Source: https://www.sternekessler.com/news-insights/client-alerts/westerngeco-v-ion-geophysical
Timestamp: 2019-04-20 14:33:46+00:00

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It is an act of infringement under U.S. patent law to supply “in or from the United States” certain components of a patented invention with the intent that they “will be combined 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)(2). In WesternGeco LLC v. ION Geophysical Corp., No. 16-1011 (2018), the U.S. Supreme Court in a 7–2 ruling held that a patentee may recover as damages lost foreign profits resulting from that type of infringement.
WesternGeco sued ION Geophysical under § 271(f)(2) and sought to recover as damages the profits from several overseas surveying contracts that WesternGeco lost as a result of ION Geophysical’s infringement. At trial, the jury returned a verdict in WesternGeco’s favor for $12.5 million in royalties and $93.4 million in lost foreign profits.
On appeal, however, the U.S. Court of Appeals for the Federal Circuit reversed the award for the foreign lost-profits damages. The Court of Appeals reasoned that because § 271(a) precludes damages for lost foreign sales, so too should § 271(f). The Supreme Court granted certiorari and reversed the Federal Circuit.
The Court first looked to § 284, which states that “the court shall award the claimant damages adequate to compensate for the infringement.” Accordingly, § 284 focuses on “the infringement.” The Court then directed its attention to the relevant type of infringement in § 271(f)(2), noting that the section focuses on regulating domestic conduct—the domestic act of supplying components of patented inventions “in or from the United States.” Accordingly, the lost-profits damages resulted from the application of § 284 to ION Geophysical’s domestic acts of infringement—the statute was not being applied to foreign conduct.
In a footnote near the end of its opinion, the Court noted that it “do[es] not address the extent to which other doctrines, such a proximate cause, could limit or preclude damages in particular cases”—thus suggesting that there may be as yet unexplored constraints on a patentee’s ability to claim foreign lost-profits damages.
The long-term significance of the Court’s decision is not yet clear. On the one hand, the Court’s opinion by its terms addresses infringement only under 35 U.S.C. § 271(f)(2). On the other hand, the logic of the opinion is not necessarily limited to § 271(f)(2), and patentholders’ lawyers will likely lose little time in trying to apply it to other types of infringement. Time will tell whether WesternGeco marks a sea change in the U.S. conception of patent damages or will remain a mere curiosity, of interest only to patentees whose patents are infringed by component exporters.
Richard Uberto, a 2018 summer associate, is the co-author of this client alert.

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