U.S. Supreme Court Allows Lost Profits on Worldwide Sales for Patent Infringement Under 35 USC Section 271(F)
In a rare victory for patent owners, the Supreme Court expanded the reach of damages in WesternGeco v. ION Geophysical Corp.,1 finding that plaintiffs can recover lost profits based on the worldwide sales of companies liable for infringement under 35 U.S.C. § 271(f) of U.S. patent law. Section 271(f) was enacted decades ago to make companies liable for exporting components of a patented invention that are combined overseas into an infringing product. The Federal Circuit rejected the patentee’s claim that it should recover its lost profits based on the overseas sales the defendant had made of its infringing product, finding that the judicial presumption against extraterritoriality applied absent clear congressional intent to allow damages based on foreign conduct. In reversing the Federal Circuit, the Court avoided the broader question of the extraterritorial reach of damages provisions within statutes that have extraterritorial effect, instead finding that the infringer’s conduct was essentially domestic and thus lost profits recoverable. Though limited to a less commonly used provision of U.S. patent law, the Court’s ruling increased damages exposure for companies who operate in global supply chains and seek to shield foreign use of their products from U.S. patents.
U.S. PATENT LAW’S LIMITED GLOBAL REACH