Patent Law - 35 U.S.C. s. 271(g) Does Not Impose Single-Entity Requirement - Syngenta Crop Protection, LLC v. Willowood, LLC.

• Author: Stewart-Sloan, Charlotte

Patent Law--35 U.S.C. [section] 271(g) Does Not Impose Single-Entity Requirement--Syngenta Crop Protection, LLC v. Willowood, LLC, 944 F.3d 1344 (Fed. Cir. 2019), cert. denied, No. 19-1147, 2020 U.S. LEXIS 4735 (U.S. Oct. 5, 2020).

U.S. law gives patentees the right to prevent others from using their inventions in the United States. (1) 35 U.S.C. [section] 271(g) extends this protection by allowing patentees to prevent others from importing products made by patented processes. (2) In Syngenta Crop Protection, LLC v. Willowood, LLC, (3) the U.S. Court of Appeals for the Federal Circuit (CAFC) considered whether a patentee pursuing an action for infringement under 35 U.S.C. [section] 271(g) must show that the relevant patented process was performed by a single entity or whether the patentee merely needs to show that all of the steps of the patented process were performed prior to the product's importation. (4) After considering this statute's language and legislative history, the CAFC concluded that 35 U.S.C. [section] 271(g) only requires the patentee to do the latter. (5)

On December 8, 1998, the U.S. Patent Office issued U.S. Patent No. 5,847,138 ('138 Patent) to Imperial Chemical Industries PLC. (6) Imperial Chemical Industries PLC subsequently spun off its agricultural chemicals business to a new company called Zeneca in 1993. (7) Zeneca later merged with Astra, from which it was ultimately spun off to merge with Novartis' agricultural chemicals business to form Syngenta. (8) The '138 Patent includes claims that encompass a process for forming azoxystrobin. (9) These claims comprise two steps: an initial etherification step and a subsequent condensation step. (10)

The three defendants, Willowood, LLC (W-LLC); Willowood USA, LLC (WUSA); and Willowood Limited (W-China) (collectively, Willowood), sought to sell their own azoxystrobin products. (11) Pursuant to this objective, in 2013, WUSA purchased five kilograms of azoxystrobin from W-China, a Chinese chemical distributor. (12) W-China had obtained this azoxystrobin from Yang-cheng Tai He Chemicals Corp. (Tai He). (13) Upon receipt of the Tai He-synthesized azoxystrobin, W-USA and W-LLC engaged third parties to prepare azoxystrobin formulations. (14) W-USA and W-LLC then sought EPA approval for these formulations in order to market and sell them. (15)

On March 27, 2015, Syngenta sued Willowood in the Middle District of North Carolina, asserting that Tai He used the method claimed in the '138 Patent to synthesize the azoxystrobin purchased by W-USA from W-China, and that WUSA was thus liable for infringing the '138 Patent under 35 U.S.C. [section] 271(g).16 Syngenta did not prove to the jury that Tai He either performed or controlled the performance of both the etherification step and the condensation step. (17) Lacking explicit instructions from a higher court as to whether 35 U.S.C. [section] 271(g) required such a showing, the Middle District of North Carolina held that it did not. (18) In so concluding, the Middle District of North Carolina simply stated that it would interpret 35 U.S.C. [section] 271(g) to impose the same single-entity requirement as 35 U.S.C. [section] 271(a), which sets forth what a patentee must show to establish patent infringement by the domestic actions of another party. (19) The CAFC disagreed with the Middle District of North Carolina's reasoning, holding that 35 U.S.C. [section] 271(g) explicitly describes the relevant single entity as the importer, not the manufacturer. (20) The CAFC also gave great weight to 35 U.S.C. [section] 271(g)'s legislative history, determining that Congress intended for 35 U.S.C. [section] 271(g) to prevent patentees' competitors from avoiding their patents by merely shifting manufacturing offshore and then importing products made by patented processes back into the United States for subsequent sale. (21)

