Our previous post concerning this matter only touched upon the extraterritorial application of patent damages because we expected that issue would be dealt with more fully in the future. That future is now our present!
The Supreme Court ruled that WesternGeco could receive lost profits based upon extraterritorial infringement of a U.S. patent.
WesternGeco represents itself to be a company which, “collaborates with you at every stage of the E&P life cycle to accelerate your discoveries in basins spanning the globe. From derisking prospects to optimizing reservoir monitoring, we have the expertise, digital capabilities, and seismic data to help you get to first oil faster and maximize your recoveries.” In plain English, the company makes big equipment used to find and recover oil and offers services towards those ends. Ion Geophysical appears to do the same thing.
The Supreme Court summarized the dispute between the two competitors as follows:
The Supreme Court pointed to a two-factor test. The first factor is “whether the presumption against extraterritoriality has been rebutted.” In this matter, however, the Court sidestepped the first factor, observing, “While ‘it will usually be preferable’ to begin with step one, courts have the discretion to begin at step two ‘in appropriate cases.'”
The second factor is “the [284] statute’s focus,” concerning which the majority concludes:
What fascinates A2C about this case is the dissenting opinion written by Justice Gorsuch and joined by Justice Breyer. In that dissent, Justice Gorsuch argues that the ruling on lost profits may prove to have reverberations throughout the global patent system and may result in other countries attempting to assert foreign patents in the United States. Justice Gorsuch writes, “Permitting damages of this sort would effectively allow U.S. patent owners to use American courts to extend their monopolies to foreign markets. That, in turn, would invite other countries to use their own patent laws and courts to assert control over our economy.”
Justice Gorsuch’s primary basis for dissent is the notion that U.S patent infringement outside of the United States does not exist. Products assembled abroad and put to use in a manner in line with claims of a United States patent does not constitute infringement because, by definition, infringement cannot occur outside of the United States:
Citing General Motors Corp. v. Devex Corp., Justice Gorsuch argues that the majority opinion on this matter would put “the patent owner in a better position than it was before by allowing it to demand monopoly rents outside the United States as well as within.” Justice Thomas rebutted this view for the majority by stating that the dissent, “wrongly conflates legal injury with the damages arising from that injury.” Citing to General Motors again, he wrote:
