Patents are valuable intellectual property assets that grant their owners a limited monopoly over the sale and use of the patented subject matter for a fixed period of time. The patent permits its owner to recover potentially significant sums of money when their patents are infringed. Damages for patent infringement may include reasonable royalties, lost profits, and in the event of willful infringement, trebled damages. Each jurisdiction with a patent system grants patents that provide protection within that jurisdiction’s territory and control. In other words, patents must be secured in each country where intellectual property protection is desired.
However, with the Supreme Court’s decision in WesternGeco, [1] owners of U.S. patents may now potentially seek damages for lost profits earned in foreign jurisdictions. To seek lost profits, the damages must be from the sale of a product infringing a U.S. patent and an infringing activity under U.S. law must have occurred within the jurisdiction of the United States. For example, under the U.S. Patent Act, [2] a party may be liable for patent infringement if it ships components of a patented invention overseas to be assembled there. [3] A patent owner that proves patent infringement is entitled to recover damages. [4]
In the instant case, petitioner WesternGeco, LLC, created a system for mapping the ocean floor and patented the idea in the United States. Respondent ION Geophysical Corporation (“ION”) provided the components to overseas purchasers that, when assembled, infringed U.S. patents belonging to WesternGeco. At the trial court level, ION was found to have infringed WesternGeco’s patents and ordered to pay royalties of approximately $12 million for manufacturing and shipping the components. ION was also ordered to pay damages of approximately $90 million in lost profits that WesternGeco could have earned had WesternGeco sold directly to the foreign purchasers. On appeal, the Federal Circuit threw out the foreign lost profits because of their extraterritorial nature.
The Supreme Court considered the facts of the case in view of the language of the relevant statutes—35 USC §271(f)(2) and §284—and concern regarding the extraterritorial nature of foreign lost profits and impacts on comity with other nations. In fact, there is a presumption against U.S. law applying extraterritorially. [5] The Supreme Court has established a two-step framework for deciding questions of extraterritoriality. The...
