Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-14-01121/USCOURTS-ca13-14-01121-0/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, 2014-1528

______________________ 

Appeals from the United States District Court for the 

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

Keith P. Ellison.

______________________ 

Decided: July 2, 2015 

______________________ 

GREGG F. LOCASCIO, Kirkland & Ellis LLP, Washington, DC, argued for plaintiff-cross-appellant. Also represented by WILLIAM H. BURGESS, JOHN C. O’QUINN;

TIMOTHY K. GILMAN, LESLIE M. SCHMIDT, New York, NY; 

LEE LANDA KAPLAN, Smyser, Kaplan & Veselka, LLP,

Houston, TX.

DAVID J. HEALEY, Fish & Richardson, P.C., Houston, 

TX, argued for defendant-appellant. Also represented by

FRANK PORCELLI, KEVIN SU, Boston, MA; BAILEY 

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

KATHLEEN HARRIS, JACKOB BEN-EZRA, BRIAN GREGORY 

STRAND, Houston, TX; OLGA I. MAY, JUSTIN BARNES,

FRANCIS J. ALBERT, San Diego, CA.

_____________________ 

Before DYK, WALLACH, and HUGHES, Circuit Judges.

Opinion for the court filed by Circuit Judge DYK. 

Dissenting-in-part opinion filed by Circuit Judge

WALLACH. 

DYK, Circuit Judge. 

WesternGeco L.L.C. (“WesternGeco”) filed suit against 

ION Geophysical Corp. (“ION”) for infringement of, inter 

alia, U.S. Patent Nos. 6,691,038 (“the ’038 patent”), 

7,080,607 (“the ’607 patent”), 7,162,967 (“the ’967 patent”), and 7,293,520 (“the ’520 patent”). The jury found 

infringement and no invalidity with respect to all asserted 

claims for each of the four patents, and awarded 

$93,400,000 in lost profits and $12,500,000 in reasonable 

royalties. 

ION appeals, arguing that WesternGeco is not the 

owner of the ’607, ’967, and ’520 patents and therefore 

lacks standing to assert them; that the district court 

applied an incorrect standard in granting summary 

judgment as to claim 18 of the ’520 patent under 35 

U.S.C. § 271(f)(1) and that this ruling infected the trial 

with respect to liability for all other claims; and that lost 

profits were impermissibly awarded for conduct abroad.

WesternGeco conditionally cross-appeals, arguing 

that, if we find in favor of ION with respect to any of its 

appealed issues, we should set aside the damages award 

because the district court erred in preventing WesternGeco’s damages expert from testifying on the issue of a 

reasonable royalty. WesternGeco also challenges the 

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

district court’s refusal to award enhanced damages for 

willful infringement.

We affirm in all respects, except that we reverse the 

district court’s award of lost profits resulting from conduct

occurring abroad. 

BACKGROUND

WesternGeco asserts that it owns the four patents at 

issue: the ’038 patent, the ’607 patent, the ’967 patent, 

and the ’520 patent. The asserted claims of all four 

patents are system claims relating to technologies used to

search for oil and gas beneath the ocean floor. To search 

for oil and gas, ships tow a series of long streamers. Each 

streamer is equipped with a number of sensors. An 

airgun bounces sound waves off of the ocean floor. The 

sensors pick up the returning sound waves and, in combination with each other, create a map of the subsurface 

geology. This generated map can aid oil companies in 

identifying drilling locations for oil or gas.

The streamers can be miles in length, and vessel 

movements, weather, and other conditions can cause the 

streamers to tangle or drift apart. This, in turn, can 

cause the sensors on the streamers to generate imperfect 

or distorted maps. The patents here relate to two improvements to that technology: first, controlling the 

streamers and sensors in relation to each other through 

the use of winged positioning devices; second, using the 

sensors to generate four-dimensional maps—that is, maps 

in which it is possible to see changes in the seabed over 

time.

Both parties are involved in this industry. WesternGeco manufactures its commercial embodiment of the 

patented technologies, the Q-Marine, and performs surveys on behalf of oil companies. ION manufactures its 

allegedly patent-practicing device, the DigiFIN, and sells 

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that device to its customers, who perform surveys on 

behalf of oil companies.

On June 12, 2009, WesternGeco filed suit against 

ION, accusing ION of willfully infringing various claims 

of four patents. WesternGeco’s theory of infringement 

was based on, inter alia, 35 U.S.C. § 271(f)(1) and 

§ 271(f)(2). Broadly speaking, (f)(1) prohibits supplying a 

substantial portion of the components of a patented 

system in a manner that actively induces their combination abroad, and (f)(2) prohibits supplying components 

that are especially adapted to work in a patented invention and intending that the components be combined 

abroad in a manner that would infringe if combined 

domestically. See 35 U.S.C. § 271(f).

On June 29, 2012, the court granted summary judgment of infringement in favor of WesternGeco for claim 18 

of the ’520 patent under 35 U.S.C. § 271(f)(1). In so 

ruling, the court interpreted § 271(f)(1) as requiring that 

the “alleged infringer (1) actively induce the combination 

of the components in question; and (2) that the combination of those components would infringe the patent if such 

combination occurred within the United States.” J.A. 52. 

Section 271(f)(2), the district court concluded, required a 

heightened standard: “that the defendant (1) intended the 

combination of components; (2) knew that the combination he intended was patented; and (3) knew that the 

combination he intended would be infringing if it occurred 

in the United States.” J.A. 55. The court determined that 

WesternGeco proved that ION intended that the components be combined and therefore infringed under 

§ 271(f)(1) with respect to claim 18, but concluded that, 

with respect to claim 18 under § 271(f)(2), there was a 

genuine issue of material fact as to whether the “Defendants knew that the combination was infringing.” J.A. 56.

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Trial was held in July and August of 2012. On August 16, 2012, the jury rendered its verdict, finding that 

ION infringed claims 19 and 23 of the ’520 patent, claim 

15 of the ’967 patent, claim 15 of the ’607 patent, and 

claim 14 of the ’038 patent under §§ 271(f)(1) and (f)(2). 

The jury also found that ION infringed claim 18 of the 

’520 patent under § 271(f)(2) (infringement under (f)(1) as 

to claim 18 having already been decided on summary 

judgment). Finally, the jury found that the infringement 

was willful (applying the so-called “subjective” prong of In 

re Seagate Technology, LLC, 497 F.3d 1360, 1371 (Fed. 

Cir. 2007) (en banc)). The jury awarded $93,400,000 in 

lost profits and $12,500,000 in reasonable royalties.

ION filed motions for judgment as a matter of law or 

for a new trial. ION also filed a motion to dismiss, for the 

first time alleging that WesternGeco did not have standing to assert the ’607 patent, the ’967 patent, and the ’520 

patent because WesternGeco did not own the patents. 

WesternGeco filed, inter alia, a motion for enhanced

damages under 35 U.S.C. § 284.

On June 19, 2013, the district court denied ION’s 

JMOLs and motion to dismiss and WesternGeco’s motion 

for enhanced damages, finding that ION’s positions were 

reasonable and not objectively baseless.

ION appealed. WesternGeco conditionally crossappealed. We have jurisdiction pursuant to 28 U.S.C. 

§ 1295(a)(1). 

DISCUSSION

I 

We first address ION’s contention that WesternGeco 

does not own the ’607 patent, the ’967 patent, and the ’520 

patent, and therefore lacked standing to assert them. The 

question is whether WesternGeco owned the patents 

when the suit was filed in 2009. It is uncontroverted that 

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a sole owner of a patent has standing to assert it and that 

an entity that does not own the patent (or is not the 

exclusive licensee) does not have standing to sue. See

Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1551–52 

(Fed. Cir. 1995) (en banc). 

Although standing is reviewed de novo, we review factual determinations relating to standing for clear error. 

See Enovsys LLC v. Nextel Commc’ns, Inc., 614 F.3d 1333, 

1340–41 (Fed. Cir. 2010). The district court reviewed the 

parties’ arguments with respect to the chain-of-title and 

concluded that “WesternGeco has presented sufficient 

evidence to prove its ownership of the patents” and that 

“WesternGeco was assigned the rights.” J.A. 7. We have 

reviewed the record relating to the chain of title between 

the original inventors and WesternGeco. We conclude 

that the district court’s findings are not clearly erroneous. 

The three patents each list two inventors: Oyvind Hillesund and Simon Bittleston. In 1993, Bittleston started 

working for a subsidiary of Schlumberger Ltd., and Hillesund started working for a subsidiary of Schlumberger 

Ltd. the following year. Schlumberger Ltd. is one of the 

world’s largest oil and gas companies, incorporated in 

Curacao and with offices throughout the world. Although 

the precise Schlumberger corporate structure existing in 

the early 1990s is not clear from the record, and it is not

clear precisely for which subsidiaries Bittleston and 

Hillesund worked at the time of their invention, ION 

admits that Hillesund and Bittleston worked for so-called 

“Geco” subsidiaries of Schlumberger Ltd. See Appellant’s 

Br. 10 (characterizing Hillesund and Bittleston as having 

“originally went to work for Geco in” 1994 and 1993, 

respectively). 

