Foreign Lost-Profit Statutes Favor U.S. Patent Holder
Do US foreign lost-profit statutes permit a patent owner to recover lost foreign profits, when a competitor manufactures components in the U.S. and exports to be assembled abroad in competition with patent owner?
On June 22, 2018, the Supreme Court decided WesternGeco LLC v. ION Geophysical Corp. The question presented was whether these statutes allow the patent owner to recover for lost foreign profits. The Supreme Court held that they do.
WesternGeco LLC owned four patents relating to a system for surveying the ocean floor. ION Geophysical Corporation sold a competing system. It manufactured the components for its competing system in the United States and then shipped them to companies abroad where they were combined to create a competing system indistinguishable from WesternGeco’s.
WesternGeco sued for patent infringement under §§271(f)(1) and (f)(2). The jury found ION liable and awarded WesternGeco $93.4 million in lost profits. The Court of Appeals for the Federal Circuit reversed the award of lost-profits damages. The Supreme Court vacated the Federal Circuit’s judgment but the panel majority reinstated its decision regarding extraterritoriality of §271(f). On petition for certiorari again, the Supreme Court reversed.
The Supreme Court concluded that the conduct relative to the statutory focus is domestic and Section 271(f)(2) focuses on domestic conduct. The Court explained that the focus of the §284 damages remedy in a case involving infringement under §271(f)(2) is on the act of exporting components from the United States. Since the focus here was ION’s domestic act of supplying the components that infringed WesternGeco’s patents, WesternGeco was entitled to lost-profits damages in this case.
The case is WesternGeco LLC v. ION Geophysical Corp.