Supreme Court Limits § 271(f)(1) Overseas Infringement Reach: More than One Exported Component Required for Offshore Manufacturing Liability
Summary
The US Supreme Court held in Life Techs. Corp. v. Promega Corp., Slip No. 14-1538 (Feb. 22, 2017) that supplying a single component of a multi-component invention manufactured abroad does not give rise to patent infringement liability under section 271(f)(1) because a single component cannot constitute a substantial portion of an invention’s components for section 271(f)(1) purposes.
Background
Life Technologies Corporation (Life Tech) manufactures and sells genetic testing kits worldwide. Life Tech manufactured all but one component of its kits in the United Kingdom. The one component not made in the United Kingdom, Taq polymerase, was manufactured in the United States. Life Tech shipped the Taq polymerase to its United Kingdom facility, where it was combined with the other four components of the kits.1
Promega filed a patent infringement action against Life Tech alleging that supplying Taq polymerase from the United States to Life Tech’s United Kingdom manufacturing facilities triggered liability under section 271(f)(1), which imposes liability for supplying “all or a substantial portion of the components of a patented invention.” The jury returned a verdict for Promega, finding Life Tech liable for manufacturing Taq polymerase in the United States and shipping the Taq polymerase to a Life Tech facility in the United Kingdom where the Taq polymerase was combined with four other components to form the patented invention. The district court, however, overturned the jury verdict. The district court ruled that section 271(f)(1) does not encompass the supply of a single component of a multi-component invention and that Promega’s evidence at trial “showed at most that one component of all of the accused products, [the Taq] polymerase, was supplied from the United States.”
On appeal, the US Court of Appeals for the Federal Circuit reinstated the jury verdict. The Federal Circuit held that the sale of a single component can be sufficient to meet the 35 U.S.C. § 271(f) threshold requirement of supplying “all or a substantial portion of the components of a patented invention,” reasoning that “the ordinary meaning of ‘substantial portion’ suggests that a single important or essential component can be a ‘substantial portion of the components’ of a patented invention.” The Federal Circuit noted that Taq polymerase is an essential component of a genetic testing kit because the genetic testing kit is inoperable without Taq polymerase (which is required for polymerase chain reaction to occur). Therefore Taq polymerase constitutes a substantial portion of the patented invention under section 271(f)(1).
The Supreme Court granted certiorari on the limited question of:
Whether the Federal Circuit erred in holding that supplying a single, commodity component of a multi-component invention from the United States is an infringing act under 35 U.S.C. § 271(f)(1), exposing the manufacturer to liability for all worldwide sales.
The Statute at Issue
35 U.S.C. § 271(f)(1) reads as follows:
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.
By way of background, section 271(f)(1) was enacted to close a loophole in patent law uncovered in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972). In that case, the Supreme Court determined that, under patent law as it existed at the time, a manufacturer was not liable for patent infringement when the manufacturer made the components of an infringing product in the United States and then exported the parts to foreign buyers that assembled and used the completed machines abroad. Deepsouth, 406 U.S. at 527; see also Promega Corp. v. Life Techs. Corp., 773 F.3d 1338 (2014).
Supreme Court Decision
The Supreme Court reversed the Federal Circuit, ruling that the supply of a single component of a multi-component invention cannot be an infringing act under section 271(f)(1).
In reaching its decision, the Supreme Court first addressed whether the term “substantial,” as used in section 271(f)(1), refers to qualitative importance or to a quantitatively large size. Life Tech argued that the text of section 271(f)(1) establishes a quantitative threshold, and that the threshold must be greater than one. Promega defended the Federal Circuit’s reading of the statute, arguing that a “substantial portion” of the components includes a single component if that component is sufficiently important to the invention.
The Court started by acknowledging that “substantial,” as it is commonly understood, may refer either to qualitative importance or to a quantitatively large size. However, the context in which “substantial” appears in section 271(f)(1) led the Court to find that “substantial” has a quantitative meaning in the statute. Notably, certain other terms in section 271(f)(1), such as “all” and “portion,” convey a quantitative meaning. Additionally, statutory syntax also suggested a quantitative meaning.
After ruling that the term “substantial portion” refers to a quantitative measurement, the Court then addressed whether a single component can ever constitute a “substantial portion” that would trigger liability under section 271(f)(1). In answering no to this question, the Court concluded that the text, context and structure of section 271(f) made clear that when Congress said “components,” plural, it meant plural, and when it said “component,” singular, it meant singular. The Court explained that reading section 271(f)(1) to impose liability for a single component renders section 271(f)(2) superfluous because this section specifically refers to a single component “especially made or especially adapted for use in the invention.”
In a concurring opinion, Justice Samuel Alito noted that, while the Court’s decision establishes that more than one component is necessary to constitute a substantial portion of an invention’s components for section 271(f)(1) purposes, the decision does not address how much more.
Companies that use global manufacturing in which some of the components emanate from the US should consider freedom-to-operate strategies that minimize not only the qualitative nature of the exported components, but also their quantitative contribution toward a patented multi-component product. Exportation of a single important component is insufficient to invoke liability under section 271(f)(1) for offshore manufacturing.
1 The kits contained at least the following additional components: (1) a primer mix; (2) a PCR reaction mix including nucleotides; (3) a buffer solution; and (4) control DNA.