Both inventors testified that they transferred their 

rights to the inventions they developed to their employers 

pursuant to their employment contracts. Bittleston 

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testified: “[W]hen [Hillesund and I] joined the company

[one of the Geco companies], we signed something saying 

that any inventions we made were going to be owned by 

the company, not by us, so they’re the owners.” J.A. 1504. 

Hillesund’s testimony is similar. When asked: “Mr. 

Hillesund, as an employee of Geco and later WesternGeco, 

did you assign your rights of the intellectual property to 

the company?”, Hillesund responded: “Yes. Part of the—

my contract was that intellectual property—there was 

also something in the contract that I was to be given 

reasonable coverage of—in the form of a bonus, all in 

accordance to the significance of the patent.” J.A. 12805. 

If, in fact, Geco subsidiaries of Schlumberger, Ltd. acquired those rights in the early 1990s, they were transferred to Schlumberger Technology Corporation (“STC”) 

pursuant to a 1998 agreement. In 1998, four Schlumberger companies, Schlumberger Holdings Limited, STC, 

Schlumberger Canada Limited, and Services Petroliers 

Schlumberger S.A., entered into a cost-sharing agreement. As a part of that agreement, the parties assigned 

intellectual property rights to each other to consolidate 

those rights on a geographical basis: 

[O]wnership of the Patent Rights, Proprietary 

Technical Information and Copyrights which are 

subject to this Agreement shall be vested in the 

Participants in their Respective Areas . . . . 

J.A. 12828–29. STC’s “respective area” was the United 

States. J.A. 12820. The agreement defined “Patent 

Rights” to include “any and all patents and patent applications, certificates of invention and the like, throughout 

the world, and interests therein, based upon inventions 

relating to seismic oil field services or equipment which 

are obtained by or for the Geco Prakla companies.” J.A. 

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12824.1 Thus, there is substantial evidence to conclude 

that the agreement here assigned the intellectual property in the Geco companies (originally assigned from the 

inventors) to STC in 1998. 

The next event in the chain-of-title occurred in 2000, 

when Schlumberger and Baker-Hughes formed a joint 

venture, WesternGeco, to which STC assigned its intellectual property rights “primarily related to the Seismic 

Business in the U.S.”2 J.A. 12780. And there is substan1 “Geco Prakla” was defined to mean:

SHL; STC and specifically its Geco Prakla engineering, manufacturing and operating divisions 

and research centers; SCL and specifically its 

Geco Prakla seismic operating division; SPS; and 

any other seismic service and/or data processing 

oil field corporation, firm, partnership or other entity (“entities”) which may, directly or indirectly, 

be wholly or majority owned by Schlumberger 

Limited (SL); and successors of such entities so 

long as each remains a wholly or majority-owned 

subsidiary of SL or a successor of SL.

J.A. 12820.

2 The agreement defined “Transferred IP” to refer 

to, inter alia, “Schlumberger Transferred IP,” which is in 

turn defined to mean “Intellectual Property that (i) is 

owned by Schlumberger or its Affiliates or to which 

Schlumberger or its Affiliates otherwise have rights, (ii) is 

used or held for use primarily in connection with or otherwise primarily related to the Schlumberger Seismic 

Business, and (iii) exists as of the Closing Date, including

the Schlumberger Proprietary Rights that are identified 

by Schedule 4.18(a) to the Schlumberger Disclosure 

Letter.” J.A. 12711; 12713. The contract defined “Intellectual Property” to mean:

 

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tial evidence to conclude that the intellectual property at 

issue in this case is “primarily related to the Seismic 

Business” because a British application and Patent Cooperation Treaty (“PCT”) application, from which the three 

patents at issue derive, were expressly included in a list

of IP used primarily for the Seismic Business.3 As a 

patents, patent applications (filed, unfiled or being 

prepared), records of invention, invention disclosures, trademarks (registered or unregistered), 

trademark applications (filed, unfiled or being 

prepared), trade names, copyrights (registered or 

unregistered), copyright applications (filed, unfiled or being prepared), service marks (registered 

or unregistered), service mark applications (filed, 

unfiled or being prepared), database rights (registered or unregistered), all together with the goodwill associated with such marks or names, trade 

secrets, shop and royalty rights, technology, inventions, know-how, processes and confidential 

and proprietary information, including any being 

developed (including but not limited to designs, 

manufacturing data, design data, test data, operational data, and formulae), whether or not recorded in tangible form through drawings, software, 

reports, manuals or other tangible expressions, 

whether or not subject to statutory registration, 

whether foreign or domestic, and all rights to any 

of the foregoing. 

J.A. 12706 (emphases added).

3 The three patents at issue here are all continuations of U.S. Patent No. 6,932,017, which was itself based 

on the PCT application expressly transferred in the 2000 

merger. The ’017 patent application was initiated under 

35 U.S.C. § 371, which provides for the national filing of 

PCT applications. The three patents at issue could not 

 

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result of this series of transfers, it appears that the inventors’ patent rights were transferred first to the Geco 

companies, then in 1998 to STC, and then in 2000 to 

WesternGeco, the plaintiff in this case. 

However, ION argues that there is a defect in this 

chain of title. It contends that the inventors, while perhaps obligated to transfer rights in the invention to their 

employers (Geco subsidiaries) under their employment 

agreements, failed to testify that such a transfer in fact 

occurred. It is well-established that employment contracts do not necessarily automatically assign patent 

rights to the employer. See Abraxis Bioscience, Inc. v. 

Navinta LLC, 625 F.3d 1359, 1364 (Fed. Cir. 2010). 

“[C]ontracts that obligate the owner to grant rights in the 

future do not vest legal title to the patents in the assignee.” Id. at 1364–65. In such circumstances, the employee 

must still formally assign the rights to the patent to the 

employer in order to convert the employer’s contractual 

right to the technology into a vested ownership interest.

The simple answer is that even if the inventors still 

owned the rights to the invention after the 2000 merger 

agreement, the inventors transferred their interests in 

the pending patent applications to STC in 2001. The 2001

assignment forms executed by each of the two inventors 

provided that “[STC] is desirous of acquiring or confirming its ownership of the entire right, title and interest in 

and to [the invention]” and confirmed that the inventors 

“have sold, assigned, transferred and conveyed, and by 

this assignment, do sell, assign, transfer and convey, unto 

Assignee, its successors and assigns, the entire right, title 

and interest throughout the United States . . . in and to 

my invention . . . .” J.A. 12195–98. These 2001 assignhave been listed in the 2000 agreement because they had 

not yet been filed.

 

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ments were filed as to U.S. Patent Application No. 

09/787,723 (“App. No. ’723”) and PCTIB99/01590. As 

noted above, the three patents for which ION challenges 

ownership were all continuations of the patent resulting 

from App. No. ’723. ION admits that STC was assigned 

the patents in 2001, and argues that STC is the patent 

owner. 

No further transfer instrument from STC to WesternGeco was required to vest these patents in WesternGeco after the rights were transferred to STC in 2001. 

The transfer from STC to WesternGeco occurred automatically under the previously executed 2000 agreement. It 

is well-established that when an agreement provides for 

the transfer of an interest in a patent and the transferring party later receives formal title, the formal title is

automatically transferred by operation of the prior 

agreement to the transferee party. See Abraxis, 625 F.3d

at 1364 (“If [a] “contract expressly conveys rights in 

future inventions, no further act is required once an 

invention comes into being, and the transfer of title occurs 

by operation of law.”); SiRF Tech., Inc. v. Int’l Trade 

Comm’n, 601 F.3d 1319, 1326 (Fed. Cir. 2010) (same).4

Here, the 2000 merger agreement was a present assignment of STC’s rights to the intellectual property at 

issue. The merger agreement provided: “STC assigns to 

[WesternGeco] in accordance with Article 2 all right, title, 

4 Indeed, 35 U.S.C. §§ 118 and 261 contemplate assignment of a right to receive a patent. Section 261 

provides in part: “Applications for patent, patents, or any 

interest therein, shall be assignable in law by an instrument in writing.” Similarly, § 118 provides in part: “A 

person to whom the inventor has assigned or is under an 

obligation to assign the invention may make an application for patent.” 

 

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and interest in and to the Schlumberger Transferred IP 

primarily related to the Seismic Business in the U.S.” 

J.A. 12780. Intellectual Property was defined to include: 

“patents, patent applications (filed, unfiled or being 

prepared),” and “inventions,” “including any being developed.” J.A. 12706. The 2000 assignment here included 

the rights to future patents resulting from the existence of 

a previous invention.

 There is thus substantial evidence to conclude that 

WesternGeco owns the patents at issue and has standing 

to sue, regardless of whether the inventors transferred 

their rights to the inventions to the Geco companies by 

operation of their employment agreements or whether

they merely agreed to a future transfer in the early 1990s 

and then formally transferred their rights to STC in 2001. 

The district court did not err in ruling that WesternGeco 

was the owner of the patents-in-suit and had standing to 

sue. 

II

We next turn to ION’s challenges to the determination 

of infringement. As stated earlier, the district court 

granted summary judgment of infringement on claim 18 

of the ’520 patent under § 271(f)(1). The jury determined 

that ION infringed the other asserted claims under 

§ 271(f)(1), and the jury separately determined that ION 

infringed all of the asserted claims (including claim 18)

under § 271(f)(2) as well.

