Chapter §14.03 Territoriality Aspects of §271(a)

• Jurisdiction: United States

§14.03 Territoriality Aspects of §271(a)

[A] Introduction

By their nature, patents are territorial legal instruments—the rights to exclude others that patents grant to their owners are generally limited by the geographic borders of the granting country. With respect to direct infringement under 35 U.S.C. §271(a), such infringement must involve acts occurring in the United States. The statute includes a specific geographic limitation to U.S. activity, providing that "[e]xcept as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent."¹³³

The Supreme Court has recognized the "general rule under United States patent law that no infringement occurs when a patented product is made and sold in another country."¹³⁴ As the Federal Circuit has explained,

[t]he territorial reach of section 271 is limited. Section 271(a) is only actionable against patent infringement that occurs within the United States. See Pellegrini v. Analog Devices, Inc., 375 F.3d 1113, 1117 (Fed.Cir.2004) ("[As] the U.S. Supreme Court explained nearly 150 years ago in Brown v. Duchesne, 60 U.S. (19 How.) 183, 15 L.Ed. 595 (1856), . . . the U.S. patent laws 'do not, and were not intended to, operate beyond the limits of the United States.' "); Rotec Indus., Inc. v. Mitsubishi Corp., 215 F.3d 1246, 1251 (Fed.Cir.2000) (stating that "extraterritorial activities . . . are irrelevant to the case before us, because 'the right conferred by a patent under our law is confined to the United States and its territories, and infringement of this right cannot be predicated on acts wholly done in a foreign country' " (emphasis added) (quoting Dowagiac Mfg. Co. v. Minn. Moline Plow Co., 235 U.S. 641, 650, 35 S.Ct. 221, 59 L.Ed. 398 (1915))). ¹³⁵

The territoriality discussion in this section of the treatise focuses on direct infringement under §271(a). Other subsections of 35 U.S.C. §271 recognize limited exceptions to the territoriality rule. For example, §271(f), discussed infra,¹³⁶ is an exception to the general rule that involves acts of infringement completed outside the geographic borders of the United States but begun by inducing or contributory activity within the United States. Section 271(g) likewise concerns acts that take place, in part, outside U.S. geographic borders.¹³⁷

[B] Use of Processes or Methods Within the United States

"[D]irect infringement of a method claim requires that each of the claimed steps are performed within the United States."¹³⁸ This territoriality standard was not satisfied in the Federal Circuit's 2012 decision, Meyer Intell. Props. Ltd. v. Bodum, Inc.¹³⁹ Meyer Intellectual Properties Ltd. ("Meyer") owned patents directed to a method for frothing liquids such as milk.¹⁴⁰ A district court granted Meyer summary judgment that defendant Bodum, Inc. ("Bodum"), a company that designed and sold housewares such as milk frothers and French press coffee makers, directly infringed by using Meyer's claimed method under 35 U.S.C. §271(a). The district court's judgment was based on its assumption that an " 'established company' " such as Bodum must have tested its products before placing them on the market.¹⁴¹ The district court reasoned that in testing Bodum's "Version 2" milk frother, Bodum " 'necessarily infringe[d] the patented method when [the frother was] operated as directed.' "¹⁴²

The Federal Circuit rejected the district court's reasoning and reversed its grant of summary judgment of infringement. Even if the district court's theory of infringing use via product testing was correct, the trial testimony of Bodum's CEO negated any assumption of use within the United States. Bodum's CEO testified that he conducted product development with a design team consisting of "five people in Hong Kong and fifteen people in Switzerland."¹⁴³

Thus, the record in Meyer provided "no evidence that Bodum used or tested its milk frother products in the United States."¹⁴⁴ Patentee Meyer had failed to show any other instances of direct infringement by the accused Version 2 frother. Because a method claim is directly infringed only if each of its recited steps is performed within the United States, "the evidence of record [was] insufficient as a matter of law to support the [district] court's decision granting summary judgment."¹⁴⁵

[C] "Beneficial Use" Doctrine

The Federal Circuit in 2005 adopted an expansive reading of the "within the United States" territorial limitation of §271(a) for uses of claimed systems (rather than processes or methods). In the NTP, Inc. v. Research In Motion, Ltd. case introduced supra,¹⁴⁶ the Circuit applied a "beneficial use" doctrine to sustain a finding of infringement of patentee NTP's system claims even though part of the accused system was located outside the United States.

