The Supreme Court increased patent indirect infringement liabilities for companies that make and sell some but not all of the components of the patented product here in the United States then assemble the patented product overseas. For example, if a competitor makes more than one but not all of the components of the patented product here in the United States, a patent owner can now threaten that company with patent indirect infringement under §§ 271(f)(1) and (2).
I. S. Ct. defines “substantial” for indirect infringement under Section 271(f)(1)
In Life Technologies v. Promega (S. Ct. 2017), the Supreme Court defined how the term “substantial” in §271(f)(1) is to be interpreted. In particular, the Supreme Court indicated that the term “substantial” refers to a quantitative aspect and not a qualitative aspect. This is better understood in context after reading §271(f)(1) directed to the active inducement of infringement under the broader term indirect infringement.
Section 271(f)(1) states that:
“whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of the 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.” (emphasis added).
II. Section 271(f)(1) involves either all or a substantial portion of the components of the patented invention
Section 271(f) deals with two different types of indirect infringement situations. One where the competitor manufactures all of the components of the patented product but assembles them overseas. The other is where the competitor manufactures a substantial portion of the components of the patented invention.
If a competitor attempts to avoid patent infringement liability by making all of the components of the patented invention here in United States but assemble the components outside of the United States to avoid patent infringement liability, § 271(f)(1) prevents these competitors from avoiding patent infringement liability.
III. S. Ct. defines “substantial” only in reference to quantitative aspect, not qualitatively
In Life Technologies, the Supreme Court only dealt with determining the meaning of the word “substantial” in Section 271(f) for indirect infringement. In particular, the Supreme Court removed the qualitative aspect of the component in determining whether the manufacture of any component is substantial. The Supreme Court is directing the lower courts to conduct a pure numerical analysis on the number of components that the competitor made to determine whether that number would be a substantial portion of the components of the patented invention under § 271(f)(1).
Based on Life Technologies, it is now unknown whether a competitor can avoid patent infringement liability by making some of the components of the patented invention in the United States but assembling these components outside of the United States. Section 271(f)(1) makes manufacturing less than all of the components of the patented invention an infringement of the patent if patent owner can show that the competitor made a substantial portion of the components of the patented invention.
IV. Lower courts need to litigate how to determine the number of components of the patented invention and what is a substantial portion of the components
The issue in Life Technologies was what constitutes a substantial portion of the components of the patented invention. Does manufacturing only one of the components of the patented invention in the United States constitute “substantial”? What if that one component was the crucial component of the patented invention, would manufacturing of that one component be “substantial”? Under Life Technologies, the importance of the component is not relevant to determination of whether that component is substantial. The number of components of the invention is important. The issue now is how many components of the patented invention must be made in the United States to constitute “substantial”?
The Supreme Court defined “substantial” in Life Technologies as being solely related to the numerical aspect. However, the Supreme Court left a lot of the work for the lower courts to hash out with respect to the definition of “substantial.” The black letter law is that the term “substantial” does not refer to the qualitative aspects of the components but solely refers to the quantitative number of components manufactured here in the United States. Also, the Supreme Court expressly found that a competitor could not be liable for patent indirect infringement under § 271(f)(1) if the competitor only made a single component. One component could never be considered a substantial portion.
V. Sections 271(f)(1) and (2) work together to global patent indirect infringement
This does not mean that the company will avoid patent infringement liability, it just means that the company will avoid patent infringement liability under 271(f)(1). The statute also has another section, §271(f)(2) (contributory infringement) which works together with §271(f)(1), which recites that:
“whoever without authority supplies or causes to be supplied in or from the United States any component of the patented invention that is specially made or specially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe a patent if such combination occurred within the United States, shall be liable as an infringer.”
So long as the one component is not especially made or especially adapted for use in the patented invention or is a staple article or commodity, then under § 271(f)(2), there would be no infringement under this section as well.
A company that manufactures more than one but less than all of the components of the patented invention, may be liable for patent infringement liability but the issue now needs to be litigated.
Second, the Supreme Court in the footnote made clear that this decision had nothing to say on how to identify the components or the number of components of the patented invention or whether and how the inquiry relates to the elements of the patent claim. In other words, the Supreme Court is leaving it to the lower courts to come up with a framework on how to identify the number of components of a patented invention and the number of components that needs to be made in the U.S. to constitute a substantial number.
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