Section 271(f)(1) provides:

Whoever without authority supplies or causes to 

be supplied in or from the United States all or a 

substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to 

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nents outside of the United States in a manner 

that would infringe the patent if such combination 

occurred within the United States, shall be liable 

as an infringer.

35 U.S.C. § 271(f)(1) (emphasis added). Section 271(f)(2) 

provides:

Whoever without authority supplies or causes to 

be supplied in or from the United States any component of a patented invention that is especially 

made or especially adapted for use in the invention and not a staple article or commodity of 

commerce suitable for substantial noninfringing 

use, where such component is uncombined in 

whole or in part, knowing that such component is 

so made or adapted and intending that such component will be combined outside of the United 

States in a manner that would infringe the patent 

if such combination occurred within the United 

States, shall be liable as an infringer.

35 U.S.C. § 271(f)(2) (emphasis added).

ION contends that three errors by the district court 

require reversal. First, ION contends that the district 

court misconstrued (f)(1)’s “actively induce” intent requirement in granting summary judgment for claim 18 of 

the ’520 patent and in instructing the jury as to (f)(1) 

infringement for the other asserted claims. The parties 

dispute the meaning of the following language of (f)(1): 

“actively induce the combination of such components 

outside of the United States in a manner that would 

infringe the patent if such combination occurred within 

the United States.” 35 U.S.C. § 271(f)(1). The district 

court held that this requirement was satisfied if the 

alleged infringer “actively induce[d]” the combination 

abroad, irrespective of whether the infringer had 

knowledge that there would be infringement if combined 

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domestically. J.A. 52. ION disagrees with that reading, 

arguing that the language of (f)(1) requires that ION 

knew the intended combination would be infringing if 

done domestically.

We need not reach the question whether the district 

court applied the correct standard under § 271(f)(1). The 

verdict was clear that the jury found liability under 

§ 271(f)(2) for all asserted claims. The district court 

expressly instructed the jury to “determine infringement . . . on a claim-by-claim basis” for both § 271(f)(1) 

and (f)(2) and instructed them to determine infringement 

as to claim 18 of the ’520 patent under § 271(f)(2). Because there was no contention raised before the district 

court that the (f)(2) instruction as to the standard of 

intent was erroneous,5 and, as discussed below, there 

were no other errors with respect to the (f)(2) instruction, 

the correctness of the infringement finding with respect to 

(f)(2) forms an adequate basis for liability. 

ION’s second challenge is to the lack of limiting instructions to the jury with respect to (f)(2). ION proposed 

that the jury be instructed: 

I have previously determined that 

ION . . . infringe[s] Claim 18 of the ’520 Patent by 

supplying DigiFIN and the Lateral Controller 

from the United States intending the two components be combined into a system that infringes 

5 On appeal, ION argues that the (f)(2) jury instruction was incorrect in light of Commil USA, LLC v. Cisco 

Sys., Inc., 720 F.3d 1361 (Fed. Cir. 2013), which was 

decided six days after the district court’s JMOL order. 

This argument is mooted by the Supreme Court’s recent 

decision in Commil USA, LLC v. Cisco Systems, Inc., 135 

S. Ct. 1920 (2015). 

 

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Claim 18 utilizing the streamer separation mode. 

You must accept my finding on infringement as it 

relates to Claim 18 of the ’520 Patent under 

§ 271(f)(1). You should not consider this finding 

in deciding the question of infringement as to any 

other claim or when deciding infringement under 

§ 271(f)(2). 

J.A. 10913 (emphasis added). The district court did not 

err in rejecting this proposed instruction. The district 

court held that, for both (f)(1) and (f)(2), WesternGeco was 

required to prove that ION intended that the components 

be combined abroad (quite apart from other intent requirements). In granting summary judgment on claim 18, 

the district court resolved this issue in favor of WesternGeco. The jury was entitled to be advised that this issue—applicable to both (f)(1) and (f)(2)—had been 

resolved against ION. Because ION’s proposed instruction would have precluded that, it was overly broad, and 

the district court did not err in refusing to give the instruction. See Bettcher Indus., Inc. v. Bunzl USA, Inc., 

661 F.3d 629, 638–39 (Fed. Cir. 2011); Biodex Corp. v. 

Loredan Biomedical, Inc., 946 F.2d 850, 862 (Fed. Cir. 

1991) (“In order to prevail on the jury instruction issue in 

this case, [the appellant] must demonstrate both that the 

jury instructions actually given were fatally flawed and 

that the requested instruction was proper and could have 

corrected the flaw.”).6

6 ION’s denied motions in limine were equally overbroad. For example, ION requested that WesternGeco be 

precluded from making “[a]ny mention of or reference to 

this Court’s Orders denying or granting motions for 

summary judgment.” J.A. 10653; see also J.A. 10793 

(refusing to give the instruction).

 

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Finally, ION complains that WesternGeco during trial 

made improper references to the (f)(1) summary judgment 

order when arguing that the jury should find (f)(2) infringement. ION did not object to the references when 

they were made, and ION fails to demonstrate that they 

constituted plain error requiring reversal in the absence 

of an objection. See Minks v. Polaris Indus., Inc., 546 F.3d 

1364, 1379–80 (Fed. Cir. 2008) (plain error reversible only 

where substantial rights are affected).

III

Although ION does not challenge the reasonable 

royalty award, ION challenges the award of lost profits 

resulting from lost contracts for services to be performed 

abroad. We hold that lost profits cannot be awarded for 

damages resulting from these lost contracts. 

WesternGeco makes the Q-Marine domestically and 

performs the surveys abroad on behalf of its customers—

oil companies looking to extract oil from the sea floor. 

ION makes the DigiFINs domestically and then ships 

them overseas to its customers, who, in competition with

WesternGeco, perform surveys abroad on behalf of oil 

companies. WesternGeco identified ten surveys for which 

it believes that, but for ION’s supplying of DigiFINs to 

ION’s customers, WesternGeco would have been awarded 

the contract. These ten surveys allegedly would have 

generated over $90,000,000 in profit. According to WesternGeco, ION’s customers would not have been able to 

win the contracts if they did not have access to the 

DigiFINs. Thus, according to WesternGeco, but for ION’s 

sales to its customers, WesternGeco would have earned 

over $90 million in profit from the ten lucrative services 

contracts performed abroad.

ION argues that WesternGeco cannot receive lost 

profits resulting from the failure to win these contracts. 

The service contracts were all to be performed on the high 

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seas, outside the jurisdictional reach of U.S. patent law. 

There is also no contention that the service contracts were 

entered into in the United States.

The presumption against extraterritoriality is wellestablished and undisputed. As the Supreme Court ruled 

in Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007), 

“[t]he presumption that United States law governs domestically but does not rule the world applies with particular force in patent law. The traditional understanding 

that our patent law operates only domestically and does 

not extend to foreign activities is embedded in the Patent 

Act itself, which provides that a patent confers exclusive 

rights in an invention within the United States.” Id. at 

454–55 (citation, alterations, and internal quotation 

marks omitted). See also Deepsouth Packing Co. v. 

Laitram Corp., 406 U.S. 518, 531 (1972) (“Our 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.’” (quoting Brown 

v. Duchesne, 60 U.S. 183, 195 (1856))); Equal Emp’t 

Opportunity Comm’n v. Arabian Am. Oil Co., 499 U.S. 

244, 248 (1991) (“It is a longstanding principle of American law ‘that legislation of Congress, unless a contrary 

intent appears, is meant to apply only within the territorial jurisdiction of the United States.’” (quoting Foley 

Bros. v. Filardo, 336 U.S. 281, 285 (1949))). 

Here, the enactment of § 271(f) expanded the territorial scope of the patent laws to treat the export of components of patented systems abroad (with the requisite 

intent) just like the export of the finished systems abroad. 

The genesis of Congressional action lay in the Supreme 

Court’s decision in Deepsouth. In Deepsouth, the Supreme 

Court determined that a domestic manufacturer who 

manufactured components of an infringing product and 

then exported those components abroad without first 

combining them was not an infringer under § 271(a). 406 

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

U.S. at 527–29. In response, Congress enacted § 271(f), 

which overruled Deepsouth to impose liability on domestic 

entities shipping components abroad (with the requisite 

intent), just as if they had manufactured the infringing 

product itself in the United States. See Microsoft, 550 

U.S. at 442–45 (explaining that Congress enacted § 271(f) 

to hold manufacturers of exported components liable as 

infringers). There is no indication that in doing so, Congress intended to extend the United States patent law to 

cover uses abroad of the articles created from the exported 

components. 

It is clear that under § 271(a) the export of a finished 

product cannot create liability for extraterritorial use of 

that product. The leading case on lost profits for foreign 

conduct is Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348 (Fed. Cir. 2013). There, 

the patentee, a chip supplier, lost contracts to supply a 

prospective customer with computer chips in the United 

States and abroad because the accused infringer became a 

competitor for such contracts as a result of the U.S. infringing sales. If the accused infringer had been precluded from U.S. infringement, the patentee alleged that the 

accused infringer could not have competed for the contracts which necessarily involved supplying chips both in 

the United States and abroad. The patentee argued that 

it should recover world-wide lost profits.

