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Federal Circuit Overturns Earlier Decision and Holds No Liability for Exporting Components of Method Patents

By Evan Kubota – Edited by Sarah Sorscher
Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc., 2007-1296, -1347 (Fed. Cir. Aug. 19, 2009)
Slip Opinion

On August 19, 2009, the Court of Appeals for the Federal Circuit, sitting en banc, held that 35 U.S.C. § 271(f), a statute providing for liability for exporting components of patented inventions, does not apply to method patents. The ruling overturned the Federal Circuit’s prior panel decision in Union Carbide Corp. v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir. 2006). A Federal Circuit panel also reversed the District Court for the Southern District of Indiana’s grant of summary judgment on the issue of invalidity, restored the jury’s finding of infringement, and remanded the case for determination of damages.

Section 271(f) imposes infringement liability upon anyone who “supplies or causes to be supplied in or from the United States” components of a patented invention and induces their combination in a manner that would infringe the patent if it occurred within the United States.  It was intended to close the loophole created by a Supreme Court decision, Deepsouth Packing Co., v. Laitram Corp., 406 U.S. 518 (1972), that had rejected infringement liability where unassembled parts of a patented shrimp deveining machine were shipped abroad.  In 2007, the Supreme Court had expressly declined to answer the question of whether a method or process patent “qualifies as a patented invention” under section 271(f).  Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007).

Patently-O, Patent Prospector, and Conflict of Laws.net summarize the decision.  The AmLaw Litigation Daily provides an overview of the stakes for U.S. business interests, and a brief comment from a lawyer for one of the amici.

The dispute concerned implantable cardioverter defibrillators, small devices that detect and correct abnormal heart rhythms that can be fatal if left untreated. Cardiac brought an action against St. Jude for infringing on a Cardiac patent that covered a method of heart stimulation using electric shocks delivered by an implantable heart stimulator.

In its August 19th opinion, the Federal Circuit held that method patents are not subject to Section 271(f) because their components cannot be “supplied,” as the statute requires.  While method patents do have “components” -the steps of the process- such intangible steps cannot be “supplied” because the word “supply” implies “the transfer of a physical object.” The court also considered legislative history and applied a presumption against extraterritoriality-even though Section 271(f) “specifically extends the reach of U.S. patent law in a limited manner,” the court found lacking “any Congressional intent to protect patented methods under Section 271(f).”

Because Section 271(f) does not apply to method patents, the court held that defendant St. Jude’s shipments of the medical devices outside the United States did not infringe plaintiff Cardiac’s method patent.

Judge Newman dissented from the en banc ruling on Section 271(f)’s scope.  For her, “patented invention” in the statutory text embraces “all of the statutory classes of patentable invention,” including process inventions.  This reading, Judge Newman argued, is consistent with the scope of “patented invention” elsewhere in Title 35.  Judge Newman also provided more detail about Section 271(f)’s legislative history-earlier versions were limited to “a patented machine, manufacture, or composition of matter,” but the version that was eventually passed removed this limiting language.  Finally, Judge Newman pointed out that the majority’s extraterritoriality concerns are exaggerated for two reasons: first, because liability is based on actions taken in the United States by entities subject to American law, and second, because it would be an absurd result if process, but not machine, patents could be avoided simply by completing the steps offshore.

Posted On Aug - 27 - 2009 Comments Off

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