IP Reports

On June 27, 2016, the Supreme Court granted Life Tech. Corp.’s petition for certiorari in Life Tech v. Promega to decide only the second question presented: “Whether the Federal Circuit erred in holding that supplying a single commodity component of a multi-component invention from the United States is an infringing act under 35 U.S.C. § 271(f)(1), exposing the manufacturer to liability for all worldwide sales.” The Federal Circuit’s decision below puts domestic suppliers at substantial risk of being liable for infringement based on their downstream customers’ activities.

At trial in the Western District of Wisconsin, the jury found that Life Tech.’s export of Taq polymerase, one component of a multi-component genetic testing kit that was found to infringe, constituted infringement under 35 U.S.C. § 271(f)(1). 35 U.S.C. § 271(f)(1) states that: “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.” The district court entered judgment as a matter of law that exporting one component could not satisfy 35 U.S.C. § 271(f)(1) because a single component is not “all or a substantial portion of the components” of the invention. The Federal Circuit reversed this holding, finding the export of the one component sufficient to constitute infringing activity under 35 U.S.C. § 271(f)(1).

In its petition for writ of certiorari, Life Tech. argued that a “substantial portion” should be determined by quantity, not by subjective importance of the components. Life Tech. first pointed to the statutory language of 35 U.S.C. § 271(f)(1) which uses the word “components” in contrast to 35 U.S.C. § 271(f)(2) which says “component.” Additionally, it argued that “a single component that is merely an off-the-shelf ‘staple article or commodity of commerce’” as described in § 271(f)(2) could not be a “substantial portion” under § 271(f)(1). Life Tech. also argued that the Federal Circuit’s holding expanded the extraterritorial reach of 35 U.S.C. § 271(f)(1) in a way that would stifle domestic industry. Promega opposed Life Tech.’s petition saying that certiorari should be denied because the question presented was not likely to recur. Promega contends that the Court should reject the bright-line rule that one component is never sufficient to attach liability under § 271(f)(1). Instead, Promega argues the Court should uphold the Federal Circuit’s application of a qualitative rule that what constitutes a “substantial portion” under § 271(f)(1) is a fact inquiry about the importance of the component that should be determined based on evidence. The Federal Circuit found that substantial evidence supported the jury’s finding below that the one component was important enough to be a “substantial portion.”

In October 2015, the Supreme Court called for the views of the Solicitor General on the petition. The Solicitor General advised that a writ of certiorari should only be granted as to this second question. That the Supreme Court followed this guidance and granted certiorari only to answer the second question may indicate that the Court was swayed by the Solicitor General’s brief in support of Life Tech. In its Amicus Curiae brief, the Solicitor General propounded the same arguments as Life Tech. First, it argued that a “substantial portion” must be measured in quantity because the statutory language says “components.” The government went on to argue that § 271(f)(2) specifies when a single component gives rise to liability—when they are “especially made or especially adapted for use in the invention.” Second, the amicus brief argued that expanding the extraterritorial scope of U.S. patent law impinged upon foreign states’ interests in permitting use of imported goods to assemble inventions that are not protected by patents outside of the U.S. Lastly, the government argued the practical difficulties of applying the Federal Circuit’s qualitative rule weigh against upholding that ruling.

This is a case of first impression in the Supreme Court so it is difficult to predict how the Court will rule. As a general matter, the Supreme Court has disfavored bright-line rules. However, the question is presented in the negative, and issuing a rule that one component not “especially made or especially adapted” for infringing use does not satisfy § 271(f)(1) does not completely foreclose the possibility of one component infringing if it is “especially made or especially adapted” under § 271(f)(2). Of course, § 271(f)(2) is more frequently asserted than § 271(f)(1), and the law on § 271(f)(2) is more developed. Therefore, such a holding is not likely to cause a wave change in patent law.

Upholding the Federal Circuit’s ruling that one component can satisfy § 271(f)(1), will have a much more significant impact on the law and industry. Additionally, the Court would likely find that multiple factors or a totality of circumstances are relevant to the inquiry of what is “substantial.” If the Court were to rule this way, its holding would put much if not all of this decision of what constitutes a “substantial portion of the components of a patented invention” on the fact finders in each case. Though what is a “substantial portion” may be a fact-intensive question, without more guidance from the Court, patent defendants would be left completely at the hands of their jury on this issue. We would also expect to see parties entering expert testimony and analysis of what is a “substantial” in efforts to further support their positions.

In the current economy where companies are eager to go global and push large portions of manufacturing and sales overseas, the Supreme Court’s decision on Life Tech. v. Promega stands to have a significant impact on where and how U.S. businesses conduct their activities.