We rejected that argument: “[Our patent laws] do not 

thereby provide compensation for a defendant’s foreign 

exploitation of a patented invention, which is not infringement at all.” Power Integrations, 711 F.3d at 1371. 

Rather, “we find neither compelling facts nor a reasonable 

justification for finding that [the patentee] is entitled to 

‘full compensation’ in the form of damages based on loss of 

sales in foreign markets which it claims were a foreseeable result of infringing conduct in the United States.” Id.

at 1372. “[T]he entirely extraterritorial production, use, 

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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.” Id. at 1371–72.

Under Power Integrations, WesternGeco cannot recover lost profits resulting from its failure to win foreign 

service contracts, the failure of which allegedly resulted 

from ION’s supplying infringing products to WesternGeco’s competitors. See also Duchesne, 60 U.S. at 195–96

(“And the use of [the patented technology] outside of the 

jurisdiction of the United States is not an infringement of 

[the patentee’s] rights, and [the patentee] has no claim to 

any compensation for the profit or advantage the party 

may derive from it.”); Halo Elecs., Inc., v. Pulse Elecs., 

Inc., 769 F.3d 1371, 1380 (Fed. Cir. 2014) (“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 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.”).

WesternGeco argues that Power Integrations applies 

to infringement under § 271(a)–(b), not infringement 

under § 271(f). WesternGeco’s argument misunderstands 

the role of § 271(f) in our patent law. Section 271(f) does 

not eliminate the presumption against extraterritoriality. 

Instead, it creates a limited exception. Microsoft, 550 

U.S. at 442, 455–56. As we have discussed, by its terms, 

§ 271(f) operates to attach liability to domestic entities 

who export components they know and intend to be 

combined in a would-be infringing manner abroad. But 

the liability attaches in the United States. It is the act of 

exporting the components from the United States which

creates the liability. A construction that would allow 

recovery of foreign profits would make § 271(f), relating to 

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

components, broader than § 271(a), which covers finished 

products. In fact, § 271(f) was designed to put domestic 

entities who export components to be assembled into a 

final product in a similar position to domestic manufacturers who sell the final product domestically or export 

the final product. Just as the United States seller or 

exporter of a final product cannot be liable for use abroad, 

so too the United States exporter of the component parts 

cannot be liable for use of the infringing article abroad. 

Of course, the fact that WesternGeco is not entitled 

under United States patent law to lost profits from the 

foreign uses of its patented invention does not mean that 

it is entitled to no compensation. Patentees are still 

entitled to a reasonable royalty, and WesternGeco received such a royalty here.7

The dissent raises three principal arguments in favor 

of allowing WesternGeco to recover lost profits resulting 

from failing to win the contracts to perform the seismic 

surveys on the high seas.

First, the dissent identifies Supreme Court cases it 

believes approved awards of lost profits for foreign sales, 

citing Goulds’ Manufacturing Co. v. Cowing, 105 U.S. 253 

(1881), Dowagiac Manufacturing, Co. v. Minnesota Moline 

Plow Co., 235 U.S. 641 (1915), and Duchesne, 60 U.S. 183. 

None of these cases is remotely similar to this one. To be 

7 The extent to which these royalties may be affected by lost profits suffered abroad is an issue not presented 

here. See Union Carbide Chems. & Plastics Tech. Corp. v. 

Shell Oil Co., 425 F.3d 1366, 1378 (Fed. Cir. 2005), overruled on other grounds, Cardiac Pacemakers, Inc. v. St. 

Jude Med., Inc., 576 F.3d 1348, 1365 (Fed. Cir. 2009) (en 

banc); see also Warsaw Orthopedic, Inc. v. NuVasive, Inc., 

778 F.3d 1365, 1378 n.7 (Fed. Cir. 2015).

 

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sure, they suggest that profits for foreign sales of the 

patented items themselves are recoverable when the 

items in question were manufactured in the United States

and sold to foreign buyers by the U.S. manufacturer. See 

Goulds’ Mfg., 105 U.S. at 254; Dowagiac Mfg., 235 U.S. at 

642–43; Duchesne, 60 U.S. at 196. There is no such claim 

here. Rather, the claim is for lost profits from the use 

abroad of the items in question. The dissent’s own authority, Dowagiac Manufacturing, makes clear that 

absent sales to foreign buyers by the U.S. manufacturer, 

there can be no recovery of lost profits for foreign sales:

Some of the drills, about 261, sold by the defendants, were sold in Canada, no part of the transaction occurring within the United States, and as to 

them there could be no recovery of either profits 

or damages. The right conferred by a patentee 

under our law is confined to the United States and 

its Territories and infringement of this right cannot be predicated of acts wholly done in a foreign 

country. 

235 U.S. at 650.

Second, the dissent argues that the surveys should be

recoverable as “convoyed sales” of the domestically manufactured components of the infringing DigiFINs. But, 

WesternGeco did not raise this argument before the 

district court or this court. And, the dissent points to no 

case extending the convoyed sales doctrine to cover sales 

of related products or services abroad. See, e.g., State 

Indus., Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573, 1575 

(Fed. Cir. 1989) (making no mention of foreign sales or 

uses); Minco, Inc. v. Combustion Eng’g, Inc., 95 F.3d 1109, 

1118 (Fed. Cir. 1996) (same). We see no basis for extending § 271(f)(2) to cover lost profits resulting from the use 

abroad of U.S. manufactured goods or components thereof 

in light of the “particular force” of the presumption 

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

against extraterritoriality in our patent laws. See Microsoft Corp., 550 U.S. at 454–55. Certainly in drafting 

271(f)(2) Congress did not provide for liability in convoyed-sales situations.

Third, the dissent expresses concern that our ruling 

today might effectively prevent WesternGeco from recovering lost profits at all, as the surveys were conducted on 

the high seas and were outside of the territorial reach of 

any patent jurisdiction in the world. This may or may not 

be the case. Indeed, WesternGeco does not contend that it 

is barred from recovering in the jurisdiction in which the 

services contracted was negotiated and signed, nor does it 

contend that it is barred from recovering in the jurisdiction from which the ship performing the seismic surveys 

is flagged. In any event, the possible failure of liability 

provides no basis for ignoring the presumption against 

extraterritoriality.

IV

Because we reverse the district court’s lost profits 

decision, we turn next to WesternGeco’s conditional crossappeal.

WesternGeco first challenges the district court’s grant 

of ION’s motion to exclude WesternGeco’s expert from 

testifying as to a reasonable royalty. WesternGeco’s 

damages expert, Raymond Sims, submitted an expert 

report in which he determined that the reasonable royalty 

rate for ION’s alleged infringement was 10% of the revenue of ION’s customers. In support of this, he explained

that ION’s customers had received $3.3 billion in revenue 

for performing surveys with the DigiFINs, and that they 

would not have been able to receive that revenue without 

the DigiFINs.

The district court excluded Sims from testifying as to

a reasonable royalty. The district court reasoned “that 

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WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 23

ION, in a hypothetical negotiation with [WesternGeco], 

would [not] have . . . agreed to a huge, profit-eliminating 

(and even revenue eliminating) royalty obligation for 

itself. As a matter of law, no such risk can be taken in a 

hypothetical negotiation in which infringement is deemed 

known. With knowledge of validity and infringement, 

such a financially catastrophic agreement would have 

been totally unreasonable.” J.A. 62.

District courts are tasked with the gatekeeping function of determining whether to allow an expert to testify. 

See Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 

592 (1993). “Faced with a proffer of expert scientific 

testimony, then, the trial judge must determine at the 

outset, pursuant to Rule 104(a), whether the expert is 

proposing to testify to (1) scientific knowledge that (2) will 

assist the trier of fact to understand or determine a fact in 

issue.” Id. (footnote omitted). We review the district 

court’s decision to exclude an expert for an abuse of discretion. Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997).

WesternGeco argues that the court improperly adopted a rule that a profit-eliminating royalty was per se 

unreasonable. It is true that there is no legal rule that 

caps the reasonable royalty by the amount of the infringer’s profit.8

We conclude that the district court adopted no such 

absolute rule and did not abuse its discretion in excluding 

8 See, e.g., Aqua Shield v. Inter Pool Cover Team, 

774 F.3d 766, 770–71 (Fed. Cir. 2014); Mars, Inc. v. Coin 

Acceptors, Inc., 527 F.3d 1359, 1374 (Fed. Cir. 2008), 

modified on other grounds, 577 F.3d 1377 (Fed. Cir. 2009); 

Monsanto Co. v. Ralph, 382 F.3d 1374, 1384 (Fed. Cir. 

2004); State Indus., Inc. v. Mor-Flo Indus., Inc., 883 F.2d 

1573, 1580 (Fed. Cir. 1989).

