but may also be determined 

by “the agreement by which such a transfer takes place,” 

Transocean Offshore Deepwater Drilling, Inc. v. Maersk 

Contractors USA, Inc., 617 F.3d 1296, 1311 (Fed. Cir. 

2010) (citing NTP, 418 F.3d at 1319), the location of 

actual or anticipated performance under a “contract for 

sale” remains pertinent to the transfer of title or property

from a seller to a buyer, see id. at 1310 (considering the 

location of delivery and performance under a contract). 

Consistent with all of our precedent, we conclude that, 

when substantial activities of a sales transaction, including the final formation of a contract for sale encompassing

all essential terms as well as the delivery and performance under that sales contract, occur entirely outside 

the United States, pricing and contracting negotiations in 

the United States alone do not constitute or transform 

those extraterritorial activities into a sale within the 

United States for purposes of § 271(a). 

On undisputed facts, the products under discussion 

here were manufactured, shipped, and delivered to buyers 

abroad. Halo, 810 F. Supp. 2d at 1207 (“All accused

products [at issue] were at no point, in transit or otherwise, in the United States.”). In addition, Pulse received 

the actual purchase orders for those products abroad. 

Although Pulse and Cisco had a general business agreement, that agreement did not refer to, and was not a 

contract to sell, any specific product. J.A. 15135–37. 

While Pulse and Cisco engaged in quarterly pricing 

negotiations for specific products, the negotiated price and 

projected demand did not constitute a firm agreement to 

buy and sell, binding on both Cisco and Pulse. Instead, 

Pulse received purchase orders from Cisco’s foreign contract manufacturers, which then firmly established the 

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essential terms including price and quantity of binding 

contracts to buy and sell. Moreover, Pulse was paid 

abroad by those contract manufacturers, not by Cisco,

upon fulfillment of the purchase orders. Thus, substantial activities of the sales transactions at issue, in addition to manufacturing and delivery, occurred outside the

United States. Although Halo did present evidence that 

pricing negotiations and certain contracting and marketing activities took place in the United States, which 

purportedly resulted in the purchase orders and sales 

overseas, as indicated, such pricing and contracting

negotiations alone are insufficient to constitute a “sale” 

within the United States.1

Any doubt as to whether Pulse’s contracting activities 

in the United States constituted a sale within the United 

States under § 271(a) is resolved by the presumption 

against extraterritorial application of United States laws. 

“The presumption that United States law governs domestically but does not rule the world applies with particular 

force in patent law.” Microsoft, 550 U.S. at 454–55. As 

the Supreme Court has stated on multiple occasions, 

“[o]ur patent system makes no claim to extraterritorial 

effect; these acts of Congress do not, and were not intended to, operate beyond the limits of the United States, and 

we correspondingly reject the claims of others to such 

control over our markets.” Id. at 444 (quoting Deepsouth 

Packing Co. v. Laitram Corp., 406 U.S. 518, 531 (1972) 

 

1 On these facts, we need not reach Halo’s argument that the place where a contract for sale is legally 

formed can itself be determinative as to whether a sale 

has occurred in the United States because we agree with 

the district court here that the pricing negotiations and 

contracting activities in the United States to which Halo 

points did not constitute the final formation of a definitive, binding contract for sale. 

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(quoting Brown v. Duchesne, 60 U.S. (19 How.) 183, 195 

(1857))) (internal citation and quotation marks omitted). 

“Foreign conduct is [generally] the domain of foreign 

law,” and in patent cases, foreign law “may embody 

different policy judgments about the relative rights of 

inventors, competitors, and the public in patented inventions.” Id. at 455 (alteration in original) (quoting Brief for 

United States as Amicus Curiae 28). As the Supreme 

Court has stated, if one desires to prevent the selling of 

its patented invention in foreign countries, its proper 

remedy lies in obtaining and enforcing foreign patents. 

See Deepsouth, 406 U.S. at 531 (“To the degree that the 

inventor needs protection in markets other than those of 

this country, the wording of 35 U.S.C. §§ 154 and 271 

reveals a congressional intent to have him seek it abroad 

through patents secured in countries where his goods are 

being used.”).

We also reject Halo’s argument that the sales at issue 

occurred in the United States simply because Halo suffered economic harm as a result of those sales. The 

incurring of harm alone does not control the infringement 

inquiry. As indicated, Pulse’s activities in the United 

States were insufficient to constitute a sale within the 

United States to support direct infringement. See N. Am. 

Philips, 35 F.3d at 1579 (“[T]he statute on its face clearly 

suggests the conception that the ‘tort’ of patent infringement occurs where the offending act is committed and not 

where the injury is felt.”). Moreover, Halo recovered 

damages for products that Pulse delivered outside the 

United States but were ultimately imported into the 

United States in finished end products based on a theory 

of inducement. 