When a court interprets a statute, it begins with the statute's language. (22) First, the court assesses whether the language has a clear and unambiguous meaning. (23) This analysis is performed in the context of the statute as a whole. (24) If the statute's language alone is insufficient to clarify its meaning, courts then look to its legislative history to ascertain congressional intent for the statute. (25) Courts also recognize a strong presumption that statutes do not have extraterritorial effect. (26)

Section 271(g) of Title 35 dates back to 1988. (27) At that time, Congress was concerned about a perceived loophole in the law that would allow U.S. entities to avoid infringing process patents, but still gain the benefits associated with practicing them, by performing the claimed processes abroad and then importing the resultant products into the United States. (28) To close this potential loophole, Congress enacted 35 U.S.C. [section] 271(g), which holds entities that import products made by patented processes liable for infringement. (29) Accordingly, prior CAFC decisions have characterized 35 U.S.C. [section] 271(g) as giving patentees protection against overseas entities commensurate with the protection they enjoy against domestic entities. (30) Prior to the enactment of this statute, patentees could sometimes preclude their competitors from importing such products with the assistance of the International Trade Commission (ITC). (31) ITC actions were, and remain, a comparatively undesirable option because the ITC cannot award damages and requires findings beyond patent infringement before it can issue any remedy. (32)

The other subsections of 35 U.S.C. [section] 271 also inform the interpretation of subsection (g). (33) Subsection (a), which causes entities to incur liability for making or using a patented invention without authorization, has been interpreted to require a single entity (possibly as one member of a joint entity) to perform or control the performance of all steps of a patented process to infringe the patent claiming that process. (34) Subsection (b), which causes inducers of infringement to incur liability, has been understood to require an act that would constitute infringement under one of the other subsections and, therefore, to have the same entity requirement as the subsection under which such infringement is alleged. (35) Subsection (f), which was enacted only four years prior to subsection (g), identifies the entity incurring liability as the entity that "without authority supplies or causes to be supplied ... the components of a patented invention." (36) Notably, Congress enacted subsection (f) to explicitly overrule the Supreme Court's decision in Deepsouth Packing Co. v. Laitram Corp. and provide actionable claims against entities seeking to avoid the technicalities of the law by shifting their operations abroad. (37)

In Syngenta Crop Protection, LLC v. Willowood, LLC, the CAFC held that 35 U.S.C. [section] 271(g) imposes liability on an entity for importing a product manufactured abroad by a patented process, even when the patented process is performed by two or more entities. (38) The CAFC highlighted that 35 U.S.C. [section] 271(g) specifically precludes importation of products made by patented processes and assigns liability to whoever performs this forbidden importation. (39) Thus, according to the CAFC, 35 U.S.C. [section] 271(g) is unconcerned with the identity of the actor or actors performing the process that results in the product whose importation is forbidden. (40) The CAFC then noted that this language differs from that in 35 U.S.C. [section] 271(a), which has a single-entity requirement, as that subsection assigns liability to whoever "makes, uses, offers to sell, ... sells ... or imports ... any patented invention." (41) The CAFC also noted that 35 U.S.C. [section] 271(f) specifically prohibits inducing action in the United States, and so held that the absence of similar language in 35 U.S.C. [section] 271(g) strongly implies that 35 U.S.C. [section] 271(g) does not have an analogous requirement. (42) Finally, the CAFC analyzed the Senate Report that accompanied 35 U.S.C. [section] 271(g)'s enactment and held that it supported the conclusion that 35 U.S.C. [section] 271(g) is directed to deterring importation of products and is indifferent as to the entities that manufactured them. (43)

The CAFC's decision effectuates Congress's intent for 35 U.S.C. [section] 271(g) by protecting patent holders' interests from competition with foreign entities who wish to shield themselves from liability by practicing in countries that allow less extensive discovery than the United States. (44) Nevertheless, the CAFC did not analyze this statute's plain language as fully as it should have. (45)...