 

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

the expert. The district court expressly based its ruling 

on two facts—that the royalty was profit eliminating and 

that it was revenue eliminating. Indeed, the proposed 

royalty was so high that it would have exceeded ION’s 

revenue by four times. WesternGeco cites no case, and we 

are aware of none, in which we have held that a reasonable royalty can exceed, by a factor of four, the market 

price for the patented invention. As such, we see no error 

in the district court exercising its discretion to exclude the 

expert from testifying as to a reasonable royalty.9

V 

Finally, WesternGeco challenges the district court’s 

refusal to award enhanced damages for willful infringement.

In In re Seagate, we announced a two-prong test for 

willfulness:

[T]o establish willful infringement, a patentee 

must show by clear and convincing evidence that 

the infringer acted despite an objectively high 

9 Although not expressly articulated by the district 

court, it is also worth noting that there were other reasons to exclude the expert’s testimony. For example, after 

determining that the patented technology was worth 10% 

of total revenue, the expert used the revenue generated by 

ION’s customers resulting from performing the oceanic 

surveys as the base for that 10% number, rather than the 

revenue generated by ION resulting from selling the 

infringing products. This increased, by more than tenfold, the estimated reasonable royalty. Again, we are 

aware of no case in which the plaintiff has used the defendant’s customer’s revenue as the revenue base for 

calculating a reasonable royalty, and WesternGeco does 

not identify one.

 

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likelihood that its actions constituted infringement of a valid patent. . . . The state of mind of 

the accused infringer is not relevant to this objective inquiry. If this threshold objective standard is 

satisfied, the patentee must 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.

497 F.3d at 1371. In Bard Peripheral Vascular, Inc. v. 

W.L. Gore & Associates, Inc., we explained that the objective inquiry is a legal question, to be answered by the 

judge and reviewed de novo. 682 F.3d 1003, 1007 (Fed. 

Cir. 2012).

The jury determined that WesternGeco demonstrated, 

“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. WesternGeco subsequently sought 

enhanced damages in light of the jury’s finding. The 

district court denied WesternGeco’s motion. The court 

noted that the jury already determined that the subjective 

prong was satisfied, but that it was the responsibility of 

the court to determine if the objective prong had been 

satisfied. After carefully reviewing ION’s noninfringement and invalidity defenses, the district court 

concluded that they were “not unreasonable by clear and 

convincing evidence,” “not objectively baseless,” and 

“reasonable.” J.A. 26–28.

WesternGeco has not established that the district 

court erred in concluding that ION’s defenses were reasonable and indeed gives relatively little attention to this 

issue. Instead, WesternGeco argues that ION was not 

successful with any of its defenses and that ION did not 

raise any of those defenses on appeal. But unreasonableCase: 14-1121 Document: 3-2 Page: 25 Filed: 07/02/2015
26 WESTERNGECO L.L.C. v. ION GEOPHYSICAL CORP. 

ness, not a lack of success, determines whether enhanced 

damages are awarded. See Spine Solutions, Inc. v. Medtronic Sofamor Danek USA, Inc., 620 F.3d 1305, 1319 

(Fed. Cir. 2010) (“Th[e] ‘objective’ prong of Seagate tends 

not to be met where an accused infringer relies on a 

reasonable defense to a charge of infringement.”). 

WesternGeco also argues that ION’s customers 

brought the patents to ION’s attention and voiced their 

concerns regarding possible infringement, and that ION 

was so concerned about the possibility of infringement 

that it hesitated to enter into indemnity agreements with 

its customers. These arguments bear on the subjective 

inquiry, not the objective inquiry—whether WesternGeco 

had objectively reasonable defenses. Whether our review 

is de novo or deferential, we see no error in the district 

court’s determination. 

CONCLUSION

We affirm in all respects, except that we reverse the 

district court’s refusal to grant JMOL eliminating the lost 

profits component of the jury award.

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

REMANDED

COSTS

Costs to neither party.

Case: 14-1121 Document: 3-2 Page: 26 Filed: 07/02/2015
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, 2014-1528

______________________ 

Appeals 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 agree with the majority’s holdings with respect to 

standing, infringement, and willfulness. However, in an 

effort to respect the presumption against the 

extraterritorial application of United States law, the 

majority erroneously declines to consider WesternGeco 

L.L.C.’s (“WesternGeco”) lost foreign sales when 

determining damages for infringement under 35 U.S.C. 

§ 271(f) (2012). Because, under this court’s precedents 

and those of the United States Supreme Court, the patent 

statute requires consideration of such sales as part of the 

damages calculation, I respectfully dissent. 

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

It is beyond question that patent rights granted by 

the United States are geographically limited. As the 

Supreme Court long ago explained, “[t]he power . . . 

granted [by the Constitution to promote the progress 

of . . . useful arts] is domestic in its character, and 

necessarily confined within the limits of the United 

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

(1856); see also Deepsouth Packing Co. v. Laitram Corp., 

406 U.S. 518, 531 (1972) (“Our 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.” 

(quoting Duchesne, 60 U.S. at 189)), superseded in part by 

statute, Patent Law Amendments Act of 1984, Pub. L. No. 

98-622, 98 Stat. 3383. 

Consistent with this approach, Congress has 

conferred on patentees “the right to exclude others from 

making, using, offering for sale, or selling the invention 

throughout the United States.” 35 U.S.C. § 154(a)(1) 

(emphasis added). Although “[t]he presumption that 

United States law governs domestically but does not rule 

the world” is not unique to the patent context, it “applies 

with particular force in patent law.” Microsoft Corp. v. 

AT&T Corp., 550 U.S. 437, 454–55 (2007). 

Nevertheless, the limited geographic reach of United 

States patent law does not mean activities occurring 

outside the United States are categorically disregarded 

when determining issues of patent infringement. For 

example, 35 U.S.C. § 271(g) imposes liability based upon 

an underlying foreign use of a patented process, if the 

product made by that process is imported into the United 

States. Similarly, and relevant to the present matter, by 

enacting § 271(f) Congress imposed liability on those 

supplying from the United States components of a 

patented invention “in such manner as to actively induce 

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the combination of such components outside of the United 

States in a manner that would infringe the patent if such 

combination occurred within the United States.” 35 

U.S.C. § 271(f)(1) (emphasis added). 

The Supreme Court has described § 271(f) as “an 

exception to the general rule that our patent law does not 

apply extraterritorially.” Microsoft, 550 U.S. at 442; see 

also Limelight Networks, Inc. v. Akamai Techs., Inc., 134 

S. Ct. 2111, 2118 (2014) (Section 271(f)(1) “illustrates 

[that] when Congress wishes to impose liability for 

inducing activity that does not itself constitute direct 

infringement, it knows precisely how to do so.”); Promega 

Corp. v. Life Techs. Corp., 773 F.3d 1338, 1351 (Fed. Cir. 

2014) (“Under 35 U.S.C. § 271(f)(1), a party may infringe 

a patent based on its participation in activity that occurs 

both inside and outside the United States.”) (emphasis 

added); Power Integrations, Inc. v. Fairchild 

Semiconductor Int’l, Inc., 711 F.3d 1348, 1371 (Fed. Cir. 

2013) (“[I]ndirect infringement, which can encompass 

conduct occurring elsewhere, requires underlying direct 

infringement in the United States.”) (emphasis added) 

(citations omitted). 

The relevance of foreign activities is not limited to the 

underlying issue of liability for infringement, but also 

relates to the associated issue of damages. It is on the 

issue of damages that the majority errs. 

In general, a patentee is entitled to full compensatory 

damages where infringement is found. Gen. Motors Corp. 

v. Devex Corp., 461 U.S. 648, 654–55 (1983) (By enacting 

§ 284, “Congress sought to ensure that the patent owner 

would in fact receive full compensation for ‘any damages’ 

he suffered as a result of the infringement.”) (citation 

omitted); Carborundum Co. v. Molten Metal Equip. 

Innovations, Inc., 72 F.3d 872, 881 (Fed. Cir. 1995) (“The 

primary purpose of compensatory damages is to return 

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

the patent owner to the financial position he would have 

occupied but for the infringement.”); H.R. Rep. No. 1587, 

79th Cong., 2d Sess. (1946) (“The object of the bill is to 

make the basis of recovery in patent infringement suits 

general damages, that is, any damages the complainant 

can prove . . . .”) (emphasis added). This general approach 

is rooted in the patent statute, which provides: “Upon 

finding for the claimant the court shall award the 

claimant damages adequate to compensate for the 

infringement, but in no event less than a reasonable 

royalty.” 35 U.S.C. § 284 (emphasis added). Section 284 

is a particular variation of the more general principle 

that, “‘when a wrong has been done, and the law gives a 

remedy,’” “‘[t]he injured party is to be placed, as near as 

may be, in the situation he would have occupied if the 

wrong had not been committed.’” Albemarle Paper Co. v. 

Moody, 422 U.S. 405, 418–19 (1975) (quoting Wicker v. 

Hoppock, 73 U.S. (6 Wall.) 94, 99 (1867)). 

These general principles of full compensation, of 

course, do not directly address the question of whether 

foreign activities may be considered when calculating 

such compensation. The Supreme Court, however, has 

answered this question in the affirmative, looking to noninfringing foreign sales to calculate lost profits where the 

patented product is manufactured in the United States. 

