On June 27 2016 the Supreme Court granted in part a petition for certiorari filed by Life Technologies Corporation, Invitrogen IP Holdings, Inc and Applied Biosystems, LLC (collectively, 'LifeTech') concerning the interpretation and application of 35 USC Section 271(f)(1). That statutory provision, which concerns infringement for US manufacturers that supply components of patented inventions for use abroad, provides as follows:
"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 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, shall be liable as an infringer."
Certiorari was granted on the following question:
"Whether the Federal Circuit erred in holding that supplying a single, commodity component of a multi-component invention from the United States is an infringing act under 35 U.S.C. § 271(f)(1), exposing the manufacturer to liability for all worldwide sales."
The Supreme Court declined to consider a second question raised by LifeTech concerning whether a single entity can "actively induce" itself to infringe a patent under 35 USC Section 271(f)(1).
Promega Corporation owns and licenses patents that relate to amplifying regions (loci) of DNA containing short terminal repeats (STRs). Because the number of STRs at each locus is unique to every individual, STR loci can be used for genetic research and genetic fingerprinting. STR profiling, as claimed by Promega, requires making copies of, or 'amplifying', the relevant loci to obtain a detectable amount of DNA for analysis. Promega's patents claim multi-component kits for amplifying STR loci, one component of which is an enzyme involved in the amplification process known as a polymerase.
Promega's competitor LifeTech also manufactures genetic testing kits that amplify STR loci. In the United States, LifeTech manufactures only the polymerase component of its kits and then ships the polymerase to the United Kingdom, where the kits are assembled and sold worldwide.
In 2010 Promega sued LifeTech in the Western District of Wisconsin for infringement of five patents, one of which is referred to as the 'Tautz patent'. Promega alleged infringement under 35 USC Sections 271(a) and (f)(1) and sought damages for wilful infringement based on the worldwide sales of LifeTech's kits.
The district court found that LifeTech's kits infringed a subset of the patent claims and a jury trial was held on the issues of wilfulness and damages. The jury was asked to consider what portion of LifeTech's worldwide sales constituted US sales under 35 USC Section 271(f)(1) (ie, "kits made outside the United States where a substantial portion of the components are supplied from the United States"), such that Promega was entitled to recover damages. The jury found that LifeTech had wilfully infringed Promega's patents and awarded lost profits of $52 million to Promega based on worldwide sales of LifeTech's accused STR kits.
After entry of judgment, LifeTech moved for a judgment as a matter of law on the basis that Promega had failed to prove its infringement case. The district court granted the motion and vacated the jury award, holding that LifeTech had not infringed under Section 271(a) or (f)(1). One of the district court's bases for finding there was no infringement under Section 271(f)(1) was that LifeTech supplied only a single component from the United States, whereas the statute requires the supply of at least two components from the United States to satisfy the "substantial portion of the components" element.
The Federal Circuit reversed the district court's grant of LifeTech's motion for judgment as a matter of law with respect to the Tautz patent, holding that the district court had improperly interpreted Section 271(f)(1). According to the majority, the "substantial portion of the components of a patented invention" element of Section 271(f)(1) does not require at least two components to be supplied from the United States. Relying on the dictionary and ordinary meaning of 'substantial' and Supreme Court precedent, the majority concluded that the district court cannot categorically exclude the supply of a single component of a patented invention from the scope of Section 271(f)(1).
The Supreme Court found that the evidence supported a finding that LifeTech's polymerase constituted a "substantial portion of the components of the patented invention" under Section 271(f)(1), and therefore LifeTech was liable for infringement based on its worldwide sales of infringing kits.
In its petition for certiorari, LifeTech argued that the Federal Circuit's interpretation and application of Section 271(f)(1) were contrary to the text and structure of the Patent Act and the presumption against extraterritoriality. In particular, LifeTech contended that the Federal Circuit's expansion of the extraterritorial scope of patent law would distort the incentives for multinational companies to supply components from facilities in the United States, potentially causing long-term economic damage and disrupting the international system of national patents.
These arguments were echoed by the solicitor general and amici curiae who similarly contended that the Federal Circuit's ruling ignored the presumption against extraterritoriality, and cautioned that upholding the ruling was likely to interfere with modern global supply logistics and disproportionately burden US manufacturers with global operations.
In its brief opposing LifeTech's petition, Promega argued that the statute requires a qualitative approach rather than a rigid quantitative one. It further noted that a qualitative application would not burden global markets, because a finding that a single component of a multi-component invention was a "substantial portion" would be unlikely to recur. Promega noted that this rare determination was found here only after LifeTech's admission that the polymerase component played a major role in its kits.
Moving forward, US corporations that supply commodities that are assembled into kits abroad will certainly monitor this case with great interest, given the potential exposure to liability for worldwide sales.
For further information on this topic please contact Christina Schwarz or Rachael Million-Perez by telephone (+1 212 218 2100) or email (cschwarz@fchs.com or [email protected]). The Fitzpatrick, Cella, Harper & Scinto website can be accessed at www.fitzpatrickcella.com.
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