On July 2, 2015, in WesternGeco L.L.C. v. ION Geophysical Corp., the US Court of Appeals for the Federal Circuit held that, under 35 U.S.C. § 271(f), a US exporter of component parts of an infringing article cannot be liable for use of the infringing final article abroad (Nos. 2013-1527, 2014-1121, 2014-1526, 2014-1528, (Fed. Cir. July 2, 2015)).

WesternGeco L.L.C. owns US Patent Nos. 6,691,038, 7,080,607, 7,162,967 and 7,293,520, which include system claims directed to improved technologies used to search for oil and gas reserves beneath the ocean floor. WesternGeco manufactures a commercial embodiment of its patents, the Q-Marine, and performs surveys on behalf of oil companies. ION Geophysical Corp. manufactures a competing product, the DigiFIN, which it sells to its customers, who in turn perform surveys in international waters on behalf of oil companies. WesternGeco alleged that it lost ten lucrative foreign service contracts as a result of ION providing its competing DigiFIN technology to its customers. The parties did not dispute that ION executed the service contracts with its customers outside of the US.

On June 12, 2009, WesternGeco sued ION, accusing it of willfully infringing WesternGeco's four patents by:

The US District Court for the Southern District of Texas granted summary judgment to WesternGeco, finding that ION infringed claim 18 of the '520 patent under § 271(f)(1). The case went to trial and the jury found that ION infringed:

The jury awarded WesternGeco over $93 million in lost profits for lost sales contracts that ION instead made with its competing DigiFIN technology. The jury also awarded WesternGeco $12.5 million in reasonable royalty damages.

After the jury verdict, ION filed:

The district court denied ION's motions and ION appealed. WesternGeco conditionally cross-appealed, arguing that if the Federal Circuit found in favor of ION on any issue, it should set aside the damages award because the district court erred in preventing WesternGeco's damages expert from testifying on the issue of a reasonable royalty.

On appeal, the Federal Circuit:

Significantly, in reversing the lost profits determination, the Federal Circuit explained that there is a presumption against extraterritoriality in patent law. The court acknowledged that, in enacting § 271(f), Congress expanded the territorial scope of the patent laws to treat the export of component parts of patented systems abroad in the same way patent law treats the export of finished articles abroad under 35 U.S.C. § 271(a), provided the exporter has the required intent. However, the court noted that infringement under § 271(f) attaches in the US with the act of exporting the components and that Congress did not intend to expand the scope of § 271(f) to cover foreign uses of the articles created from the exported components. To impose liability for foreign use of the components would expand § 271(f)'s scope beyond that of § 271(a), which does not impose liability for foreign use of a finished product.

Regarding WesternGeco's conditional cross-appeal, the court held that the district court did not abuse its discretion in excluding WesternGeco's damages expert from testifying on a reasonable royalty. The court noted that the expert's methodology was unsound in part because it proposed a royalty that would have exceeded ION's revenue by a factor of four and ION would not have agreed to such a royalty in a hypothetical negotiation.

Judge Wallach dissented-in-part regarding the majority's lost profits reversal, asserting that: