In WesternGeco LLC v. ION Geophysical Corp., Appeal No. 2013-1527, the Federal Circuit denied lost-profit damages based on certain overseas activities where the defendant was liable for infringement under 35 USC § 271(f).

WesternGeco sued ION Geophysical for infringing four patents on ocean floor survey technology.  The jury found infringement and no invalidity with respect to all of the asserted patents and awarded lost profits and reasonable royalty damages of $93.4 million and $12.5 million, respectively.  ION appealed the denial of its post-trial motions, arguing that the district court applied an incorrect standard in granting summary judgment of infringement under 35 U.S.C. § 271(f)(1).  In addition, ION argued that WesternGeco lacked standing to sue because it did not own the asserted patents, a position ION had raised for the first time in a post-trial motion to dismiss.  WesternGeco conditionally cross-appealed with respect to certain damages issues.

The Federal Circuit affirmed in all respects, but reversed the district court’s award of lost profits resulting from conduct occurring abroad.  Regarding the damages award, WesternGeco’s successful lost profits theory was that ION’s sales of infringing devices to WesternGeco’s competitors had caused WesternGeco to lose out on ten lucrative survey contracts that would have generated over $90 million in profits.  ION challenged the lost profits award, arguing that WesternGeco could not recover on the lost contracts because they were entered into abroad and involved services rendered outside the jurisdictional reach of patent law.  The Federal Circuit agreed with ION, citing Power Integrations, Inc. v. Fairchild Semiconductor International, Inc., 711 F.3d 1348 (Fed. Cir. 2013), which rejected compensation for foreign exploitation of a patented invention.  In turn, the Federal Circuit rejected WesternGeco’s argument that Power Integrations applies only to compensation for infringement under §§ 271(a)-(b), clarifying that § 271(f) created a limited exception to the presumption against extraterritoriality, and did not expand the scope of potential recovery.  Nevertheless, the Federal Circuit noted that WesternGeco could still recover damages in the form of reasonable royalties, but did not address the question of whether a similar territorial limit would apply to such damages.