For example, in Goulds’ Manufacturing Co. v. Cowing, the 

defendant manufactured 298 pumps “specially designed 

for drawing off the gas from oil-wells,” for which “there 

was no market . . . except in the oil-producing regions of 

Pennsylvania and Canada.” 105 U.S. 253, 254–55 (1881) 

(internal quotation marks omitted). Without excluding 

the pumps sold in Canada, the Supreme Court found “a 

reasonable allowance for profits will be fifteen dollars on 

each pump, or $4,470 [i.e., 298 multiplied by $15 equals 

$4,470] in all.” Id. at 258. The Court thus relied in part 

on foreign sales to calculate lost profits, explaining the 

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appellant “could easily, and with reasonable promptness, 

[have filled] every order that was made.” Id. at 256.

In Dowagiac Manufacturing Co. v. Minnesota Moline 

Plow Co., the Court reviewed “an accounting of profits 

and an assessment of damages resulting from the 

infringement of a patent granted . . . for certain new and 

useful improvements in grain drills, commonly known as 

shoe drills.” 235 U.S. 641, 642–43 (1915) (internal 

quotation marks omitted). The defendants included 

wholesale dealers who purchased from manufacturers 

(who also infringed the patent). Id. at 643. Some of the 

drills were sold in Canada by the defendants. Id. at 650. 

The Court held the plaintiff was unable to recover “either 

profits or damages” as to these sales, specifically 

distinguishing Goulds’ on the basis that “while [the 

infringing drills] were made in the United States, they 

were not made by the defendants.” Id. By implication, 

had the defendants manufactured within the United 

States the infringing articles that were the subject of the 

foreign sales, those sales could have been used in the 

calculation of profits and therefore damages. 

Consistent with Supreme Court precedent, this court 

has previously considered lost foreign sales to inform 

patent damages calculations. In Railroad Dynamics, Inc. 

v. A. Stucki Co., the district court awarded $2,182,986 in 

damages based upon 52,183.5 infringing carsets 

multiplied by a royalty of $35 per carset, plus 6% 

compound interest. 727 F.2d 1506, 1510 n.1 (Fed. Cir. 

1984). In upholding the award, this court noted: 

The award includes royalties for 1,671 carsets sold 

to foreign customers . . . . When it made the 1,671 

carsets in this country, it infringed . . . . Whether 

those carsets were sold in the U.S. or elsewhere is 

therefore irrelevant, and no error occurred in 

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

including those carsets among the infringing 

products on which royalty was due. 

Id. at 1519 (emphasis added).

The use of non-infringing foreign sales, following 

infringing domestic manufacture, as part of the base on 

which royalties or lost profits are calculated is only one 

example of reliance on non-infringing activity to arrive at 

an appropriate damages figure. Where method patents 

are involved, non-infringing domestic sales of products 

resulting from domestic infringement of the patent have 

been held relevant to the damages calculation. In State 

Industries, Inc. v. Mor-Flo Industries, Inc., for example, 

the plaintiff held a patent on “a method of insulating the 

tank of a water heater by using polyurethane foam.” 883 

F.2d 1573, 1575 (Fed. Cir. 1989). “The district court 

awarded [the plaintiff] its incremental profit on [the noninfringing] foam-insulated gas water heaters reflecting 

the percentage of sales revenue [the plaintiff] lost because 

of [the defendant’s] infringement that would have been its 

profit,” and this court affirmed. Id. at 1579–80; see also

Soverain Software LLC v. J.C. Penney Corp., 899 F. Supp. 

2d 574, 583 (E.D. Tex. 2012) (upholding a damages 

calculation that relied on “the value of [non-infringing] 

products sold via the infringing websites as the royalty 

base,” considering in particular “the profit earned on 

these [non-infringing] products”), rev’d on other grounds, 

778 F.3d 1311 (Fed. Cir. 2015). Similarly, where a 

patented device is used to manufacture unpatented 

products that are later sold, the non-infringing sales can 

be used to calculate lost profits or reasonable royalties. 

See Minco, Inc. v. Combustion Eng’g, Inc., 95 F.3d 1109, 

1118 (Fed. Cir. 1996) (“In awarding both lost profits and a 

reasonable royalty, the trial court used the sale of [noninfringing] fused silica [produced using a patented kiln] as 

the baseline for measuring damages.”). 

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In this case, the foreign sales of unpatented seismic 

surveys were made not by defendant-appellant ION 

Geophysical Corporation (“ION”), but by its customers. 

Maj. Op. at 3–4, 16. WesternGeco’s lost profits might 

therefore be distinguished from those at issue in Goulds’, 

Dowagiac, and Railroad Dynamics on two separate bases: 

first, the foreign sales were not of a patented product but 

of an unpatented service in which a patent-practicing 

device was used; and second, the foreign sales in the 

present matter were not made by the defendant.1 

With respect to the first difference, this court has 

previously allowed recovery of lost profits based on the 

recognition that “the economic value of a patent may be 

greater than the value of the sales of the patented part 

alone.” King Instruments Corp. v. Perego, 65 F.3d 941, 

950 n.4 (Fed. Cir. 1995). For example, under the doctrine 

of “convoyed sales,” a patentee may recover lost profits 

based on lost sales of unpatented products if they are 

“sufficiently related to the patented product.” Warsaw 

Orthopedic, Inc. v. NuVasive, Inc., 778 F.3d 1365, 1375 

(Fed. Cir. 2015). Similarly, “when claims are drawn to an 

individual component of a multi-component product” a 

patentee may recover “damages based on the entire 

1 The majority overreads Dowagiac. Maj. Op. at 20–

21. Dowagiac declined to impose liability for downstream 

foreign sales because the defendant was the downstream 

seller rather than the U.S. manufacturer and its 

“infringement consisted only in selling the drills after 

they passed out of the makers’ hands.” 235 U.S. at 650. 

That is, the defendant—who was comparable not to ION 

but to ION’s customers—did not infringe as to the 

products sold to foreign buyers. In the present action, 

WesternGeco is not bringing suit against the downstream 

sellers, and the issue is not infringement, but damages. 

 

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market value of the accused product” so long as “the 

patented feature creates the basis for customer demand or 

substantially creates the value of the component parts.” 

VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1326 (Fed. 

Cir. 2014) (internal quotation marks and citation 

omitted); see also Westinghouse Elec. & Mfg. Co. v. 

Wagner Elec. & Mfg. Co., 225 U.S. 604, 615 (1912) (Upon 

a sufficient showing, a patentee may recover “the profits 

and damages . . . on the whole machine” if “the entire 

value of the whole machine, as a marketable article, is

properly and legally attributable to the patented 

feature.”) (internal quotation marks and citation omitted). 

Although discussions of convoyed sales and the entire 

market value rule are generally addressed to products, 

there is no statutory or doctrinal reason to exclude 

functionally related services, as this court has 

acknowledged. See State Contracting & Eng’g Corp. v. 

Condotte Am., Inc., 346 F.3d 1057, 1074 (Fed. Cir. 2003) 

(quoting with approval a jury instruction that “if . . . an 

entire construction job is functionally a part of the 

patented inventions used on the job, then . . . lost profits” 

may be awarded “for that entire construction job”). 

Moreover, the sale of the patented and unpatented 

products or services need not occur simultaneously. See 

DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 

F.3d 1314, 1333 (Fed. Cir. 2009) (Whether patented and 

unpatented products are sold together or in separate 

transactions “is a distinction without a difference.”); see

also Carborundum, 72 F.3d at 881–82 (affirming the 

district court’s holding that the patentee was “clearly 

entitled to lost profits on all [unpatented] spare parts 

sales,” and finding, absent an injunction, it would have 

been entitled to lost profits on “future lost sales of repair 

parts”). Here, where it appears WesternGeco “could 

[have] easily, and with reasonable promptness, fill[ed] 

every order that was made” for marine surveys, Goulds’, 

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105 U.S. at 256, where the patent-practicing devices 

“were made in the United States” and were made “by the 

defendants,” Dowagiac, 235 U.S. at 650, and where “the 

patented feature creates the basis for customer demand” 

of the marine surveys, VirnetX, 767 F.3d at 1326, recovery 

should not be precluded.

With respect to the second difference—that ION did 

not itself make the downstream sales—there is no reason 

to allow ION to escape liability for lost profits simply 

based upon the business model it chose to employ. Under 

§ 284, damages are based not on the infringer’s profits but 

on harm suffered by the patentee. See Robert Bosch, LLC 

v. Pylon Mfg. Corp., 719 F.3d 1305, 1315–16 (Fed. Cir. 

2013). In this case, damages to WesternGeco are the 

same whether ION competes directly or indirectly. 

Moreover, had ION chosen to compete against 

WesternGeco directly by manufacturing components in 

the United States, assembling them abroad, and then 

underbidding WesternGeco to win and perform seismic 

survey contracts, there would be no sales of patentpracticing devices (or components thereof) on which to 

base a reasonable royalty. This case would then resemble 

Minco in that “[b]oth [the defendant] and [the patentee] 

used the invention to compete in [the same] market.” 

