Supreme Court decision
On February 22 2017 the Supreme Court reversed the Federal Circuit's interpretation of an infringement liability statute in litigation over whether shipping a single component of a patented multi-component invention to be assembled overseas qualifies as infringement under 35 USC Section 271(f)(1), and remanded the matter to the Federal Circuit. In doing so, the Supreme Court clarified that Section 271(f)(1) does not cover the supply of a single component of a multi-component invention.
Section 271(f)(1), which imposes infringement liability on US manufacturers that supply components of patented inventions for use abroad, provides as follows:
"Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer."
Promega owns and licenses patents that relate to DNA amplification, including the 'Tautz patent'. The Tautz patent claims a kit with five components, one of which is a polymerase enzyme with non-infringing uses. Promega's competitor LifeTech manufactures genetic testing kits that contain all five components of the claimed kit. The polymerase component of LifeTech's kits is manufactured in the United States and then shipped to the United Kingdom, where the kits are assembled and sold worldwide.
Promega sued LifeTech for infringement in the US District Court for the Western District of Wisconsin. The district court held that LifeTech could not be liable for infringement under Section 271(f)(1) because it exported from the United States only one component of the multi-component kit claimed in the Tautz patent (ie, the polymerase), whereas the statute requires exporting at least two components to satisfy the "substantial portion of the components" requirement.
The Federal Circuit reversed the decision. Relying on the dictionary and ordinary meanings of 'substantial' as being 'important' or 'essential', the Federal Circuit concluded that the substantial portion element of Section 271(f)(1) does not require at least two components.
The Supreme Court's decision, written by Justice Sotomayor, reversed the Federal Circuit's 2014 decision, holding that the "supply of a single component of a multicomponent invention for manufacture abroad does not give rise to § 271(f)(1) liability". The Supreme Court observed that given the statute's text, context and structure, the phrase 'all or a substantial portion' points to a quantitative rather than qualitative meaning. The court further explained that under a quantitative approach, a single component cannot constitute a 'substantial portion' triggering Section 271(f)(1) liability. Further, the court observed that Promega's proffered case-specific approach – requiring either a qualitative and/or quantitative test, depending on the circumstances – is unworkable, as it would only compound the statute's ambiguity and further complicate a jury's review.
The Supreme Court also found that a quantitative approach is supported by Section 271(f)(2), which expressly provides for liability for the supply of "any component" (ie, a single component), but only where that component is "especially made or especially adapted for use in the invention". Reading Section 271(f)(1) as necessarily covering more than a single component allows the two provisions to "work in tandem and gives each provision its unique application".
Further, the Supreme Court observed that Congress enacted Section 271(f)(1) to prevent the so-called 'Deepsouth' loophole, where all the components of a patented invention (not merely a single component) were manufactured in the United States and shipped abroad for final assembly. Justice Alito penned a concurring opinion (joined by Justice Thomas) observing that the phrase 'all or a substantial portion' clearly shows that Congress intended Section 271(f)(1) to cover more situations than simply when all of the components are exported. However, neither the statute nor the Supreme Court's decision clearly states a bright-line rule as to what substantial portion of the components will trigger liability, leaving courts and juries to address the remaining ambiguity between 'more than one' and 'less than all'.
The Supreme Court's decision is a step towards clarity. Nevertheless, US manufacturers and exporters should continue to follow this issue closely, seeking further guidance from courts on what constitutes a substantial portion of the components of an invention beyond more than one.
For further information on this topic please contact Stephen K Sullivan or Yvonne Stoddard by telephone (+1 212 218 2100) or email ([email protected] or [email protected]). The Fitzpatrick, Cella, Harper & Scinto website can be accessed at www.fitzpatrickcella.com.