Federal Circuit Reverses Summary Judgment Finding Non-Infringement
By Leocadie Welling – Edited by Jad Mills
Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., No. 2009-1556 (Fed. Cir. Aug. 18, 2010)
On August 18, 2010, the Federal Circuit reversed in part, affirmed in part, vacated in part, and remanded the decision of the United States District Court for the Southern District of Texas, which had granted summary judgment in favor of Maersk on issues of invalidity and non-infringement for three of Transocean’s deepwater drilling patents.
The Federal Circuit reversed the district court’s grant of summary judgment of invalidity for lack of enablement because there were factual issues precluding summary judgment. The court also reversed the summary judgment of invalidity for obviousness because the district court failed to consider objective evidence of nonobviousness. Although Transocean had presented contrary objective evidence of obviousness, the court held that the issue could not be resolved at summary judgment. The court also held that the district court had erred in granting summary judgment of non-infringement. Importantly, in so holding, the court stated that “a contract between two U.S. companies for performance in the U.S. may constitute an offer to sell within the U.S. under § 271(a)” regardless of whether the contract had been negotiated and/or signed outside of the U.S.
This case deals with an offshore drilling technology patented by Transocean. The patented system attempts to save time in deepwater drilling by creating a derrick with two stations that work in tandem, an improvement over previous drilling technology that used a derrick with only one station. Transocean’s infringement claims against Maersk arose from contracts entered into by Maersk USA’s Danish parent company, Maersk A/S. In 2005, Maersk A/S contracted with Keppel FELS Ltd to build an allegedly infringing rig in Singapore. Maersk later contracted with the Norwegian corporation Statoil ASA for Statoil’s use of the rig, with the non-exclusive “Operating Area” defined as the U.S. Gulf of Mexico.
Maersk argued, and the district court agreed, that there was no infringement of Transocean’s patents because there was no sale or offer to sell under 35 U.S.C. § 271(a). The court based that finding on the fact that the parties negotiated and signed the contract abroad and that Maersk had the option under the contract to alter the rig to avoid infringement. Section 271 provides that “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States . . . infringes the patent.” Maersk argued that this language means that for there to be an “offer to sell … within the United States,” the offer must be made in the United States. The Federal Circuit disagreed. It stated that Maersks’s “interpretation would exalt form over substance by allowing a U.S. company to travel abroad to make offers to sell back into the U.S. without any liability for infringement.” The court also stated that in analyzing whether an infringing offer has been made, “[t]he focus should not be on the location of the offer, but rather the location of the future sale that would occur pursuant to the offer.” In this case, because the sale of the rig would occur in the U.S., the district court was premature in ruling that there had been no infringing offer.
The Federal Circuit’s holding that domestic contract negotiation and signing is not a requirement of infringement under Section 271 is significant because it prevents U.S. firms from executing deals abroad to avoid patent liability.
Leocadie Welling is a 3L at the Harvard Law School.