SCOTUS: Patent owners can recover lost profits for overseas infringement

The US Supreme Court today ruled that patent owners can recover profits lost outside the US as a result of infringement in WesternGeco v Ion Geophysical.

In a 7-2 ruling, the Supreme Court reversed and remanded the US Court of Appeals for the Federal Circuit’s decision which had held that US patent law doesn’t apply outside the country so the profits could not be recouped.

The Supreme Court agreed to review the dispute between WesternGeco and competitor Ion Geophysical Corporation, which offers geoscience services, in January this year. WesternGeco had submitted its petition in February 2017.

Ion allegedly developed technology to rival WesternGeco’s seismic survey system and sold the product, which used elements of WesternGeco’s patented technology, to surveying companies outside the US.

In 2009, WesternGeco filed a claim for patent infringement at the US District Court for the Southern District of Texas, Houston Division. The jury found infringement and validity of all asserted claims, awarding WesternGeco $93.4 million in lost profits and $12.5 million of royalties.

Six years later, in July 2015, the Federal Circuit reversed the lost profits award and WesternGeco petitioned for certiorari in February 2016, just days after the oral arguments for Halo Electronics v Pulse Electronics had been heard.

The Supreme Court remanded WesternGeco to the Federal Circuit, “for further consideration in light of” Halo, which changed the landscape for determining damages in cases of wilful patent infringement.

In September 2016, the Federal Circuit held that the profits could not be recouped.

But today, the Supreme Court reversed and remanded the decision, effectively expanding the scope of US patent law.

Justice Clarence Thomas, on behalf of the court, said that in a case involving infringement under USC section 271(f)(2), the focus of section 284 USC, which states that “the court shall award the claimant damages adequate to compensate for the infringement”, is on the act of exporting components from the US.

Under section 271(f)(2), it is 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 the US in a manner that “would infringe the patent if such combination occurred within the US”.

He added that the lost profits award to WesternGeco was therefore a domestic application of section 284.

Brian Hanson, Ion’s president and CEO, said: “While we are disappointed with the Supreme Court's ruling, and believe that the type of lost profits WesternGeco is seeking should be categorically unavailable, the Federal Circuit has yet to determine whether they are available to WesternGeco in this case because they never opined on an argument we made and that we preserved.”

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