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Federal Circuit Clarifies Infringement Liability under Section 271(f)(1)
Practical Law Legal Update 9-592-7806 (Approx. 4 pages)
Federal Circuit Clarifies Infringement Liability under Section 271(f)(1)
by Practical Law Intellectual Property & Technology
| Published on 17 Dec 2014 • USA (National/Federal) |
In Promega Corp. v. Life Technologies Corp., the US Court of Appeals for the Federal Circuit reversed the US District Court for the Western District of Wisconsin's grant of judgment as a matter of law (JMOL) for Life Technologies Corp., finding there was substantial evidence that Life Technologies was liable for patent infringement under 35 U.S.C. § 271(f)(1) even though there was no third-party infringer and only one component for the accused product was supplied from the US.
On December 15, 2014, the US Court of Appeals for the Federal Circuit issued an opinion in Promega Corp. v. Life Technologies Corp., reversing the US District Court for the Western District of Wisconsin's grant of judgment as a matter of law (JMOL) to Life Technologies Corp. (LifeTech) (Nos. 2013–1011, 2013–1029, 2013–1376, (Fed. Cir. Dec. 15, 2014)). The Federal Circuit held that there was substantial evidence showing that LifeTech was liable for patent infringement under 271(f)(1) even though:
- There was no evidence of a third-party infringer.
- LifeTech manufactured only one component of the accused product in the US.
Promega Corp. is the exclusive licensee of US Patent No. RE 37,984 (the Tautz patent), which is directed to a process for examining polymorphism in DNA samples and claims a kit for testing the samples. LifeTech manufactures one component of its accused DNA testing kits in the US, which it then ships overseas to a LifeTech manufacturing facility in the UK, which then assembles and sells the kits worldwide.
In 2010, Promega sued LifeTech for infringement of the Tautz patent and four other patents, based on LifeTech's worldwide sales of its DNA testing kits. LifeTech asserted a licensing defense to the infringement claims based on a 2006 cross license. LifeTech did not challenge the validity of the Tautz patent but counterclaimed that the four other asserted patents were invalid. Both parties cross-moved for summary judgment on infringement and invalidity. The district court rejected LifeTech's licensing and invalidity challenges, and the case proceeded to a jury trial on willfulness and damages.
After a jury trial, LifeTech moved for JMOL under FRCP 50(b), arguing that Promega failed to prove infringement under 35 U.S.C. § 271(f)(1) as a matter of law. The district court agreed, holding that 35 U.S.C. § 271(f)(1) requires:
- The involvement of another, unrelated party to actively induce the combination of components and no other party was involved in LifeTech's assembly of the accused kits.
- At least two components to be supplied from the US, and LifeTech only supplied a single component from the US.
The Federal Circuit, however, disagreed with the district court's interpretation of 35 U.S.C. § 271(f)(1), and found that there was substantial evidence to support the jury's finding of infringement, and therefore the district court erred in granting LifeTech's motion for JMOL.
On appeal, the Federal Circuit held that under 35 U.S.C § 271(f)(1):
- No third party is required to actively induce the combination of components outside the US.
- A party may be liable for infringement for supplying or causing to be supplied a single component for combination outside the US.
In interpreting 35 U.S.C. § 271(f)(1), the Federal Circuit explained that:
- The word "induce" in the statutory phrase "to actively induce the combination" encompasses the broad concept of bringing about or causing something and is not limited to the concept of influencing or persuading someone. The court reasoned that if Congress had wanted to limit the word "induce" to mean only influencing another, it could have explicitly assigned liability when one party actively induced another to combine infringing components.
- The concept of a third-party infringer is not embodied in the statute's legislative history. Instead, the legislative history focuses on closing the exportation loophole exposed in Deepsouth Packing Co. v. Laitram Corp., which acknowledged the practice of infringers manufacturing parts within the US, but sending the infringing parts to foreign buyers to be assembled outside of the US (406 U.S. 518 (1972)).
- In closing the loophole exposed in Deepsouth Packing, Congress chose to expand liability to the supply of "all or a substantial portion" of the components, making it unlikely that Congress intended to hold companies liable for shipping components overseas to third parties but not for shipping the same components overseas to themselves or their foreign subsidiaries.
- Although the statute assigns infringement to anyone who supplies or causes to be supplied all or a substantial portion of the components of the invention in question, the court noted that there are certain instances when a single important or essential component can be a substantial portion of the components of a patented invention. In this case, the court found that the claimed DNA testing kits would be inoperable without the single component that LifeTech manufactured in the US and shipped to the UK.
Accordingly, the Federal Circuit reversed the district court's grant of JMOL and remanded the matter for a determination of damages based on LifeTech's infringement of the Tautz patent.