Transcript PATENT PIRACY: WHEN IS OFFSHORE ACTIVITY INFRINGEMENT?

PATENT PIRACY: WHEN IS
OFFSHORE ACTIVITY
INFRINGEMENT?
Jody Galvin
Melissa Subjeck
July 31, 2013
www.hodgsonruss.com
Where value is law.
© 2012 Hodgson Russ LLP
Jodyann Galvin is partner with Hodgson Russ LLP in Buffalo, NY, Ms.
Galvin's practice is focused on complex intellectual property matters, including patent and trademark
litigation, and the misappropriation of trade secrets, ideas, and concepts. She is the President of the
Western District of New York Chapter of the Federal Bar Association, as well as an adjunct professor
at the University at Buffalo
School of Law.
Melissa Subjeck's practice is focused on intellectual property matters,
including patent, trademark, and trade secret litigation. She has represented both plaintiffs and
defendants in intellectual property matters in diverse areas, including pharmaceuticals, medical
devices, and genetic testing. Ms. Subjeck also represents prominent national corporations in
complex contract and business disputes as well as accounting and legal malpractice matters.
PATENT – THE BASICS
 Exclusionary
 Territorial
SECTION 271(A) – The
Principal Infringement Statute
 § 271. Infringement of patent
(a) Except as otherwise provided in this title . . .
whoever authority makes, uses, offers to sell, or
sells any patented invention, within the United
States or imports into the United States any
patented invention during the term of the patent
therefor, infringes the patent.
Acts of Infringement
 Make
 Use
 Offer to Sell
 Sell
“Make” and “Use”
 Easy Interpretation
 “Make” or “Use” a patented invention
in the United States
Act of
Infringement
“Offer to Sell” and “Sale”
 Difficult interpretation when any step in
the process is conducted offshore
 Caselaw not well-developed
 Fact specific
 Split of authority
The New Trend
 Make the product offshore in some
country where the patentee does not
have patent rights
 Market and sell to customers located in
the United States
Is this infringement under the
United States patent laws?
Extraterritorial Activities
 Section 271 does not provide express
guidance
 What we know:
 Infringement only for activities that take place
within the borders of the United States
 Thus, offer to sell or sale must be “within the
United States”
 What we need to determine:
 Location of the offer to sell and sale
Where is the sale located?
 Not a “single point where some legally
operative act look place”
 Transocean Offshore Deepwater Drilling v.
Maersk Contractors USA, 617 F.3d 1296, 131011 (Fed. Cir. 2010)
 MEMC Electronic Materials v. Mitsubishi
Materials Silicon, 420 F.3d 1369, 1375-76 (Fed.
Cir. 2005).
 Multi-factor analysis
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Passage of title
Place of performance
Delivery
Sales negotiations
Payment
Receipt of sales proceeds
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Wing Shing Products, Ltd. v. Simatelex Manufactory Co., Ltd., 479 F.
Supp. 2d 388, 403 (S.D.N.Y. 2007)
Fellowes, Inc. v. Michilin Prosperity Co., Ltd., 491 F.Supp.2d 571, 57779 (E.D. Va. 2007)
Ensign-Bickford Co. v. ICI Explosives USA, Inc., 817 F. Supp. 1018,
1025-27 (D. Conn. 1993).
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When is an offer to sell
infringement?
 A communication is an “offer to sell”
when:
 Description of product
 Purchase price
 Biometrics, LLC v. New Womyn, Inc., 112 F. Supp.
2d 869, 873 (E.D. Mo. 2000)
 Traditional marketing: letters,
postcards, brochures
 New trend: website
 Infringement when completed sale is to
a United States customer.
 Transocean, 617 F.3d at 1308-09
 Split of authority when contemplated
sale is outside the U.S.
What about Method Patents?
 Federal Circuit has Declined to decide
this Issue
 District Courts are Divided
 Yes: Section 271(a) applies to method patents
• OptiGen, LLC v. International Genetics, Inc., 777 F.
Supp. 2d 390 (N.D.N.Y. 2011)
• Western Geco LLC. V. Ion Geophysical Corp., 2012
U.S. Dist. LEXIS 67776, at *13 (S.D. Tex. May 15,
2012)
 No: Section 271(a) does not apply to method
patents
• W.L. Gore & Assocs., Inc. v. Medtronic, Inc., 2012
U.S. Dist. LEXIS 84222, at *45 (E.D. Va. June 18,
2012)
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Section 271(g):
Manufacturing Outside the U.S.
 Reaches outside of boundaries of U.S. to protect
patentees’ processes – primary purpose is to prevent
competitors from avoiding patent by moving
manufacturing offshore
 Making according to a patented process in a foreign
country does not insulate from liability
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Section 271(g):
Manufacturing Outside the U.S.
 Importation of product, sale, offer to sell
 Creative Compounds, LLC v. Starmark Labs, 651 F.3d
1303 (Fed. Cir. 2011)
 Presumption that a product is made by patented
process under Section 295
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 Does it apply to methods? No. “Section 271(g) does
not cover every patented process and its purported
result.”
 NTP, Inc. v. Research in Motion, 418 F.3d 1282 (Fed. Circ. 2005)
 Production of “information” not enough.
 Phillip M. Adams & Assocs., LLC v. Dell Computer Corp.,
2013 U.S. App. LEXIS 5294 (Fed. Cir. Mar. 8, 2013)
 McRO, Inc. v. Namco Bandai Games Am., Inc.,
2013 U.S. Dist. LEXIS 100764 (C.D. Cal. July 11, 2013)
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The Future of Information
 Developing caselaw
 Congressional action
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Damages
 Sale:
 Lost profits
 Reasonable royalties
 Injunction
 Offer to sell
 Injunction
 Damages related to offer
 Price erosion
 Marketing costs