In Halo Electronics, Inc. v. Pulse Electronics, Inc., (Fed. Cir. Oct. 22, 2014), the Federal Circuit affirmed a district court ruling of no direct infringement for products that were manufactured, shipped, and delivered outside of the United States. Pulse manufactured electronic components outside the U.S. and delivered those components to contract manufacturers located outside the U.S. who incorporated the electronic components into products that were sold and shipped around the world. Some of these contract manufacturers were assembling products on behalf of U.S. companies. Agents of Pulse would travel to the U.S. to engage in general price negotiations with these U.S. companies. Pulse employees also met regularly with these U.S. companies to assist with design, review samples, attend sales meetings, and provide post-sales technical support. The U.S. companies, however, did not buy directly from Pulse. Instead, the contract manufacturers would purchase the electronic components from Pulse at the price negotiated by the U.S. companies and then invoice the U.S. companies for the price of the entire product, not just the components purchased from Pulse.
Although sales related activity occurred in the U.S., the Federal Circuit did not find that determinative because that activity did not constitute a final contract. It was undisputed that the contract finalization, manufacture, and delivery of goods all occurred outside the U.S. The U.S. sales related activity did not constitute an offer for sale in the U.S. either. For an offer to sell to be infringing, the location of the contemplated sale controls. Here, the location of the sale of the electronic components was outside the U.S. The Federal Circuit supported its holding by relying on the presumption against extraterritorial application of United States laws, particularly in patent cases.
In Ziptronix, Inc. v. Omnivision Techs., Inc. (N.D. Cal., Oct. 21, 2014), a district court came to a similar conclusion. In this case, defendant TSMC supplied its U.S. subsidiary, TSMC NA, price quotations for allegedly infringing wafers. TSMC NA then sent the price quotations to Omnivision, another U.S. company. If Omnivision agreed to the terms, one of its foreign subsidiaries would place a purchase order to TSMC NA. TSMC NA would then transmit the necessary information to TSMC who manufactured and delivered the products outside the U.S. to Omnivision's foreign subsidiary. Because the manufacture, sale, and delivery of the accused products occurred outside the U.S., the district court granted summary judgment of no direct infringement by TSMC or TSMC NA. The presence of two U.S. companies involved in the transaction and limited activity in the U.S. was not enough to constitute direct infringement of a U.S. patent when the bulk of the activity occurred outside the U.S. Like inHalo, the district court relied on the presumption against extraterritorial application of U.S. laws.