Page 112 - Intellectual Property Disputes

Chapter 6

Other Considerations in Calculating Infringement Damages

Other Patent Damages Considerations

Foreign Sales and Foreign Manufacturing

In general, patent holders do not have recourse for the foreign use of U.S. patents outside of the United
States unless certain conditions are met. USC 35, Section 271(f) was enacted following the U.S.
Supreme Court’s decision in Deepsouth Packing Co., Inc. v. Laitram Corp. fn 1 35 USC 271(f) states the
following:

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 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 shall be liable as an infringer. fn 2

In Deepsouth Packing, the court acknowledged that liability for infringement could be avoided by
manufacturing parts in the United States and then shipping them separately overseas for assembly by
customers.

In Eolas Technologies Inc. v. Microsoft Corp., Judge Rader affirmed the district court’s finding that the
construction of 35 USC 271(f) implicates software code on golden master disks as components.
Microsoft argued that the golden master disks containing Windows source code did not equate to the
provision of a component of an infringing product and that the disk was not a physical part of a product.
Judge Rader, however, concluded that "the software code on the golden master disk is not only a
component, it is probably the key part of this patented invention. Therefore, the language of Section
271(f) in the context of Title 35 shows that this part of the claimed computer product is a ‘component of
a patented invention.’" fn 3

Judge Rader interpreted the reference to components of a "patented invention" to be "broad and
inclusive" and stated that "every form of invention eligible for patenting falls within the protection of
section 271(f)." By extension, Judge Rader concluded that "the statute did not limit section 271(f) to
‘machine’ components or ‘structural or physical’ components. Rather every component of every form of
invention deserves the protection of section 271(f)." Judge Rader cited Rotec Industries, Inc. v.
Mitsubishi Corp. in explaining that "Section 271(f) closed that obvious loophole in the statutory
protections for patented inventions." In addition, Judge Rader cited the Congressional Record (130
Cong. Rec. H10525 [1984]), which also referred to "correcting a loophole." Finally, the appellate court
found that the statute "does not impose a requirement of ‘tangibility’ on any component of a patented

fn 1 Deepsouth Packing Co., Inc. v. Laitram Corp., 406 U.S. 518 (1972).

fn 2 35 USC 271(f).

fn 3 Eolas Techs. Inc. v. Microsoft Corp., 399 F.3d 1325 (Fed. Cir. 2005).

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