Some Foreign Activities Can Result in Liability for Patent Infringement Under US Patent Law

It is generally known that one who manufactures, uses, sells or offers to sell a product in the US or that practices a process in the US that is covered by one or more claims of a US patent is liable for patent infringement under US law.  Less well known is that certain activities involving activities outside of the US can give rise to a cause of action for patent infringement.

(1)       Importing a product manufactured by a patented process

Under US law one who imports into the US or offers to sell, sells or uses within the US, a product made by a process patented in the US is liable for patent infringement even if the process is practiced outside of the US.  35 U.S.C. 271 (g).  Thus, one cannot avoid claims to a patented process simply by making a product in accordance with the patented process overseas.

(2)       Importing unpatented components of a patented invention from a foreign supplier for use is an infringement in the US

A recent court case considered the authority of the US International Trade Commission (USITC) to issue exclusion orders barring importation of goods where the subject goods did not infringe as of the time of importation but were used by the importer to directly infringe a US patent at the inducement of the foreign supplier of the goods.  Section 337 of the Tariff Act of 1930 authorizes the USITC to investigate allegations of unfair trade acts in the importation of articles that infringe a valid United States patent.  19 U.S.C. § 1337(b)(1).  The Court of Appeals for the Federal Circuit (CAFC) recently held that the USITC has the authority under Section 337 of the Tariff Act to issue an exclusion order blocking the importation of products that do not directly infringe at the time of importation into the US where the foreign seller was inducing a direct infringement by the importer. The Court held that this position was reasonable because it was consistent with the mandate of the USITC to “safeguard United States commercial interests at the border” even absent a direct infringement at the border.  Suprema, Inc. et al. v. International Trade Commission et al., 2012-1170 at 26-27 (Fed. Cir. August 10, 2015). 

(3)       Exporting unpatented components of a patented invention for combination outside the US

Under US law 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 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.   35 USC 271 (f) (1). 

Assume a US manufacturer within the US exports one or more components of an invention that is the subject of a US patent.  If the US manufacturer instructs the customer to combine the one or more components so as to produce a product that would infringe the US patent if the product were made in the US, the US manufacturer is liable for infringement even though the patented invention was never made in the US. 

(4)       Exporting unpatented non-staple articles from the US constitutes an infringement of a US patent if the articles are intended to be combined outside of the US in a manner that would infringe a US patent if the combination occurred in the US

Under US law, Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially 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 the patent if such combination occurred within the United States, shall be liable as an infringer.  35 271 (f) (2).

Under this statute, a party can be liable for contributory infringement if the party is exporting a non-staple article of commerce that is intended for use in a product covered by a US patent even if the component, per se, is not covered by any claims of a US patent.  The party exporting the unpatented component will be liable  if the unpatented component is specifically adapted for use in a product covered by a US patent. Contributory infringement may be found  even if the combination of the unpatented component with other components to form the patented invention occurs outside of the United States. 

(5)       An offers for sale anywhere in the world may constitute an act of infringement if the product is ultimately to be used in or delivered to the US

An offer to sell a product that would infringe a US patent constitutes an act of patent infringement under US law.  In a recent decision, the Court of Appeals for the Federal Circuit held that, for purposes of infringement, an actionable offer to sell occurs when a company makes an offer outside of the US to sell a product that will ultimately be used in or delivered to the US. The act of offering the product covered by one or more claims of a US patent which was planned to be delivered to the United States was held to constitute the infringing act.

As noted above, there are exceptions to the general rule that the reach of a US patent ends at the US border.  It is therefore important to be aware that certain acts that occur in foreign countries can be actionable under US patent law.  Additionally, certain acts in the US that do not amount to a direct infringement can still be actionable if coupled with overseas activity that would constitute an infringement of a US patent if the activity occurred in the US. When questions arise regarding the applicability of US patents to foreign activities it is generally advisable to consult a specialist that deals with such matters.

Blog authored by Vic Lebovici, a member of Preti Flaherty's IP Practice Group.  