Following Halo’s logic, a foreign sale of goods covered 

by a U.S. patent that harms the business interest of a 

U.S. patent holder would incur infringement liability 

under § 271(a). Such an extension of the geographical 

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scope of § 271(a) in effect would confer a worldwide exclusive right to a U.S. patent holder, which is contrary to the 

statute and case law. See, e.g., Power Integrations, Inc. v. 

Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348, 1371–

72 (Fed. Cir. 2013) (“[T]he 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.”) 

(citing Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 

266 (2010) (“But the presumption against extraterritorial 

application would be a craven watchdog indeed if it retreated to its kennel whenever some domestic activity is 

involved in the case.” (emphasis in original))). 

We therefore hold that the district court did not err in 

granting summary judgment that Pulse did not sell

within the United States those products that Pulse manufactured, shipped, and delivered abroad. 

B. Offer for Sale

We next consider whether Pulse offered to sell within

the United States those products that Pulse manufactured, shipped, and delivered abroad. An “offer to sell” 

generally occurs when one “communicate[s] a manifestation of willingness to enter into a bargain, so made as to 

justify another person in understanding that his assent to 

that bargain is invited and will conclude it.” MEMC, 420 

F.3d at 1376 (internal quotation marks omitted). We 

have held that “a description of the allegedly infringing 

merchandise and the price at which it can be purchased” 

may constitute an offer to sell. 3D Sys., Inc. v. Aarotech 

Labs., Inc., 160 F.3d 1373, 1379 (Fed. Cir. 1998). 3D 

Systems did not, however, involve international transactions and in that case this court considered the issue of 

offer to sell in a personal jurisdiction context. 

More importantly, we have held that “the location of 

the contemplated sale controls whether there is an offer to 

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18 HALO ELECTRONICS, INC. v. PULSE ELECTRONICS, INC. 

sell within the United States.” Transocean, 617 F.3d at 

1309 (emphasis added). “In order for an offer to sell to 

constitute infringement, the offer must be to sell a patented invention within the United States.” Id. In 

Transocean, contract negotiations occurred outside the 

United States for delivery and performance in the United 

States. This court held that the location of the contemplated sale controlled and that the offer to sell infringed 

the patent at issue. 

The case now before us involves the opposite situation, where the negotiations occurred in the United 

States, but the contemplated sale occurred outside the 

United States. We adopt the reasoning of Transocean and 

conclude here that Pulse did not directly infringe the Halo 

patents under the “offer to sell” provision by offering to 

sell in the United States the products at issue, because 

the locations of the contemplated sales were outside the 

United States. Cisco outsourced all of its manufacturing 

activities to foreign countries, and it is undisputed that 

the locations of the contemplated sales were outside the 

United States. Likewise, with respect to other Pulse 

customers, there is no evidence that the products at issue 

were contemplated to be sold within the United States. 

An offer to sell, in order to be an infringement, must 

be an offer contemplating sale in the United States. 

Otherwise, the presumption against extraterritoriality 

would be breached. If a sale outside the United States is 

not an infringement of a U.S. patent, an offer to sell, even 

if made in the United States, when the sale would occur 

outside the United States, similarly would not be an 

infringement of a U.S. patent. We therefore hold that 

Pulse did not offer to sell the products at issue within the 

United States for purposes of § 271(a).

For the foregoing reasons, we affirm the summary 

judgment of no direct infringement with respect to those 

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products that Pulse manufactured, shipped, and delivered 

abroad.

II. Enhanced Damages

Applying the then-controlling Seagate test for willful 

infringement, the district court determined that Pulse did 

not willfully infringe the Halo patents with respect to 

products that were delivered in the United States, and 

thus declined to enhance damages under 35 U.S.C. § 284. 

Under Seagate, establishing willful infringement required 

a two-prong analysis entailing an objective and a subjective inquiry. First, the 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. Second, with the “threshold objective 

standard” satisfied, the patentee was required to “also 

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.

The Supreme Court has now rejected the Seagate test 

as “unduly rigid” and inconsistent with “the statutory 

grant of discretion to district courts” to enhance damages 

under § 284. Halo, 136 S. Ct. at 1932 (internal quotation 

marks omitted). In particular, the Court rejected the 

clear-and-convincing standard of proof, as well as the 

tripartite framework for appellate review. Id. at 1934. 

The Court also rejected Seagate’s requirement of “a finding of objective recklessness in every case before district 

courts may award enhanced damages.” Id. at 1932. Such 

a threshold requirement, the Court explained, “excludes 

from discretionary punishment many of the most culpable 

offenders, such as the ‘wanton and malicious pirate’ who 

intentionally infringes another’s patent—with no doubts 

about its validity or any notion of a defense—for no purpose other than to steal the patentee’s business.” Id. 

