Court Opinion

ID: 9498174
Source: CourtListenerOpinion
Date Created: 2023-08-05 17:09:58.032879+00
Date Added: 2024-06-11T17:58:39.775803
License: Public Domain

RADER, Circuit Judge,
dissenting.
This court today determines that supplying a single “component” of a patented invention from the United States gives rise to endless liability in the United States under § 271(f) for products manufactured entirely abroad. To my eyes, this judgment disregards the existing international scheme of patent law with potential consequences beyond a “parade of horribles [in] the domestic software industry.” Therefore, although agreeing that software may be a component of a patented invention under § 271(f) and that electronic transmissions of software from the United States must receive the same treatment as software shipped from the United States on disks, I respectfully dissent from the proposition that foreign manufacture of a mere component of a patented product creates liability in the United States under § 271(f).
As noted by this court, section 271(f) imposes liability on anyone who “without authority supplies ... from the United States ... the components of a patented invention ... in such a manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent .... ” Today’s judgment turns on the meaning of “supplies.” This court purports to construe that term according to its “ordinary, contemporary, common meaning.” The ordinary meaning of “supplies,” however, does not include “copy*1373ing,” “replicating,” or “reproducing” — in effect “manufacturing.” The act of supplying is separate and distinct from copying, reproducing, or manufacturing. Thus, this court provides extraterritorial expansion to U.S. law by punishing under U.S. law “copying” that occurs abroad. While copying in Düsseldorf or Tokyo may indeed constitute infringement, that infringement must find its remedy under German or Japanese law.
Each manufacture of a patented product constitutes a separate and distinct act of infringement. Microsoft “supplied” a master disc to New York, Düsseldorf, and Tokyo. The district court properly assessed damages against Microsoft under § 271(a) for each copy of the master manufactured and implemented into an infringing product in New York.1 Similarly, section 271(f) attaches liability to each individual export from the United States of components of an incomplete invention for assembly abroad. As for manufacturing copies in Düsseldorf and Tokyo for the German and Japanese markets, those acts create liability only under German or Japanese law. Nonetheless, this court extends § 271(f) to cover extraterritorial copying in Düsseldorf and Tokyo. This extraterritorial expansion of U.S. patent law contravenes the precedent of this court and the Supreme Court that expressly confines the rights conferred by Title 35 to the United States and its Territories. See Dowagiac Mfg. Co. v. Minn. Moline Plow Co., 235 U.S. 641, 650, 35 S.Ct. 221, 59 L.Ed. 398 (1915) (“The right conferred by a patent under our law is confined to the United States and its Territories (Rev.Stat., § 4884) and, infringement of this right cannot be predicated on acts wholly done in a foreign country.” (citing United Dictionary Co. v. G & C Merriam Co., 208 U.S. 260, 265, 28 S.Ct. 290, 52 L.Ed. 478 (1908))); accord Int’l Rectifier Corp. v. Samsung Elecs. Co., 361 F.3d 1355, 1360 (Fed.Cir.2004); Pellegrini v. Analog Devices, Inc., 375 F.3d 1113, 1117 (Fed.Cir.2004); Rotec Indus., Inc. v. Mitsubishi Corp., 215 F.3d 1246, 1251 (Fed.Cir.2000); see Waymark Corp. v. Porta Sys. Corp., 245 F.3d 1364, 1367-68 (Fed.Cir.2001) (holding that liability under § 271(f) attaches with mere shipment of the component from the United States and does not consider the presence or absence of acts occurring abroad).
Again this extraterritorial expansion flows from this court’s broad construction of “supplies.” This court reasons that the “nature of the technology” justifies a different, unordinary, and uncommon construction of that term. Thus, this court distinguishes intangible software components from tangible components on the grounds that “the ‘supplying’ of software commonly involves generating a copy.”
To the contrary, copying and supplying are separate acts with different consequences — particularly when the “supplying” occurs in the United States and the copying occurs in Düsseldorf or Tokyo. As a matter of logic, one cannot supply one hundred components of a patented invention without first making one hundred copies of the component, regardless of whether the components supplied are physical parts or intangible software. Thus, copying and supplying are different acts, and one act of “supplying” cannot give rise to liability for multiple acts of copying.
The court’s proposition today that “the ‘supplying’ of software commonly involves generating a copy” does not actually dis*1374tinguish software components from physical components of other patented inventions. The only true difference between making and supplying' software components and physical components is that copies of software components are easier to make and transport. The ease of copying a patented component is not the proper basis for making distinctions under § 271(f).
Possibly recognizing defects in its reasoning, this court limits its novel uncommon construction of “supplies” to “software ‘components,’ [because for those inventions] the act of copying is subsumed in the act of ‘supplying,’ .... ” Rather than “according the same treatment to all forms of invention,” Eolas Techs. Inc. v. Microsoft Corp., 399 F.3d 1325, 1339 (2005) (citing TRIPS Agreement, Part II, Section 5 (1994) (“Patents shall be available and patent rights enjoyable without discrimination as to the place of inyention[ ][and] the field of technology ....”) (emphases added)), this court creates a new rule that foreign copying of a component of a patented invention shipped from the U.S. gives rise to liability in the U.S. Apparently this rule applies only to software inventions. This application of “supplies” solely to software components ignores this court’s case law that refuses to discriminate based on the field of technology. Id. The language of § 271(f) does not discriminate basted on field or form Of technology, yet this court invents such a distinction.
This court also declines to treat software the same as other inventions because a literal application of § 271(f) “fails to account for the realities of software distribution ... and [this court] cannot disregard the nature of the relevant technology and business practices underlying a particular litigation.” However, in Pellegrini an American corporation provided the instructions and corporate oversight that “cause[d] the components of the patented invention to be supplied,” but no part of the accused products ever entered or exited the United States. 375 F.3d at 1118. Thus, the production of the infringing products in Pellegrini was “facilitated by acts in 'the United States.” Despite economic harm to the plaintiff and economic benefit to the defendant both, in the United States, this court strictly construed § 271(f) to “appl[y] only where components of a patentfed] invention are physically present in the United States and then either sold or exported ....” Id. at 1117. This court should exercise the same restraint demonstrated in Pellegrini by refusing to broaden § 271(f) to accommodate the “nature of the relevant technology and business practices underlying a particular litigation.”
In fact, the “realities of software distribution” or “nature of the relevant technology and ■ business practices” theory amounts to the following: “section 271(f) liability attaches if this court perceives that the patented component is cheaper or more convenient to replicate abroad than to ship from the United States.” In sum, this “nature of the business” theory has no statutory support and may well not even be based on an accurate understanding of the nature of the software business.
Furthermore, this court’s dismissal of Pellegrini because Microsoft supplied an actual component of the patented invention and not merely instructions as in Pellegri-ni does not reconcile the holding of Pelle-grini with today’s ruling. Pellegrini holds that “the language of § 271(f) clearly contemplates that there must be an intervén-ing sale or exportation; there can be no liability under § 271(f) unless components are shipped from the United States for assembly.” 375 F.3d at 1117. In the case before this court Düsseldorf and Tokyo distributors copy the components supplied from the United States and then install those copies into the infringing products. *1375The German and Japanese manufacturers do not install the actual component “supplied” from the U.S. (the master disc). Instead, they install a copy made in Dusseldorf or Tokyo. Thus, under Pellegrini liability cannot attach under § 271(f) because the components actually assembled into the infringing products were never literally “shipped from the United States.” To my eyes, today’s ruling departs from the holding of Pellegrini.
The majority also purports to construe § 271(f) to “comport with Congresses] motivation for enacting § 271(f).” Apart from the impossibility of divining Congressional intent divorced from the language of the law, this court’s reasoning misses the policy behind § 271(f). Congress enacted § 271(f) in response to the Supreme Court’s holding in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 92 S.Ct. 1700, 32 L.Ed.2d 273 (1972). Deepsouth held that making and shipping component parts of a patented combination invention did not constitute “making” the patented invention in the United States. Id. at 527-29, 92 S.Ct. 1700 (“We cannot endorse the view that the ‘substantial manufacture of the constituent parts of a machine’ constitutes direct infringement when we have so often held that a combination patent protects only against the operable assembly of the whole and not the manufacture of its parts.”). Thus, because Deepsouth was not “making” the invention in the United States before exportation, there was no direct infringer in the United States to enable a charge of contributory infringement. Id. at 527, 92 S.Ct. 1700. Deep-south let U.S. manufacturers escape infringement by making and exporting less than the complete patented invention. Section 271® closed that loophole by attaching liability to U.S. manufacturers for making and exporting -components of the patented invention. ■ .
