Manufacturer Not Liable Of Patent Infringement For Constructing One Component In U.S. And Remaining Components Abroad

Feb
28

On February 22, 2017, the United States Supreme Court addressed whether a manufacturer—who shipped a single component of a multicomponent invention outside the U.S. for assembly abroad—could be held liable for patent infringement under 35 U.S.C. § 271(f)(1) of the Patent Act. In Life Techs. Corp. v. Promega Corp., the Supreme Court chose quantity over quality and held that the supply of a single component cannot constitute a “substantial portion” of an multicomponent invention to trigger patent infringement liability.  No. 14-1538, 2017 WL 685531 (U.S. Feb. 22, 2017).

Relevant Law

35 U.S.C. § 271(f) of the Patent Act was enacted by Congress to plug a loophole in the enforceability of patent rights by reaching components that are manufactured in the U.S. but assembled overseas. §271(f)(1) states:

 (1)   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.

Thus, a manufacturer may be liable for patent infringement under §271(f)(1) for shipping from the U.S. “all or a substantial portion” of the components of a patented invention when those components are assembled abroad. Notably, the Patent Act did not define the phrase “substantial portion” as used in the context of §271(f)(1).

Background

In Life Techs. Corp., Promega was the exclusive licensee to a patent claiming a toolkit for genetic testing.  The toolkit was utilized by law enforcement agencies for forensic identification, in addition to clinical and research institutions.  Promega sublicensed the toolkit patent to Life Technologies for the worldwide manufacture and sale of the toolkit in limited law enforcement fields of use.  Life Technologies manufactured one component—of the five component toolkit—in the United States.  That single component was then shipped to Life Technologies’ facility in the United Kingdom where it was combined with the remaining four components of the toolkit.  When Life Technologies began selling these kits outside of the licensed fields of use, Promega sued for patent infringement under § 271(f)(1).

The jury returned a willful infringement verdict of $52 million in favor of Promega. The district court, however, granted Life Technologies’ motion for judgment as a matter of law finding that §271(f)(1)’s reference to a “substantial portion of the components” did not embrace the supply of a single component.  The U.S. Court of Appeals for the Federal Circuit reversed and reinstated the jury’s verdict.  The Federal Circuit noted that the dictionary definition of “substantial” included “important” or “essential.”  Thus, in light of expert testimony that the component manufactured in the U.S. was a “major” component of the toolkit, the Federal Circuit concluded the “substantial component” requirement of §271(f)(1) was satisfied.

U.S. Supreme Court

On appeal, the essential question before the Supreme Court was whether a “substantial portion” under §271(f)(1) referred to either a quantitative or qualitative measurement. Because the Patent Act did not define the phrase “substantial portion,” the Court turned toward its ordinary meaning.  The Court found that, as did the Federal Circuit, “substantial” may refer to either quality or quantity.  The Court noted, however, that context was key and the disputed term’s neighbors were the first clue to its quantitative meaning.  In particular, the Court found that both “all” and “portion” conveyed a quantitative connotation, while a qualitative interpretation would have rendered the modifier “of the components” unnecessary.  Rejecting Promega’s proposal for a “case specific approach” that applied either a qualitative or quantitative test, the Court concluded that this would simply complicate matters for the factfinder.  Thus, the Court held that the phrase “substantial portion” has a quantitative, not qualitative, meaning under §271(f)(1).  The Court then expressly rejected the notion that a single component of a multicomponent patented invention would ever trigger liability under §271(f)(1).  Nevertheless, the Court failed to reveal a magic number of components that would constitute “a substantial portion” under §271(f)(1).  As Justices Alito and Thomas succinctly stated in their concurrence in part and in judgment, “today’s opinion establishes that more than one component is necessary, but does not address how much more.”

Practical Effects

The Supreme Court’s decision will likely spur further patent litigation, as questions remain over how many and what components may constitute “a substantial portion” to trigger §271(f)(1) liability. Thus, manufacturers and patent owners alike should speak with their patent attorney to determine whether a patent infringement suit can be avoided—or should be brought—if components of a multicomponent patented invention are built in the U.S.  Patent applicants with the United States Patent and Trademark Office should also speak with their patent attorney about crafting multiple claim limitations that are more likely to be satisfied by potential infringers.  For more information, please see: Life Techs. Corp. v. Promega Corp., No. 14-1538, 2017 WL 685531 (U.S. Feb. 22, 2017).

  • Luke C. Holst is a registered patent attorney with experience in both patent prosecution and patent litigation. Holst is a former Patent Examiner at the U.S. Patent and Trademark Office; Law Clerk to the Honorable Mark W. Bennett at the U.S. District Court for the Northern District of Iowa; and Legislative Counsel at the U.S. Capitol to an Iowa Congressman on the U.S. House of Representatives Committee on the Judiciary. At McGrath North, Holst works on patent issues, other intellectual property matters, and litigation.
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