Chapter §18.03 Importation Under 35 U.S.C. §271(g)

• Jurisdiction: United States

§18.03 Importation Under 35 U.S.C. §271(g)

Like §271(f), 35 U.S.C. §271(g) also concerns acts that take place, in part, outside the geographic borders of the United States. The statute provides as follows:

(g) Whoever without authority imports into the United States or offers to sell, sells, or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, offer to sell, sale, or use of the product occurs during the term of such process patent. In an action for infringement of a process patent, no remedy may be granted for infringement on account of the noncommercial use or retail sale of a product unless there is no adequate remedy under this title for infringement on account of the importation or other use, offer to sell, or sale of that product. A product which is made by a patented process will, for purposes of this title, not be considered to be so made after—

(1) it is materially changed by subsequent processes; or

(2) it becomes a trivial and nonessential component of another product. ²³²

In contrast with §271(f), which involves exports, §271(g) involves imports.

[A] Process Patent Amendments Act of 1988

Section 271(g) is particularly important for biotechnology firms that hold method or process patents. In many cases such firms may obtain patents on innovative biotech processes for making known products, such as a novel recombinant method for obtaining insulin needed by patients suffering from diabetes. Prior to the enactment of §271(g) in 1988, a U.S. process patent owner had no recourse under the Patent Act²³³ against a competitor who carried out the process abroad (where it would not violate the U.S. process patent) and imported the product (which was not protected by U.S. patent) into the United States.

By enacting §271(g) in 1988 as part of the Process Patent Amendments Act,²³⁴ Congress closed the loophole and brought this aspect of U.S. patent law into conformity with that of other nations.²³⁵ Although prior to the Process Patent Amendments Act a patentee had some recourse to remedies available from the International Trade Commission, Congress recognized that greater protection was needed. As the Federal Circuit has explained:

The history of the enactment of the Process Patents Amendments Act is quite long. See Eli Lilly & Co. v. American Cyanamid Co., 82 F.3d 1568, 1574 (Fed.Cir.1996). Section 271(g) was not enacted on an entirely blank slate. Rather, it was designed to provide new remedies to supplement existing remedies available from the International Trade Commission ("ITC") under 19 U.S.C. §1337 (2000). See H.R.Rep. No. 100-60 at 8–9. Section 1337 (Section 337 of the Tariff Act of 1930) defines "[u]nfair methods of competition" in import trade. 19 U.S.C. §1337(a)(1)(A) (2000). One of these statutory "unfair methods of competition" is the "[t]he importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer, or consignee, of articles that . . . are made, produced, processed, or mined under, or by means of, a process covered by the claims of a valid and enforceable United States patent." 19 U.S.C. §1337(a)(1)(B); see also 19 U.S.C. §1337(a)(1)(A) (referring to "unfair acts in the importation of articles"). When enacting §271(g), Congress recognized the availability of redress from the ITC, but noted that the remedies available thereunder were insufficient to fully protect the owners of process patents. H.R.Rep. No. 100-60 at 8–9. Thus, the legislative history suggests that section 271(g) was intended to address the same "articles" as were addressed by section 1337, but to add additional rights against importers of such "articles." ²³⁶

[B] Product Made by a Patented Process

The Federal Circuit has interpreted 35 U.S.C. §271(g) as limited to acts of infringement via importation of tangible goods or articles that were "manufactured" abroad in accordance with a U.S.-patented process; the statutory provision does not cover the importation of intangible "information."²³⁷

In Bayer AG v. Housey Pharms., Inc., Housey Pharmaceuticals' patents in suit were directed to screening methods for detecting substances that specifically inhibited, or activated, a particular protein. For example, if researchers discovered a link between the protein and a disease, the claimed methods provided a process for identifying the effect that different agents had on the activity of the suspect protein.²³⁸

Bayer AG and Bayer Corporation (collectively "Bayer") filed an action seeking a declaratory judgment that they did not infringe Housey's patents and that the patents were invalid and unenforceable. Housey's counterclaim alleged, inter alia, that Bayer infringed Housey's screening method claims under 35 U.S.C. §271(g). Housey asserted that its patented methods "were used by Bayer to make the characterization of a pharmacologically active agent."²³⁹

A district court interpreted Housey's §271(g) infringement allegation as having two components: (1) infringement by importation into or use in the United States of knowledge or information reflecting the identification or characterization of a drug acquired from using the patented methods; and (2) infringement by Bayer's sale in the United States of a drug that, by using Housey's patented methods, had been determined to be an inhibitor or activator of a target protein.²⁴⁰ On Bayer's motion, the district court dismissed Housey's §271(g) counterclaim under Fed. R. Civ. P. 12(b)(6), concluding that "[u]pon a plain reading of the statute, . . . Section 271(g) addresses only products derived from patented manufacturing processes, i.e., methods of actually making or creating a product as opposed to methods of gathering information about, or identifying, a substance worthy of further development."²⁴¹

The Federal Circuit in Bayer AG affirmed the district court's dismissal of Housey's §271(g) counterclaim. The central question, one of first impression, was whether the term "made" as used in §271(g) should be interpreted as limited to "manufactured." The appellate court concluded that it should. Although the statutory text itself was ambiguous, other provisions of the statute,²⁴² as well as its legislative history,²⁴³ indicated that in enacting §271(g), Congress was concerned "solely with physical goods that had undergone manufacture."²⁴⁴ Moreover, the Federal Circuit believed it prudent to "leave to Congress the task of expanding the statute if we are wrong in our interpretation."²⁴⁵

The Federal Circuit's interpretation of §271(g) as excluding importation of "information," rather than physical...