In HALO ELECTRONICS, INC. v. PULSE ELECTRONICS, INC., Appeal Nos. 2013-1472 & -1656, the Federal Circuit affirmed the district court’s finding of no direct infringement and no willful infringement for products sold outside of the United States.

Halo alleged that Pulse infringed three patents.  Pulse moved for summary judgment that it did not directly infringe the Halo patents by selling or offering to sell products manufactured, shipped, and delivered outside the United States.  The district court granted Pulse’s motion.  The remaining issues were decided by the jury, which found that Pulse directly infringed with respect to products shipped within the United States and induced others to infringe.  The jury also found it was highly probable that the infringement was willful and that the patents were not invalid for obviousness.  Pulse raised a post-trial motion of no willfulness.  The district court granted the motion and held that Pulse’s infringement was not willful because Pulse reasonably relied on at least its obviousness defense, which was not objectively baseless.

On appeal, Halo argued that the granting of summary judgment regarding the products sold outside the United States was improper because the contracts were negotiated inside the United States.  The Federal Circuit affirmed the district court because, regardless of the location of negotiations, the fact remained that the products were not sold or offered for sale inside the United States.  The Federal Circuit noted that adopting Halo’s logic would improperly broaden 35 U.S.C. § 271(a) and could confer a worldwide exclusive right on U.S. patent holders.  Halo also argued that the district court erred in ruling the objective prong of the willfulness inquiry was not met simply because Pulse raised a non-frivolous obviousness defense.  The Federal Circuit affirmed the ruling.  Even though Pulse was ultimately unsuccessful in challenging the validity, the record supported that Pulse did raise a substantial question as to the obviousness of the Halo patents and thus the defense was not objectively unreasonable.