Power Integrations, Inc. v. Fairchild Semiconductor International, Inc. (US Court of Appeals, Fed. Cir., Mar. 26, 2013)

The Court of Appeals for the Federal Circuit held that damages awarded in a patent infringement case cannot include losses based upon sales outside the US.

Facts

At a trial to determine infringement and damages, a jury returned an award of substantial damages based on expert testimony regarding lost profits due to lost worldwide sales. The defendant attacked the award of damages because it was based on extraterritorial use of the patented inventions. The trial court agreed and reduced damages to an amount believed to represent the percentage of worldwide sales that took place in the US.

Analysis

The Court of Appeals agreed that the plaintiff was not entitled to damages resulting from sales outside the US. The court stated that “[i]t is axiomatic that U.S. patent law does not operate extraterritorially to prohibit infringement abroad.” The court specifically rejected the suggestion that the principle of “full compensation” in awarding damages in patent cases meant that one or more acts of infringement in the United States entitled a patent owner to recover damages for foreign sales that were the “direct and foreseeable” result of that domestic infringement, stating that “the entirely extraterritorial production, use or sale of an invention patented in the United States . . . cuts off the chain of causation initiated by an act of domestic infringement.”