Nothing in § 271(f) or its enacting documents expresses an intent to attach liability to manufacturing activities occurring wholly abroad. This court’s ruling, however, does exactly that: It holds Microsoft liable for the activities of foreign manufacturers making copies of the patented component abroad.
To the contrary, § 271(f) protects only components “supplied in or from the United States.” This language limited § 271(f) to ensure it would not embrace, manufacturing or copying activities occurring abroad. The “supplied in and from the United States” limitation would be wholly unnecessary, and indeed would contradict the intent of the law, if the law intended, as this court holds today, to regulate activities occurring in Dusseldorf or Tokyo. Had Congress intended to give extraterritorial effect to U.S. patent laws, it would have expressly stated so. Instead, Title 35 expressly limits liability under § 271(f) to activities occurring in the United States that result in the literal shipment of components “in or from the United States.”
As a final refusal to confront the central issues of this case, the court today dismisses Microsoft’s lock-and-key hypothetical as “irrelevant,” as merely a scenario “without bearing on the technical realities.” To the contrary,, just as computers easily can make copies of software components of patented computer products,, key replication machines easily can make copies of the key component’ ,of a paténted lock product. A computer needs a master copy to replicate the software; similarly, a key replication machine needs a master copy to replicate the key. Thus, under a fair presentation of the hypothetical, a U.S. manufacturer supplies a single master key of a patented lock invention from the United States. Foreign manufacturers then copy that key for .foreign sale as part of the patented lock product.2 I doubt that the *1376U.S. manufacturer who supplied the single master key would be liable under § 271(f) for the multiple infringing lock products manufactured and sold abroad. Yet this court creates liability under indistinguishable circumstances.
Other possible scenarios further highlight difficulties with this court’s holding. For example, this court’s holding would seem to impose liability under § 271(f) for foreign-manufactured copies on an individual who purchased a copy of AT & T’s patented software and then shipped it overseas knowing that it would be copied and sold in Düsseldorf or Tokyo. The same problem might arise if the individual ships the purchased software to Düssel-dorf with no intention of making further copies, but the Düsseldorf distributor of its own accord then makes and sells foreign copies. Before this opinion, the law would have suggested that AT & T would need to resort to German law and courts to determine any infringement for the copies manufactured and sold in Düsseldorf, but apparently this court purports to change that basic tenet of patent law.
This court reinforces one point several times, namely that its judgment reaches a just result by imposing liability for multiple infringing acts by foreign manufacturers on a U.S. “supplier” of a single patented component. This emphasis suggests that AT & T might otherwise have no remedy for infringement occurring wholly outside the United States. AT & T, however, is not left without remedy. AT & T can protect its foreign markets from foreign competitors by obtaining and enforcing foreign patents. Section 271(f) protects foreign markets from domestic competitors. Section 271(f) does not, or at least did not until today, protect foreign markets from foreign competitors. This court’s expansion of § 271(f) to offer protection to foreign markets from foreign competitors distorts both the language and the policy of the statute. This court should accord proper respect to the clear language of the statute and to foreign patent regimes by limiting the application of § 271(f) to components literally “shipped from the United States.” Pellegrini, 375 F.3d at 1117.
For the foregoing reasons, I must respectfully dissent.

. Microsoft might also be liable for supplying the master to Düsseldorf and Tokyo if copies made in those overseas locations are sold back into the U.S. market. See 35 U.S.C. § 271(a) & (c) (prohibiting importing into the United States patented inventions or components thereof).

. The court’s dismissal of the “key” hypothetical is easily addressed by adjusting the facts *1376of the hypothetical. Consider a lock-and-key combination that recognizes the voice of the key’s rightful owner. Only after confirming the identity of the owner does the lock expose the opening for the key and the key expose the teeth necessary to rotate the locking mechanism. Thus, each lock and key may have the same shape, thereby decreasing manufacturing costs, and yet allow access to a limited number of persons.