Chapter §18.02 Component Exports Under 35 U.S.C. §271(f)
| Jurisdiction | United States |
§18.02 Component Exports Under 35 U.S.C. §271(f)
Subsection (f) of 35 U.S.C. §271 is a hybrid statutory provision that concerns acts of infringement that are completed outside the geographic borders of the United States but were begun by inducing or contributory activity within the United States. Thus, §271(f) involves certain extraterritorial activities, but those activities must have a nexus to acts occurring in the United States. Where that nexus is adequately established, §271(f) creates liability as an exception to the "general rule under United States patent law that no infringement occurs when a patented product is made and sold in another country."104
Section 271(f) of the Patent Act provides:
(f) (1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, 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 if such combination occurred within the United States, shall be liable as an infringer.
(2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
Thus, subparagraph (1) of §271(f) is analogous to inducing infringement under §271(b),105 while subparagraph (2) of §271(f) is analogous to contributory infringement under §271(c). But under either prong of §271(f), the exported component(s) are assembled outside of the United States in a manner that would infringe if the combination had occurred inside the United States.106
[A] Deepsouth Packing v. Laitram (U.S. 1972) and Legislative Response
Section 271(f) was enacted in 1984 to close a loophole in the Patent Act that came to light with the U.S. Supreme Court's 1972 decision in Deepsouth Packing Co. v. Laitram Corp.107 The Court in Deepsouth confronted a case of alleged patent infringement in which the various component parts of a patented shrimp deveining machine were separately sold by a U.S. manufacturer to foreign buyers, who then assembled the deveining machine beyond U.S. borders in countries such as Brazil.108 Was this offshore assembly actionable as a "making" of the patented invention under §271(a)?
The Supreme Court concluded that it was not, because it interpreted "making" to require final assembly or combination of the "operable whole,"109 and the final assembly in question did not occur within U.S. borders.110 Moreover, the Court refused to apply U.S. patent laws extraterritorially to make the foreign assembly an act of infringement in the United States.111 Because in the Deepsouth Court's view there was no act of direct infringement, the component supplier could not be held liable for contributory infringement under 35 U.S.C. §271(c).112
Enacted in 1984, Section 271(f) represents a legislative overruling of the Deepsouth decision.113 The two subparagraphs of §271(f) are structured so as to parallel the inducing and contributory infringement provisions of 35 U.S.C. §§271(b) and (c). More specifically, §271(f)(1) echoes the inducing infringement provisions of §271(b) to render infringing the act of supplying "in or from the United States all or a substantial portion of the components of a patented invention" in such a manner as to "actively induce the combination of such components outside of the United States."114 Similarly, §271(f)(2) echoes the contributory infringement provisions of §271(c) to render infringing the act of supplying "in or from the United States" a nonstaple component of a patented invention "intending that such component will be combined outside of the United States."115
[B] "Supplying or Causing to Be Supplied"
Federal Circuit decisions continue to grapple with the limits of extraterritoriality under 35 U.S.C. §271(f). For example, the potential infringement liability of one who "supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention" under §271(f)(1) does not extend to the mere supply of instructions or authorization from the United States, according to the Federal Circuit's decision in Pellegrini v. Analog Devices, Inc.116
Pellegrini's patent was directed to brushless motor drive circuits that incorporated integrated circuit chips. The chips fabricated and sold by accused infringer Analog Devices were manufactured entirely outside the United States and shipped only to customers outside the United States. Nevertheless, Pellegrini argued that because Analog's corporate headquarters was located in the United States and instructions for the production and disposition of the chips emanated there, the chips should have been regarded as "supplied or caused to be supplied in or from the United States."
The Federal Circuit disagreed, holding that the plain meaning of §271(f)(1) makes it applicable only where components of a patent invention are physically present in the United States and then either sold or exported "in such a manner as to actively induce the combination of such components outside the United States in a manner that would infringe the patent if such combination occurred within the United States." Here, the components (i.e., circuit chips) were not present in the United States prior to their combination offshore.
The language "supplying or causing to be supplied" in §271(f)(1) "clearly refers to physical supply of components, not simply to the supply of instructions or corporate oversight," the Pellegrini court concluded. "[A]lthough Analog may be giving instructions from the United States that cause the components of the patented invention to be supplied, it is undisputed that those components are not being supplied in or from the United States."117
[C] "Components"
The Federal Circuit distinguished Pellegrini in Eolas Techs., Inc. v. Microsoft Corp.118 The patent in suit in Eolas claimed a "computer program product" comprising inter alia a "computer usable medium having computer readable program code physically embodied therein." The claimed invention allowed a user to employ a Web browser in a fully interactive environment, for example, viewing news clips or playing games across the Internet. Eolas, the exclusive licensee of the patent, alleged that certain aspects of Microsoft's Internet Explorer (IE) browser incorporated the claimed invention. Eolas further contended that under 35 U.S.C. §271(f)(1), Microsoft's foreign sales of its IE browser should have been included in the damages base.
The legal dispute in Eolas centered on whether Microsoft's export to foreign manufacturers of certain "golden master" disks containing software code for the Microsoft Windows operating system (including code for the IE browser) constituted the supply of "components" under the statute. The foreign manufacturers used the golden master disks to replicate the software code onto computer hard drives for sale outside of the United States, but the golden master disks themselves did not become a physical part of any infringing product.
The Federal Circuit rejected accused infringer Microsoft's argument that "components of a patented invention" under §271(f)(1) must be limited to physical or tangible components, as suggested by Pellegrini. Rather, the Eolas court concluded, "every form of invention eligible for patenting falls within the protection of section 271(f)," and "software code claimed in conjunction with a physical structure, such as a disk, fits within. . . . the broad statutory label of 'patented invention.' "119 Exact duplicates of the software code on the golden master disks were incorporated into the ultimate products, and that code was "probably the key part" of the patented invention.
The Eolas court distinguished Pellegrini as requiring only that components are "physically supplied from the United States,"120 not that the components themselves must be physical. Pellegrini did "not impose on section 271(f) a tangibility requirement that does not appear anywhere in the language of that section."121
[1] Microsoft v. AT&T (U.S. 2007)
Eolas was not the only patent owner to allege a violation of §271(f) based on Microsoft's distribution of its Windows operating system software to foreign computer manufacturers. When the AT&T Corporation sued Microsoft for infringement under §271(f), the case eventually made its way to the Supreme Court. In Microsoft Corp. v. AT&T Corp.,122 the Court held that Microsoft's export of the golden master disks (or counterpart electronic transmissions) containing Windows software for copying and installation on foreign-made computers did not trigger infringement liability under §271(f).
AT&T's patent in suit was directed to apparatus for digitally encoding and compressing recorded speech. Microsoft's Windows operating system admittedly included code that enabled a computer to process speech per AT&T's patent claims. Importantly, however, the AT&T claims were infringed only when the relevant Windows code was installed on a computer; infringement of the claims occurred "only when a computer is loaded with Windows and is thereby rendered capable of performing as the patented speech processor."123
The key facet of Microsoft's distribution scheme that avoided infringement liability was that while Microsoft exported the disks (or sent electronic transmissions) containing the code capable of infringing AT&T's patent, those...
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