SCOTUS asks for government views in patent profits suit
The US Supreme Court has asked the government for its views in a patent infringement dispute, WesternGeco v Ion Geophysical.
Yesterday, the acting solicitor general, Jeffrey Wall, was invited to file a brief expressing the view of the US.
The court is expected to answer the question of “whether the US Court of Appeals for the Federal Circuit erred in holding that lost profits arising from prohibited combinations occurring outside of the US are categorically unavailable in cases where patent infringement is proven under 35 USC section 271(f)”.
Under section 271(f) it’s an act of patent infringement to supply “components of a patented invention” from the US with the knowledge or intention that the components are to be combined “outside of the US” in a manner that “would infringe the patent if such combination occurred within the US”.
In September last year, the Federal Circuit reheard the dispute, after it was vacated and remanded from the Supreme Court “for further consideration in light of” Halo Electronics v Pulse Electronics, which changed the landscape for determining damages in cases of wilful patent infringement.
Geophysical services company WesternGeco had sued Ion Geophyiscal, a geoscience firm, for infringement of US patents 6,691,038; 7,080,607; 7,162,967; and 7,293,520.
The jury found infringement and no invalidity of all asserted claims. It awarded WesternGeco $93.4 million in lost profits and a reasonable royalty of $12.5 million.
Ion’s infringement was found to have been subjectively reckless under the “subjective” prong of the then prevailing two-part test articulated in the case In re Seagate.
WesternGeco then moved for enhanced damages for wilful infringement under 35 USC section 284, while Ion asked for judgment as a matter of law of no wilful infringement.
Both requests were denied, so the companies appealed to the Federal Circuit.
In July 2015, the Federal Circuit reversed the lost profits award, holding that WesternGeco was not entitled to lost profits resulting from foreign uses of its patented inventions.
It also unanimously affirmed the district court’s denial of WesternGeco’s motion for enhanced damages, holding that Ion’s non-infringement and invalidity defences were not objectively unreasonable and that the objective prong of the Seagate test had not been met.
WesternGeco petitioned for certiorari in February 2016, just days after the oral arguments for Halo had been heard.
The Supreme Court rejected the Seagate test in June 2016 in Halo, returning the interpretation to a subjective test.
The highest court in the US then granted certiorari in the dispute and remanded the decision to the Federal Circuit.
On remand, the Federal Circuit vacated the district court’s judgment with respect to enhanced damages for wilful infringement and reinstated its earlier opinion and judgment in all other respects.
In February this year, WesternGeco filed a writ of certiorari, arguing that despite finding Ion liable for infringement under section 271(f), the panel held that WesternGeco wasn’t entitled to lost profits.
“The Federal Circuit reasoned that even when Congress has overridden the presumption against extraterritorial application of the law in creating liability, the presumption must be applied a second time to restrict damages,” said WesternGeco’s petition.
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