Minco, 95 F.3d at 1118. That is, Minco upheld a 

calculation of lost profits based on a downstream, noninfringing sale of something other than the patented 

product. The court should do so here.2 

2 The majority 

see[s] no basis for extending § 271(f)(2) to cover 

lost profits resulting from the use abroad of U.S. 

manufactured goods or components thereof in 

light of the ‘particular force’ of the presumption 

against extraterritoriality in our patent laws. 

 

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This court’s en banc decision in Cardiac Pacemakers, 

cited by ION in support of its argument that 

extraterritorial sales cannot be considered, is not 

contrary. See Cardiac Pacemakers, Inc. v. St. Jude Med., 

Inc., 576 F.3d 1348, 1362 (Fed. Cir. 2009) (en banc). In 

that case, this court “[held] that Section 271(f) does not 

cover method claims.” Id. at 1359. The export of noninfringing implantable cardioverter defibrillators that 

were then used abroad to practice a patented method 

could not give rise to liability under § 271(f) because “a 

component of a method or process is a step in that method 

Certainly in drafting 271(f)(2), Congress did not 

provide for liability in convoyed-sales situations. 

Maj. Op. at 21–22 (emphases added) (citation omitted). In 

so stating, the majority elides three important issues. 

First, by categorizing the damages as “resulting from . . . 

use abroad,” it assumes without analysis that there is an 

insufficient connection between ION’s proven 

infringement in the United States and damages (see 

discussion of Power Integrations, infra). Second, it fails to 

consider that the Supreme Court in Goulds’ did not rely 

on an explicit authorization of Congress to award 

damages based upon activities occurring overseas. Third, 

by using the term “liability,” the majority’s statement 

ignores the critical distinction between whether a 

defendant is liable and the amount for which a defendant 

is liable. In any event, Congress stated whoever violates 

§ 271(f) “shall be liable as an infringer.” 35 U.S.C. 

§ 271(f)(1) & (2). Under this court’s precedents, the extent 

of liability for infringement, in appropriate cases, is 

determined by considering the sale of non-infringing 

products or services. See generally King Instruments, 65 

F.3d at 947 (“Section 284 imposes no limitation on the 

types of harm resulting from infringement that the 

statute will redress.”). 

 

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or process,” id. at 1362, but “one cannot supply the step of 

a method,” id. at 1364. In simple terms, Cardiac 

Pacemakers held that because method claims are 

intangible, they cannot be exported (“supplie[d]”) within 

the meaning of § 271(f). The point of law with respect to 

infringement under § 271(f) in Cardiac Pacemakers, 

however, is inapposite to the issue of damages the court 

now decides. Unlike the defendant in Cardiac 

Pacemakers, who shipped non-infringing implantable 

cardioverter defibrillators, there is no question that ION 

shipped components of a patented invention for 

combination abroad and that infringement liability under 

§ 271(f) is proper. See Maj. Op. at 12–14. 

Most significantly, this court’s decision in Power 

Integrations does not support the majority’s view of 

damages. It is true that case stated damages for 

infringement under § 271(a) cannot be based on foreign 

sales simply “because those foreign sales were the direct, 

foreseeable result of . . . domestic infringement.” See 

Power Integrations, 711 F.3d at 1371. Read in isolation, 

this statement is inconsistent with Goulds’, Dowagiac, 

and Railroad Dynamics. 

However, despite its use of the word “direct,” the court 

in Power Integrations was clearly concerned with the 

sufficiency of the connection between the foreign activity 

and the domestic infringement. Power Integrations

explained the plaintiffs had 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. Id. at 1371 

(emphasis added). It noted the “estimate [of the plaintiff’s 

expert witness] of $30 million in damages was not rooted 

in [the defendant’s] activity in the United States.” Id. at 

1372 (emphasis added) (internal quotation marks and 

citation omitted). Similarly, the district court decision 

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

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

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].” Power Integrations, 

Inc. v. Fairchild Semiconductor Int’l, Inc., 589 F. Supp. 2d 

505, 511 (D. Del. 2008). 

Although the record in Power Integrations does not 

clearly describe the nature of the infringing conduct (e.g., 

sale, manufacture, or sample testing as part of the design 

process) in relation to the foreign sales activities, see, e.g.,

711 F.3d at 1370–71, what is clear is that both the district 

court and this court found the connection insufficient. 

Such an approach merely applies the sensible 

requirement that there be an appropriate connection 

between the infringing activity and the resulting lost 

sales. See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 

1546 & n.5 (Fed. Cir. 1995) (en banc) (explaining that 

damages for “remote consequences” of patent 

infringement “are not compensable,” and noting 

disagreement with the dissent on “where those lines are 

to be drawn”); cf. F. Hoffmann–La Roche Ltd. v. 

Empagran S.A., 542 U.S. 155, 166 (2004) (indicating it is 

not “reasonable to apply [American antitrust] laws to 

foreign conduct insofar as that conduct causes 

independent foreign harm and that foreign harm alone

gives rise to the plaintiff’s claim”) (emphasis modified). In 

contrast to the tenuous connection between infringement 

and harm in Power Integrations, see 711 F.3d at 1371–72, 

the majority does not question WesternGeco’s assertion 

that “but for ION’s sales to its customers, WesternGeco 

would have earned over $90 million dollars in profit from

the ten lucrative services contracts performed abroad.” 

Maj. Op. at 16. 

In any event, Power Integrations is distinguishable 

because the patentee in that case could presumably have 

protected itself from the foreign manufacture, sale, and 

use by obtaining patents abroad. See Deepsouth Packing, 

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406 U.S. at 531 (“[T]he wording of 35 U.S.C. §§ 154 and 

271 reveals a congressional intent to have [the patentee] 

seek [protection] abroad through patents secured in 

countries where his goods are being used.”); see also

Microsoft, 550 U.S. at 456 (“If AT&T desires to prevent 

copying in foreign countries, its remedy today lies in 

obtaining and enforcing foreign patents.”). Such 

reasoning loses much of its force where the 

extraterritorial activity takes place or could take place 

entirely on the high seas. See Maj. Op. at 16–17 (“The 

service contracts were all to be performed on the high 

seas, outside the jurisdictional reach of U.S. patent law.”); 

see also J.A. 10151 (“international waters”); id. at 1182 

(“high seas”). See generally United States v. Louisiana 

(The Louisiana Boundary Case), 394 U.S. 11, 23 (1969) 

(“Outside the territorial sea are the high seas, which are 

international waters not subject to the dominion of any 

single nation.”); WesternGeco L.L.C. v. ION Geophysical 

Corp., 776 F. Supp. 2d 342, 370 (S.D. Tex. 2011) 

(“[A]ctivities in the [Exclusive Economic Zone] do not 

occur within the territory of the United States for 

purposes of U.S. patent law.”). 

For similar reasons, concerns that extraterritorial 

application of U.S. patent law could result in double 

recovery (e.g., by parallel suits brought under the patent 

laws of more than one country based on the same 

infringing act) or possibly interfere with foreign 

sovereignty are of minimal relevance here. Where 

components of a patented invention are supplied from one 

country and used exclusively on the high seas, it may be 

that no country’s patent laws reach the conduct occurring 

in international waters absent a provision such as 

§ 271(f). See, e.g., Duchesne, 60 U.S. (19 How.) at 196 

(“[T]he high seas [are] out of the jurisdiction of the United 

States.”); Ocean Sci. & Eng’g, Inc. v. United States, 595 

F.2d 572, 574 (Ct. Cl. 1979) (It is uncertain whether 

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

Congress intended the patent laws to apply “to processes 

carried out on U.S. flag ships and planes at sea.”). See 

generally Equal Emp’t Opportunity Comm’n v. Arabian 

Am. Oil Co., 499 U.S. 244, 265 (1991) (Marshall, J., 

dissenting) (“[T]he law of the flag state ordinarily governs 

the internal affairs of a ship.”) (emphasis added) (internal 

quotation marks and citation omitted), superseded by 

statute on other grounds, Civil Rights Act of 1991, Pub. L. 

No. 102-166, § 109, 105 Stat. 1071, 1077, as recognized in

Arbaugh v. Y&H Corp., 546 U.S. 500, 513 n.8 (2006); 

Gardiner v. Howe, 9 F. Cas. 1157, 1158 (C.C.D. Mass. 

1865) (No. 5219) (“[Patent] jurisdiction extends to the 

decks of American vessels on the high seas . . . .”) 

(emphasis added); Restatement (Third) of Foreign 

Relations Law § 502(2) (1987) (“The flag state may 

exercise jurisdiction to prescribe, to adjudicate, and to 

enforce, with respect to the ship or any conduct that takes 

place on the ship.”) (emphasis added). 

The greater concern, therefore, is not the possibility of 

recovering too much, but the possibility that patent 

owners will be unable to obtain full compensation, as may 

well be the import of the majority’s holding today. Under 

the majority’s view of damages, plaintiffs such as 

WesternGeco who are the victims of proven infringement 

and who have sustained damages caused by the 

defendant’s activity in the United States may not be able 

to fully recover even if they obtain patent rights abroad.3 

3 Even if every country applies the law of the flag to 

prohibit vessel-based activities in international waters 

that are claimed in a patent issued by that country, it 

may be difficult for United States patentees to predict, at 

the time of patenting, either the flag that future vessels 

are likely to fly or the countries in which future contracts 

are likely to be “negotiated and signed.” Maj. Op. at 22. 