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20 HALO ELECTRONICS, INC. v. PULSE ELECTRONICS, INC. 

Rather, “[t]he subjective willfulness of a patent infringer, 

intentional or knowing, may warrant enhanced damages.” 

Id. at 1933.

Moreover, the Court held that Section 284 allows district courts to exercise their discretion in deciding whether to award enhanced damages, which “are generally 

reserved for egregious cases of culpable behavior” beyond 

“typical infringement.” Id. at 1932; see also id. at 1933–

34 (“Section 284 allows district courts to punish the full 

range of culpable behavior. Yet none of this is to say that 

enhanced damages must follow a finding of egregious 

misconduct. . . . [S]uch punishment should generally be 

reserved for egregious cases typified by willful misconduct.”).

Here, the jury awarded Halo $1.5 million in reasonable royalty damages with respect to products that were 

delivered in the United States. The jury also found that it 

was highly probable that Pulse’s infringement was willful. 

However, the district court determined that the objective 

prong of the Seagate test was not met because it concluded that the obviousness defense that Pulse presented at 

trial was not objectively baseless. On appeal, Pulse does 

not challenge the propriety of the jury finding of subjective willfulness. In light of the Supreme Court’s decision, 

we vacate the district court’s determination of no willful 

infringement. We remand for the district court to exercise 

its discretion and to decide whether, taking into consideration the jury’s unchallenged subjective willfulness finding as one factor in its analysis, an enhancement of the 

damages award is warranted. 

Halo argues that Pulse did not actually rely on any 

invalidity defense pre-suit when selling the accused 

products because Pulse’s obviousness defense was 

developed after the lawsuit was filed in 2007. As the 

Supreme Court explained, “culpability is generally measured against the knowledge of the actor at the time of the 

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challenged conduct.” Halo, 136 S. Ct. at 1933. Thus, in 

assessing the culpability of Pulse’s conduct, the district 

court should consider, as one factor in its analysis, what 

Pulse knew or had reason to know at the time of the 

infringement of the Halo patents. 

Accordingly, we vacate the district court’s decision not 

to enhance damages under § 284 and remand for further 

proceedings. 

III. Cross-Appeal

Pulse cross-appeals from the district court’s construction of the claim limitations “electronic surface mount 

package” in the Halo patents and “contour element” in 

Pulse’s ’963 patent and the resulting judgments of infringement of the Halo patents and noninfringement of 

Pulse’s ’963 patent. We have considered Pulse’s arguments but find no reversible error in those judgments. 

We therefore affirm the judgment of direct infringement 

with respect to products that Pulse delivered in the United States and the judgment of inducement with respect to 

products that Pulse delivered outside the United States 

but ultimately were imported into the United States in 

finished end products, as well as the judgment of noninfringement of Pulse’s ’963 patent. 

In addition, Pulse cross-appeals from the judgment

that the asserted claims of the Halo patents were not 

invalid for obviousness. It is true that the record evidence 

indisputably shows that almost all the limitations in the 

asserted claims were known elements of electronic packages that existed in the prior art. However, Pulse did not 

file a motion during trial under Fed. R. Civ. P. 50(a) on 

the issue of obviousness before that issue was submitted 

to the jury and thus waived its right to challenge the 

jury’s implicit factual findings underlying the nonobviousness general verdict. The district court thus correctly 

presumed that the jury resolved all factual disputes 

relating to the scope and content of the prior art and 

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22 HALO ELECTRONICS, INC. v. PULSE ELECTRONICS, INC. 

secondary considerations in Halo’s favor. Based upon 

those presumed factual findings, the court did not err in

reaching the ultimate legal conclusion that the asserted 

claims were not invalid for obviousness. We therefore

affirm the judgment that the asserted claims of the Halo 

patents were not invalid for obviousness. 

CONCLUSION

For the foregoing reasons, we affirm the judgment 

that Pulse did not directly infringe the Halo patents by 

selling or offering to sell within the United States those 

accused products that Pulse manufactured, shipped, and 

delivered outside the United States. With respect to the 

infringing products that were delivered in the United 

States, we vacate the unenhanced damages award and 

remand for the district court to determine whether an

award of enhanced damages is appropriate. On the crossappeal, because we discern no reversible error in the 

contested claim constructions, we affirm the judgment of 

direct infringement with respect to products that Pulse 

delivered in the United States and the judgment of inducement with respect to products that Pulse delivered

outside the United States, but that were imported into the 

United States by others, as well as the judgment of noninfringement of Pulse’s ’963 patent. We also affirm the 

judgment that the asserted claims of the Halo patents 

were not shown to be invalid for obviousness. 

AFFIRMED IN PART, VACATED IN PART, 

AND REMANDED

COSTS

No costs. 

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