This case presents the question whether an offer which is made in Norway by a U.S. company to another U.S. company to sell a product within the U.S. for delivery and use within the U.S. constitutes an offer to sell within the U.S. under 35 U.S.C.§ 271(a). That section provides that it is an infringement of a U.S. patent, inter alia, to offer to sell or to sell a patented invention in the United States. The Court of Appeals for the Federal Circuit (CAFC) concluded that on the facts presented here the answer to the question is "Yes," such an offer is an offer to sell under the statute.
Transocean Offshore Deepwater Drilling, Inc. (Transocean) sued Maersk Contractors USA, Inc. (Maersk USA) for infringement of three patents that relate to an improved apparatus for conducting off-shore drilling. The District Court granted summary judgment of invalidity of all asserted patent claims (based on obviousness and lack of enablement), noninfringement and no willfulness. On appeal, the Court of Appeals for the Federal Circuit reversed the grant of summary judgment of invalidity and affirmed the holding of summary judgment of no willfulness. The court vacated the summary judgment of noninfringement and remanded the case for further findings on infringement.
Transocean accused a specific rig of Maersk USA of infringement. Maersk USA's Danish parent company, Maersk A/S, negotiated the contract that is the subject of the alleged offer to sell with Statoil ASA (a Norwegian company) and came to an agreement for use of the rig. The contract was signed by Maersk USA and Statoil Gulf of Mexico LLC, both of which are U.S. companies. The contract specified that the "Operating Area" for the rig was the U.S. Gulf of Mexico and it mentioned U.S. patents held by Transocean. Maersk USA specifically retained the right to make alterations to the rig in view of "court or administrative determinations throughout the world."
Maersk did just that before the rig in question was delivered to the U.S. when Maersk USA learned of an injunction against another competitor that resulted from a patent infringement suit. Maersk USA modified the accused rig with the same casing sleeve permitted by that injunction in order to avoid infringement.
The District Court had determined that there was no offer to sell under 35 U.S.C. § 271(a) based upon the undisputed fact that the negotiation and signing of the contract in question took place outside the U.S. (in Norway) and the contract gave Maersk USA the option to alter the rig to avoid infringement.
The District Court also held that Transocean was collaterally estopped from arguing that the modified rig that Maersk USA delivered to Statoil infringed the patent claims, because that design had already been adjudicated as noninfringing in the prior litigation.
The CAFC recounted the historical background of the addition of the "offer to sell liability" to the United States Patent Code in order to conform to the April 1994 Uruguay Round's Trade-Related Aspects of Intellectual Property Agreement (TRIPS).
The CAFC recognized that the offer must be for a potentially infringing article and was mindful of the presumption against extraterritoriality. It reiterated the general rule under U.S. patent law that no infringement occurs when a patented product is made and sold in another country. The court agreed that the location of the contemplated sale controls whether there is an offer to sell within the United States. The court reasoned that the focus should not be on the location of the offer, but rather the location of the future sale that would occur pursuant to the offer. The CAFC then held that the District Court committed error because a contract between two U.S. companies for performance in the U.S. may constitute an offer to sell within the U.S. under § 271(a).
Because the District Court had held that the location of the offer (Norway) removed it from the statute as a matter of law it never reached the factual issue of whether the subject of the offer to sell was covered by the claims of the patents. The CAFC observed that on remand the District Court must determine whether the unmodified rig that was the subject of the offer to sell was the "patented invention." Likewise the District Court erred in granting summary judgment that there was no sale within the U.S. As with the offer to sell, there remains a dispute over whether the unmodified rig that was sold was the patented invention.
Finally the CAFC agreed with the District Court that because Maersk USA modified the rig to avoid infringement as provided for in the injunction entered in the other infringement action, Transocean was collaterally estopped from asserting that the modified rig infringed the patent claims.
Thus on remand the District Court must determine if the rig that was the subject of the offer for sale and the rig that was sold (but not brought to the U.S. or operated in the U.S.) was covered by the claims of the patents. If so – it would appear that there will be actual infringement of the patent claims (by either or both the offer for sale and the sale). But question what are the damages that the patentee can prove for what would appear to be this de minimus infringement?
It appears from the CAFC's repeated and precise use of the phrase "U.S. company" that the result here could be different if the contract in question was entered into outside the United States by companies that were not U.S. companies.