Opinion ID: 856284
Heading Depth: 3
Heading Rank: 1

Heading: worldwide sales

Text: Power Integrations argues that the jury’s original award of worldwide damages was legally appropriate. Specifically, Power Integrations argues that it was foreseeable that Fairchild’s infringement in the United States would cause Power Integrations to lose sales in foreign markets. Thus, Power Integrations argues, the law supports an award of damages for the lost foreign sales which Power Integrations would have made but for Fairchild’s domestic infringement. As legal authority for its position, Power Integrations recites established law that once a patentee demonstrates an underlying act of domestic infringement, the patentee is entitled to receive full compensation for “any damages” suffered as a result of the infringement.5 Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 654–55 (1983). 5 Our patent damages statute mandates, “[u]pon 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). “Congress sought [by the statute] to ensure that the patent owner would in fact receive full compensation for ‘any damages’ he suffered as a result of the infringement.” Gen. Motors Corp, 461 U.S. at 654–55. Thus, “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)). 37 POWER INTEGRATIONS v. FAIRCHILD SEMI According to Power Integrations, this principle of “full compensation” has no inherent, per se geographical limits. Power Integrations cites this court’s decision in Rite-Hite, where we explained that “[i]f a particular injury was or should have been reasonably foreseeable by an infringing competitor in the relevant market, broadly defined, that injury is generally compensable absent a persuasive reason to the contrary,” 56 F.3d at 1546, and urges us here to incorporate Fairchild’s foreign sales as part of “the relevant market.” Power Integrations’ argument that the broad principles of “full compensation,” extend to cover Fairchild’s worldwide sales is not persuasive. It is axiomatic that U.S. patent law does not operate extraterritorially to prohibit infringement abroad. Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 531 (1972), superseded by statute, Patent Law Amendments Acts of 1984, Pub. L. No. 98-622, 98 Stat. 3383 (codified at 35 U.S.C. § 271(f)), as recognized in Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007); see also Brown v. Duchesne, 60 U.S. (19 How.) 183, 195 (1856) (“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 . . . .” (internal quotation marks omitted)). Even indirect infringement, which can encompass conduct occurring elsewhere, see Merial Ltd. v. Cipla Ltd., 681 F.3d 1283, 1302–03 (Fed. Cir. 2012), requires underlying direct infringement in the United States, Deepsouth, 406 U.S. at 531. Our patent laws allow specifically “damages adequate to compensate for the infringement.” 35 U.S.C. § 284 (emphasis added). They do not thereby provide compensation for a defendant’s foreign exploitation of a patented invention, which is not infringement at all. Brown, 60 U.S. at 195 (“And the use of it outside of the jurisdiction of the United States is not an infringement of POWER INTEGRATIONS v. FAIRCHILD SEMI 38 his rights, and he has no claim to any compensation for the profit or advantage the party may derive from it.”). Power Integrations’ “foreseeability” theory of worldwide damages sets the presumption against extraterritoriality in interesting juxtaposition with the principle of full compensation. Nevertheless, Power Integrations’ argument is not novel, and in the end, it is not persuasive. Regardless of how the argument is framed under the facts of this case, the underlying question here remains whether Power Integrations is entitled to compensatory damages for injury caused by infringing activity that occurred outside the territory of the United States. The answer is no. Power Integrations is incorrect that, having established one or more acts of direct infringement in the United States, it may recover damages for Fairchild’s worldwide sales of the patented invention because those foreign sales were the direct, foreseeable result of Fairchild’s domestic infringement. Power Integrations has not cited any case law that supports an award of damages for sales consummated in foreign markets, regardless of any connection to infringing activity in the United States. To the contrary, the entirely extraterritorial production, use, or sale of an invention patented in the United States is an independent, intervening act that, under almost all circumstances, cuts off the chain of causation initiated by an act of domestic infringement. Cf. Morrison v. Nat’l Australia Bank Ltd., 130 S. Ct. 2869, 2884 (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.”). The district court determined that the jury had “clearly adopted the measure of damages posed by Power 39 POWER INTEGRATIONS v. FAIRCHILD SEMI Integrations expert, Dr. Troxel” in reaching the combined damages award of over $33 million. In view of this determination, the district court correctly concluded that there was “no legal basis that supports the jury award in the amount of $33 million” because Dr. Troxel’s estimate of $30 million in damages was not “rooted in Fairchild’s activity in the United States.” Indeed, Dr. Troxel testified on cross-examination that he did not quantify an amount of damages based on any offer for sale by Fairchild in the United States. We find neither compelling facts nor a reasonable justification for finding that Power Integrations 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. See F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 166 (2004) (finding it unreasonable to apply the law at issue to conduct that is significantly foreign, “insofar as that conduct causes independent foreign harm and that foreign harm alone gives rise to the plaintiff's claim”). We thus reject Power Integrations’ argument that there exists a legal basis sufficient to uphold the jury’s original damages award, which was based on worldwide sales and hold that the district court correctly decided that the jury’s original damages award was contrary to law.