The Federal Circuit reversed the jury’s award of $93,400,000 in lost profit damages where the infringement was determined under 35 U.S.C. §271(f)(2). Under Section 271(f)(2), an entity can be liable for patent infringement where it supplies components from the U.S. knowing that such components are made and adapted for use in the invention and intending that such component would infringe the patent if combined in the U.S. Here, the patentee argued that the lost profits resulting from lost contracts for services to be performed abroad. The court held that a patent owner cannot recover lost profits for acts that occur abroad. Instead, the remedy for infringement under Section 271(f)(2) is a reasonable royalty, and, here, the jury awarded $12,500,000 in reasonable royalties. The law is clear that the patent laws do not have any extraterritorial effect; Section 271(f)(2) is a limited exception to this rule and it is only the act of exporting components from the U.S. which creates the liability. In his dissent, Judge Wallach argues that the patent owner should have been entitled to recover lost profits based on prior Federal Circuit and Supreme Court precedent.
In other rulings, the court affirmed the district court’s holdings on the issues of patent ownership for standing, the standard used for granting summary judgment of infringement for one claim under Section 271(f)(1), the exclusion of the plaintiff’s damages expert regarding the royalty base, and the denial of enhanced damages for willful infringement.
WesternGeco L.L.C. v. Ion Geophysical Corporation, Case Nos. 2013-1527, 2014-1121, -1526, and -1528 (July 2, 2015); Opinion by: Dyk, joined by Hughes, Wallach, dissenting-in-part; Appealed From: District Court for the Southern District of Texas, Ellison, J. Read the full opinion here.