Exportability's Effect on Process Patent Enforcement: Why Section 271(f) Export Restrictions Do Not Apply to Intangible Process Claims

• Citation: Vol. 6 No. 3
• Publication year: 2011

Washington Journal of Law, Technology and Arts Volume 6, Issue 3 Winter 2011

Exportability's Effect ON Process Patent Enforcement: Why § 271(F) Export Restrictions Do Not Apply TO Intangible Process Claims

Homer Yang-hsien Hsu(fn*)

Abstract

Congress enacted 35 U.S.C. § 271(f) to broaden U.S. patent protection and prohibit shipping patented devices in smaller components for assembly overseas. Section 271(f) creates an infringement cause of action for sending components outside the United States for assembly. Whether § 271(f)-which clearly applies to physical things-also applies to process claims has been hotly debated. In Cardiac Pacemakers, Inc. v. St. Jude Med Inc., the United States Court of Appeals for the Federal Circuit held that § 271(f) does not apply to process claims because a component of a process claim is an intangible step that cannot be physically supplied. This Article surveys the origins of 35 U.S.C. § 271(f), examines how courts applied the statute before Cardiac Pacemakers, analyzes the Federal Circuit's reasoning in Cardiac Pacemakers, and discusses implications for those with process claims. Although § 271(f) offers limited protection against acts giving rise to foreign commercial activity, Cardiac Pacemakers suggests patent attorneys should consider possible claims for tangible combinations elements occurring during performance of intangible processes.

Table of Contents

Introduction .................................................................................. 234

I. Origin of the Export Restriction in 35 U.S.C. § 271(f) ......... 236

II. Export Restriction Applies to Process Claims before Cardiac Pacemakers ................... 238

III. The Cardiac Pacemakers Decision and Its Reasoning ......... 239

IV. What Are the Components of a Process Claim? ................... 241

V. A Pragmatic Interpretation: Cannot Be Supplied, Cannot Apply ...................................... 242

VI. Presumption against Extraterritoriality and Other Possible Factors ............................... 243

VII.Implications of the Cardiac Pacemakers Decision .............. 244

Conclusion ................................................................................... 245

Practice Pointers ........................................................................... 245

Introduction

Direct patent infringement occurs when the actions or products of an unlicensed party meet all the limitations of a patent claim, while inducement and contributory infringement occur when a party intentionally encourages or causes a third-party to infringe.(fn1) Inducement infringement occurs when a party intentionally encourages or otherwise causes a third party to infringe a patent.(fn2) Contributory infringement occurs when a party knowingly provides a material component within the United States that will be used in something covered by a patent.(fn3)

To provide stronger protection of products covered by U.S. patents, Congress enacted § 271(f) of the Patent Act, which expanded the definition of patent infringement to include exporting a substantial portion of the components of a patented invention "in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent ..."(fn4) The Act was clearly designed to prevent U.S. manufacturers from circumventing patent protections by shipping components out of the country for overseas assembly.

The statutory language does not, however, state whether § 271(f) also applies to intangible process claims. (A process claim, also known as a method patent, protects the series of steps taken to manufacture something.) Instead, the section applies to a "patented invention" and does not explicitly refer to more specific terms like "apparatus" or "process."(fn5) U.S. patent law does protect both apparatuses and processes; both could arguably be considered a "patented invention."(fn6) On the other hand, the statute refers to "components" and it has been asserted this signals the legislature's intent to exclude intangible methods. Such statutory ambiguities have been a source of longstanding confusion.(fn7)

Cardiac Pacemakers, Inc. v. St. Jude Med Inc.,(fn8) significantly changes the law because the United States Court of Appeals for the Federal Circuit ("Federal Circuit") overruled its 2005 Union Carbide Chemicals v. Shell Oil(fn9) decision and held that the export restriction in § 271(f) does not apply to process claims.(fn10) In reaching this decision, the Federal Circuit mainly relied on the United States Supreme Court's 2007 decision in Microsoft Corp. v. ATandT Corp. ("ATandT SC").(fn11) ATandT SC narrowly interpreted the export regulation and held master disks were not a § 271(f) component when sent abroad to be copied and then installed to form a would-be infringing system.(fn12) The Court had based its decision on the extraterritorial theory: Recognizing that § 271(f) is an exception to the general rule that our patent law does not apply extraterritorially, we resist giving the language in which Congress cast § 271(f) an expansive inter-pretation.(fn13) This Article first discusses the origins of § 271(f) and how courts prior to Cardiac Pacemakers applied the statute. This Article further analyzes the Cardiac Pacemakers decision and the Federal Circuit's reasoning, and then discusses the possible implications of the Cardiac Pacemakers decision.

I. Origin of the Export Restriction in 35 U.S.C. § 271(f)

U.S. patent law protects both tangible apparatuses and intangible processes.(fn14) A process claim is a patent claim whose subject matter is a process or a method.(fn15) Patent applicants can seek process claim protection on any new method for achieving certain useful results or any new way of utilizing existing substances. The statutory language used in § 271(f) to protect "any component of a patented invention" does not clearly indicate whether this section applies to both apparatus and process claims.

An apparatus claim has tangible elements as its components, while a process claim has intangible steps as its components. This difference between apparatus and process claims may cause distinct results when courts interpret or apply patent law to adjudicate a patent infringement case.

Prior to the enactment of § 271(f), U.S. law already recognized causes of action for contributory patent infringement(fn16) and inducement to infringe,(fn17) both of which are restricted to supplying tangible apparatuses and intangible processes within the United States. Section 271(f) partially expands these provisions to prohibit supplying a patented...