Patent Strategy Update: Court Curtails Extraterritorial Scope of Method Patents
February 15, 2010
Lahive’s Patent Strategy Updates report on recent developments in patent law and how they may affect your IP strategy.
Recent Developments
On January 11, 2010 the United States Supreme Court declined to hear the appeal of Cardiac Pacemakers Inc. v. St. Jude Medical, Inc., 576 F.3d 1348 (Fed. Cir. 2009). This leaves standing the en banc decision of the Court of Appeals for the Federal Circuit (CAFC) that 35 U.S.C. § 271(f) does not apply to methods patents and thus, does not afford protection against the practice of a patented method overseas with components supplied from the United States. This interpretation of Section 271(f) could have significant impact on some industries, especially in the biotechnology and IT (software) sectors.
Section 271(f) Does Not Apply to Method Patents
Section 271(f) of the patent statute was enacted in 1984 in response to a decision by the Supreme Court in Deepsouth Packing Co., Inc. v. Laitram Corp., 406 U.S. 518 (1972) which interpreted the patent law not to make it infringement where the final assembly and sale of a patented invention takes place abroad. Aiming to close this loophole, Congress enacted Section 271(f) to provide for patent infringement when the components of a patented invention are supplied from United States for assembly abroad. In Cardiac Pacemakers, the CAFC held that method and process inventions have no intangible “components” that can be “supplied” and, thus, are not “patented inventions” under Section 271(f).
In holding that Section 271(f) is not applicable to method claims, the CAFC focused on the language of the statute, in particular the words “component” and “supplied.” The CAFC held that a component of a method or process is a step in that method or process. This was a “fundamental distinction” from a component of a “tangible” product, device or apparatus. In addition, the CAFC held that Section 271(f) requires that the components be “supplied”, which means transferring a physical object instead of an intangible step of a method. The CAFC further relied on the context of the statute and its legislative history to “draw a clear distinction between methods and apparatus claims for purposes of infringement liability, which is what Section 271(f) is directed to.”
Judge Newman was the sole dissenter on the en banc panel of the CAFC. She argued that the Court’s holding misinterpreted and ignored statutory text, legislative history, precedent and statutory purpose. In Judge Newman’s view, the “statute is aimed at evasion of United States patents, and is not limited to any particular class of patentable subject.”
In the majority’s view, however, the decision in Cardiac Pacemakers tracked the recent Supreme Court’s decision in AT&T Corp. v. Microsoft Corp., 550 U.S. 437 (2007), which held that Microsoft did not supply combinable components of a patented invention when it shipped master disks abroad to be copied. In the opinion of the majority, the Supreme Court “sent a clear message that the territorial limits of patents should not be lightly breached.”
IP Strategy Considerations
The Cardiac Pacemakers case illustrates the importance drafting appropriate composition or apparatus claims, whenever possible, in order to invoke the extraterritorial patent protection provided by Section 271(f). When a patent is restricted to method claims, like the patent in Cardiac Pacemakers, it may not provide protection under Section 271(f) for overseas sales. This may be of particular interest to biotechnology companies, where method claims may be the only claims available to protect certain therapeutic or diagnostic uses, or to some software companies who may be “supplying” software code for sale or use outside of the United States. Careful consideration should be given to patent strategies that can compensate for the limited scope of Section 271(f.).
Contact Us
The likely outcome of any case rests on the particular facts of each client’s unique situation. For more information on how case law relating to Section 271(f) might affect your IP strategy, please contact:
Giulio A. DeConti, Jr. in the Life Sciences Group at 617.994.0771 or gdeconti@lahive.com.
Kevin J. Canning in the Software Group at 617.994.0732 or kcanning@lahive.com.
