On Wednesday, February 22, 2017, the Supreme Court published its decision in Life Technologies Corp. v. Promega Corp. 580 U.S. __ (2017), concerning infringement of US Patent RE 37,984. The question before the Court was whether supplying a single component of a multicomponent invention overseas constitutes an infringing act under 35 U. S. C. §271(f)(1).
35 U. S. C. §271(f)(1) prohibits a US supplier from providing "all or a substantial portion" of the components of a patented invention for combination abroad. The purpose of the statute was to close a now ancient loophole where all components of an invention could be exported from the U.S. to be assembled abroad and avoid infringement.
The Supreme Court held that a single component does not constitute "a substantial portion" of the components that can give rise to liability under §271(f)(1). The Court did not define how many components would define "a substantial portion," stating only that one is not enough.
The key issue before the Court was purely semantic, including the interpretation of the phrase "a substantial portion" of the components, and more particularly, whether "substantial" might mean a "qualitative" or "quantitative" measurement: does "substantial" mean an important component, or a lot of components. Since the statute itself did not define the term "substantial," the Court engaged in some routine grammatical analysis to arrive at its decision.
The dispute between Life Technologies and Promega arose out of a licensing agreement. Promega gave Life Technologies a license to make and sell genetic testing kits for specified law enforcement fields outside of the United States. A few years into the agreement, Promega sued, claiming that Life Technologies was selling the kits to clinical and research markets outside of the licensed field.
Looking beyond the facts of this particular case, the Supreme Court's interpretation may be important to you for a number of reasons.
First, it highlights the importance of foreign patent filings as an important element of a comprehensive IP strategy. Patent protection in foreign countries is another way to protect your intellectual property rights. Had Promega obtained patent coverage in Europe, they could have sued for patent infringement in European courts and avoided spending millions for litigation on an arcane issue.
Second, it provides a reality check in drafting better licenses. In hindsight, perhaps the licensing agreement between Life Technologies and Promega was too narrowly drawn. Expanding the scope and paying careful attention to the language of the licensing agreement might have provided better protection.
Finally, it provides a guideline for avoiding infringement. For example, a US company sends a patented product overseas that later requires replacement of a worn part with a part made without a license from the patent owner. Prior to this decision, it was not clear if sending the parts out of the US would constitute infringement. This case indicates it would not, so long as you only send one part. The Supreme Court did not answer the next obvious question - if you send two components, might this infringe?
For more specific guidance on how this important Supreme Court decision affects you or your business, call us and we will be your guide.
Susan L. Crockett, Esq.