 

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No legislative history shows Congress intended to leave 

such patentees with an incomplete remedy. 

The majority points out that § 271(f) is not broader 

than § 271(a),4 that “liability attaches in the United 

States,” and that “[i]t is the act of exporting the 

component from the United States which creates the 

liability.” Maj. Op. at 19; see also 35 U.S.C. § 271(b), 

(f)(1), (f)(2) & (g) (indicating who “shall be liable as an 

infringer”). The question here, however, is not whether 

“the export of a finished product can[] create liability for 

extraterritorial use of that product,” Maj. Op. at 18, but 

instead, what is the proper measure of damages given a 

finding of liability. Infringement has been consistently 

addressed at the various stages of the proceeding, and the 

majority acknowledges the role of foreign activities in the 

infringement determination under the statute. Id. at 12–

13. The jury found ION infringed under § 271(f)(1) and 

(2), and that it did so willfully. The district court denied 

This difficulty in prediction distinguishes patents related 

to activities on the high seas from those obtained in the 

more common situation where businesses can attempt to 

predict the need for patenting in a given country based 

upon factors such as population size or historical market 

demand. See Deepsouth Packing, 406 U.S. at 531 (“[T]he 

wording of 35 U.S.C. [§ 271] reveals a congressional intent 

to have [the patentee] seek [protection] abroad through 

patents secured in countries where his goods are being 

used.”) (emphasis added). 

4 Of course, § 271(f) is broader than § 271(a) in that 

it reaches the supply of “all or a substantial portion of the 

components of a patented invention.” 35 U.S.C. 

§ 271(f)(1) (emphasis added); see also Microsoft, 550 U.S. 

at 458 n.18 (explaining how § 271(f), “in one respect, 

reach[es] past the facts of Deepsouth”). 

 

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ION’s Renewed Motion for Judgment as a Matter of Law 

and Alternative Motion for New Trial Regarding NonInfringement, and this court now affirms “the 

infringement finding with respect to (f)(2) [as] an 

adequate basis for liability.” Id. at 14. The question of 

whether ION is liable for infringement has been answered 

in the affirmative.

The majority states “§ 271(f) was designed to put 

domestic manufacturers who export components to be 

assembled into a final product in a similar position to 

domestic manufacturers who sell the final product 

domestically.” Id. at 20; see also S. Rep. No. 98-663, 98th 

Cong., 2d Sess., at 3 (1984) (“The bill simply amends the 

patent law so that when components are supplied for 

assembly abroad to circumvent a patent, the situation will 

be treated the same as when the invention is ‘made’ or 

‘sold’ in the United States.”). It asserts “[j]ust as the 

United States seller or exporter of a final product cannot 

be liable for use abroad, so too the United States exporter 

of the component parts cannot be liable for use abroad.” 

Maj. Op. at 20. 

However, the cases from which the majority 

apparently draws this conclusion do not hold that foreign 

use can never be considered when calculating damages 

resulting from domestic infringement. In Microsoft, 550 

U.S. 437, see Maj. Op. at 17, the Court found no 

infringement under § 271(f); it did not address the issue of 

damages. Similarly, in Halo Electronics, Inc. v. Pulse 

Electronics, Inc., 769 F.3d 1371, 1380 (Fed. Cir. 2014), see 

Maj. Op. at 19, this court found the defendant’s “activities 

in the United States were insufficient to constitute a sale 

within the United States to support direct infringement,” 

and did not reach the issue of damages with respect to 

those non-sales. Finally, the Supreme Court in Duchesne, 

60 U.S. (19 How.) at 193–94, 198, see Maj. Op. at 19, 

found no infringement based on the extraterritorial use of 

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an improved gaff on a foreign sailing vessel that was 

temporarily present in Boston harbor. 

Duchesne actually undermines the majority’s 

assertion that damages for domestic manufacture cannot 

take into account value from use on the high seas. The 

Duchesne Court specifically stated that if the patented 

invention “had been manufactured on [the vessel’s] deck 

while she was lying in the port of Boston, or if the captain 

had sold it there, he would undoubtedly have trespassed 

upon the rights of the plaintiff, and would have been 

justly answerable for the profit and advantage he thereby 

obtained.” Duchesne, 60 U.S. (19 How.) at 196 (emphasis 

added). Significantly, the Court noted “[t]he chief and 

almost only advantage which the defendant derived from 

the use of this improvement was on the high seas.” Id. 

The Court thus concluded that where domestic 

manufacture leads to “profit and advantage” on the high 

seas, the defendant is answerable for that profit. Id. 

Unsurprisingly, this court has indicated damages 

under § 271(f) may be based on lost foreign sales. In

Union Carbide Chemicals & Plastics Technology Corp. v. 

Shell Oil Co., this court held the district court “was in 

error” when it “prohibited Union Carbide from submitting 

evidence of Shell’s foreign sales for the purpose of 

recovering additional damages under 35 U.S.C. 

§ 271(f)(2).” 425 F.3d 1366, 1378 (Fed. Cir. 2005), 

overruled on other grounds by Cardiac Pacemakers, 576 

F.3d 1348. Although this court sitting en banc overruled 

Union Carbide, it did so on the basis that the export of a 

catalyst for use abroad in a patented method did not 

infringe under § 271(f) because the catalyst was not a 

“component” as required by the statute, and because 

“[§] 271(f) does not apply to method patents.” Cardiac 

Pacemakers, 576 F.3d at 1363 n.4, 1365. It left 

undisturbed Cardiac Pacemakers’ holding that evidence of 

foreign sales is relevant to the damages determination 

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where infringement is found under § 271(f). See id. at 

1365 (“We therefore overrule [Union Carbide] to the extent 

that it conflicts with our holding today . . . .”) (emphasis 

added).

In Promega, decided after Cardiac Pacemakers, this 

court confirmed that worldwide sales are relevant to the 

damages determination under § 271(f), i.e., that Union

Carbide’s holding with respect to the relevance of foreign 

sales remains good law. 773 F.3d at 1350–51. This court 

noted the “jury awarded lost profits . . . based on 

worldwide sales . . . under 35 U.S.C. § 271(f)(1).” Id.; see 

also W.R. Grace & Co. v. Intercat, Inc., 60 F. Supp. 2d 316, 

321 (D. Del. 1999) (“[P]laintiff is entitled to damages 

[under § 271(f)] based on Intercat’s international sales.”). 

Although this court vacated the damages award because 

“the challenged claims of four of the five asserted patents 

on which the jury based its damages verdict are invalid,” 

it did not preclude the district court on remand from 

again considering worldwide sales as part of a renewed 

damages calculation. Promega Corp., 773 F.3d at 1358. 

To the contrary, Promega acknowledged the presumption 

“against the extraterritorial application” of the patent 

laws, but found that “Congress’ chosen language [in 

§ 271(f)] assigns liability to [the defendant’s] conduct 

within the United States, based on its extraterritorial 

effect.” Id. at 1353 n.10 (emphasis added). The majority 

does not attempt to distinguish Cardiac Pacemakers or 

Promega.5

5 The majority distinguishes Union Carbide on the 

basis that it addressed “[t]he extent to which . . . royalties 

may be affected by lost profits suffered abroad,” while the 

present matter does not. Maj. Op. at 20 n.7. The majority 

offers no explanation as to why lost foreign sales should 

be relevant when calculating damages based on a 

 

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It is true some Federal Circuit decisions have stated 

lost profits are unavailable where the patentee does not 

sell its product in the United States. See, e.g., Lindemann 

Maschinenfabrik GmbH v. Am. Hoist & Derrick Co., 895 

F.2d 1403, 1406 n.2 (Fed. Cir. 1990) (“Because Lindemann 

did not compete in the sale of its invention in the United 

States, it did not, as it could not, seek damages on the 

basis of lost profits.”); Trell v. Marlee Elecs. Corp., 912 

F.2d 1443, 1445 (Fed. Cir. 1990) (“Because Trell did not 

sell its invention in the United States, he could not seek 

damages on the basis of lost profits.”). In these cases, 

however, the defendants’ conduct appears to have taken 

place in the United States and no exports were at issue. 

They therefore stand only for the proposition that there 

can be no lost profits where the patentee would not have 

made sales in any event. See King Instruments, 65 F.3d 

at 951 n.5 (“In Trell and Lindemann . . . the record does 

not show that the patentee sold any product in the United 

States. The patentee had no possible basis for a lost 

profits claim. These cases, like others, reflect the general 

rule that lost profits are recoverable only if demonstrated 

by adequate evidence in the record.”). In this case, the

district court found “WesternGeco presented sufficient 

evidence for the jury reasonably to find that it had the 

capability to exploit the demand,” i.e., that but for the 

infringement, WesternGeco would have made additional 

sales. J.A. 34. 

For these reasons, the majority’s near-absolute bar to 

the consideration of a patentee’s foreign lost profits is 

contrary to the precedent both of this court and of the 

Supreme Court. I therefore respectfully dissent in part.

reasonable royalty, but not when calculating damages 

based on lost profits. 

 

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