In a 7-2 decision issued late last month, the U.S. Supreme Court ruled that patentees can recover damages resulting from the exportation of certain components to foreign jurisdictions, where those components are then incorporated into an infringing system used outside of the United States. The Court’s decision reversed a Federal Circuit ruling that the patent holder could not receive lost profits stemming from overseas activity.
The patents-in-suit, each owned by plaintiff WesternGeco, involve technology for surveying the ocean floor using lateral steering. Defendant ION developed a competing system that infringed WesternGeco’s patents; ION manufactured components for its system in the U.S., then shipped the components overseas to foreign companies which assembled and used the infringing system. After losing a number of survey contracts to ION’s system, WesternGeco sued ION for infringement under Sections 271(f)(1) and (f)(2) of the Patent Act. A jury subsequently found ION liable and awarded WesternGeco nearly $95 million in lost profits damages. On appeal, the Federal Circuit reversed the lost profits award—concluding that Section 271(f) should be interpreted to exclude recovery of damages from lost foreign sales because it does not apply to extraterritorial activities. Continue Reading