How much is enough? SCOTUS clarifies overseas patent infringement liability
Just how much patent infringement does it take to be liable for damages? The U.S. Supreme Court recently tackled this question in one context, ruling that supplying only one component of an infringing multicomponent invention made abroad doesn’t make the supplier liable for patent infringement. With that, the Court established a bright-line test for some circumstances, but created significant uncertainty for others.
Single and ready to mingle
Promega Corporation was the exclusive licensee of the patent on a genetic testing toolkit. It sublicensed the patent to Life Technologies Corporation, which used the patent to manufacture and sell genetic testing kits for certain licensed law enforcement fields. Life Technologies manufactured all but one component of the kits in the United Kingdom. That component was made in the United States and shipped to the UK for combination with the other components.
When Life Technologies began selling its kits outside the licensed fields of use, Promega sued for patent infringement under Section 271(f)(1) of the Patent Act. The provision prohibits anyone from supplying, from the United States, “all or a substantial portion” of a patented invention for combination abroad in a way that would infringe the patent if the combination were done in the United States.
The jury returned a verdict for Promega, but the trial court ruled in Life Technologies’ favor on its posttrial motion, finding that the phrase “all or a substantial portion” didn’t apply to the supply of a single component in a multicomponent invention. The Federal Circuit Court of Appeals reversed and reinstated the jury’s verdict finding Life Technologies liable for infringement. Life Technologies appealed to the Supreme Court.
“Substantial” takes more
The appellate court found that a party could be liable under Sec. 271(f)(1) for supplying just a single component for combination outside the United States. Noting that the dictionary definition of “substantial” is “important” or “essential,” the court determined that a single important component can be a “substantial portion” of the components. Based on expert testimony, it concluded that the component at issue was substantial under Sec. 271(f)(1).
The Supreme Court acknowledged that the ordinary meaning of “substantial” can refer to either qualitative importance or quantitatively large size. But in the statutory context, it found, the term assumes a quantitative meaning. The Court pointed out that the words “all” and “portion” convey a quantitative meaning and none of the neighboring text supports a qualitative interpretation. And, it held, a single component can’t qualify as a “substantial portion” that triggers Sec. 271(f)(1) infringement liability under a quantitative approach.
The Court rejected Promega’s “case-specific approach,” which would require a court or jury to determine whether the components at issue constitute a substantial portion under either a qualitative or quantitative approach. It also shot down Promega’s proposal to adopt an analytical framework accounting for components’ quantitative and qualitative aspects. Both of these approaches would only further complicate application of Sec. 271(f)(1).
The Court’s ruling clarifies Sec. 271(f)(1) — but not entirely. It didn’t address exactly how many components are required to make a “substantial portion.” It also left open how courts should identify a patent’s “components.” Until resolved by the courts, these uncertainties will make it difficult for component suppliers to determine whether they’re committing infringement. •
Life Technologies Corp. v. Promega Corp., No. 14-1538, Feb. 22, 2017 (U.S.)