NTP's patented invention involved integrating existing electronic mail (e-mail) systems with radio frequency (RF) wireless communication networks so that mobile users could receive e-mail over a wireless network.¹⁴⁷ Some of the asserted claims of NTP's patents were drafted as claims to electronic mail systems.¹⁴⁸ The accused infringer, Research In Motion, Ltd. (RIM), a Canadian corporation with its principal place of business in Ontario, sold the well-known "BlackBerry" wireless e-mail system. Users of the Blackberry system satisfied the "interface switch" limitation of NTP's system claims by utilizing RIM's "Relay," a piece of equipment in RIM's wireless network that was physically located in Canada (outside U.S. borders).¹⁴⁹ RIM identified its Relay as the "control point" of its accused system, and argued that consumers using the Blackberry system could not be direct infringers under §271(a) because of the Relay's extraterritorial location.

The Federal Circuit rejected RIM's argument, relying chiefly on a 1976 decision by one of its two predecessor courts, the Court of Claims. In Decca Ltd. v. United States,¹⁵⁰ a patentee sued the United States for use and manufacture of a radio navigation system in an action brought under 28 U.S.C. §1498. The system was used to pinpoint the location of ships and planes on or over the sea. Asserted claim 11 of Decca's patent in suit required that the system comprise three stations transmitting signals; a receiving ship or aircraft then calculated position by the time difference in the three signals. Notably, one of the three transmitting stations of the government's accused navigation system was located in Norway rather than the United States.

The trial judge in Decca concluded that the Supreme Court's Deepsouth decision, requiring an "operable assembly of the whole" in the United States, was not controlling:

[P]laintiff [Decca] is correct that Deepsouth really is not in point since that case dealt with a situation where the operative assembly of the claimed combination was completed and used wholly outside the United States. Here, only a portion of the claimed combination, one transmitter out of the requisite three, is located outside the United States while the beneficial use of the completed assembly actually occurs within the jurisdiction of the United States, when either a vessel or an airplane equipped with an [accused] Omega receiver and owned by the defendant [United States] receives and utilizes the signals in the manner claimed. Also, in Deepsouth, by the time the combination was assembled, all the elements of the combination had been sold and were in the hands of someone other than the domestic manufacturer. Here, all of the equipment in Norway was purchased by the United States, installed by the United States, continues to be owned by the United States, was operated initially by the United States and it operate[s] today for the benefit of the United States under the direction and control of the United States. On these facts, Deepsouth cannot be considered to be controlling here. ¹⁵¹

Instead, Decca could be resolved more straightforwardly as a case of infringing "use[]" rather than "mak[ing]":

[when a]nalyzed from the standpoint of a use instead of a making by the United States, a somewhat clearer picture emerges. The transmission from the Norwegian station is controlled by the United States in the sense that it established and continuously monitors the signals from that station, and this all occurs in the United States. In addition, defendant established through the use of atomic clocks . . . the necessary synchronization of that station and part of that activity occurred in this country. Further, it is from the United States all actions are taken to ensure synchronization of the transmissions of that station with those in the United States. In other words, it is obvious that, although the Norwegian station is located on Norwegian soil, a navigator employing signals from that station is, in fact, 'using' that station and such use occurs wherever the signals are received and used in the manner claimed.

In view of the foregoing, and while the matter is not free from doubt, it is concluded that a basis for liability under claim 11 has been shown. This conclusion does not rest on any one factor but on the combination of circumstances here present, with particular emphasis on the ownership of the equipment by the United States, the control of the equipment from the United States and on the actual beneficial use of the system within the United States. In addition, one other consideration that should be mentioned is that it is clear from both the specification of the patent and the claim that the patentees' contribution was not in the manner by which a transmitter generated and radiated the signals, but rather it was in a system in which signals having a particular relationship were received from spaced sources and utilized in the receiver to arrive at a position fix. Had it been otherwise, that is,

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