Closing the U.S. Border Gates Against Infringing Imports

Could infringing imports be jeopardizing your intellectual property rights without your knowledge? U.S. Customs and Border Protection (CBP) may be a valuable resource to protect your registered U.S. trademarks and copyrights, trade name, and U.S. patents at the border gates.

These benefits and protections to IP owners do not automatically follow issuance of a U.S. patent, trademark registration, or copyright registration, however. IP owners must take affirmative steps.

CBP is the primary federal agency responsible for securing America’s borders. With more than 60,000 employees, CBP monitors U.S. borders at and between 328 ports of entry, including more than 95,000 miles of shoreline, 1,900 miles of border with Mexico, and 5,000 miles of border with Canada. On a typical day, CBP welcomes nearly 1 million visitors, screens more than 67,000 cargo containers, arrests more than 1,100 individuals, and seizes nearly 6 tons of illicit drugs. CBP is also armed with the legal authority to detain, seize, examine, and forfeit or destroy infringing goods, and can make infringement determinations, subject to appellate review by U.S. federal courts. CPB is not required to establish personal jurisdiction over the importing party or prove intent to infringe to take enforcement action.

In fiscal year 2014, CBP processed 31.6 million trade entries, and seized approximately $1.2 billion worth of goods believed to infringe U.S. IP rights. The commodities that CBP seized in connection with more than 23,000 seizures included apparel and accessories, consumer electronics, pharmaceuticals and personal care products, footwear, watches, jewelry, optical media, computers and accessories, labels, tags, toys, and other goods. CBP analyzed samples and found intellectual property rights violations in commercial products that included integrated circuits, networking devices, gaming devices, and cell phones. Approximately 63% of the seized goods originated in China.

In comparison, CBP processed more than $2.3 trillion in trade in fiscal year 2013, including nearly 25 million cargo containers. CBP conducted more than 24,000 seizures of goods that violated intellectual property rights, with a total retail value of $1.7 billion, representing a 38 percent increase in value from fiscal year 2012.

To take advantage of CBP’s formidable IP enforcement resources and intercept foreign pirated, counterfeit, or gray market goods at the border, intellectual property owners may record U.S. trademark and copyright registrations and trade names with CBP. Owners of U.S. trademark registrations may also apply for “Lever rule” protection to prevent parallel imports of gray market goods, which are branded goods that are purchased outside the U.S. and imported for sale into the U.S. without authorization from the U.S. trademark owner. Patent owners cannot presently record U.S. patents with CBP, but may be entitled to exclusion of infringing imports into the U.S. under Section 337 of the Tariff Act of 1930.

Trademarks

A trademark owner who has registered a trademark with the United States Patent and Trademark Office (USPTO) may apply to record the trademark registration with CBP, and may also apply for “Lever rule” protection against parallel imports or gray market goods. CBP primarily focuses its border trademark enforcement efforts on marks that have been recorded with CBP.

Trade Names

A trade name is the name under which a company does business. Trade names are not registered with the USPTO, but may be recorded with CBP if they have been used to identify a trade or manufacturer for at least six months. Notice of tentative recordation of a trade name is published in the Federal Register and the Customs Bulletin and Decisions (Customs Bulletin) to provide notice to the public and give interested parties an opportunity to oppose the recordation.

Copyrights

CBP’s border enforcement of copyrights is primarily concentrated on works of authorship covered under copyrights that are registered with the U.S. Copyright Office (USCO) and have been recorded with the agency.

Patents

Although a patent that is issued by the USPTO may not be recorded with CBP, the agency enforces exclusion orders issued by the U.S. International Trade Commission (ITC) pursuant to Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337), which provides relief to U.S. industries that have established the existence of unfair trade practices in importing. ITC exclusion orders are issued for findings of patent infringement, among other things. CBP has authority to exclude importation of articles that infringe a patent pursuant to an exclusion order issued by the ITC.

To harness the powers of CBP to close the border gates on infringing imports, consult with an experienced intellectual property attorney.