WesternGeco LLC v. ION Geophysical Corp., 585 U.S. ___ (2018)
WesternGeco owns patents for a system used to survey the ocean floor. ION sold a competing system, built from components manufactured in the U.S., then shipped abroad for assembly into a system indistinguishable from WesternGeco’s. WesternGeco sued for patent infringement, 35 U.S.C. 271(f)(1) and (f)(2). The jury awarded WesternGeco royalties and lost profits under section 284. The Supreme Court reversed the Federal Circuit, holding that WesternGeco’s award for lost profits was a permissible domestic application of section 284 of the Patent Act, not an impermissible extraterritorial application of section 271. To determine whether the case involves a domestic application of the statute, courts must identify the statute’s "focus” and ask whether the conduct relevant to that focus occurred in U.S. territory. If so, the case involves a permissible domestic application of the statute. When determining the statute’s focus, the provision at issue must be assessed in concert with other provisions. Section 284, the general damages provision, focuses on “the infringement.” The “overriding purpose” is “complete compensation” for infringements. Section 271 identifies several ways that a patent can be infringed; to determine section 284’s focus in a given case, the type of infringement must be identified. Section 271(f)(2) was the basis for WesternGeco’s claim and damages. That provision regulates the domestic act of “suppl[ying] in or from the United States,” and vindicates domestic interests, The focus of section 284 in a case involving infringement under section 271(f)(2) is the act of exporting components from the U.S., so the relevant conduct occurred in the U.S. Damages are not the statutory focus but are merely the means by which the statute remedies infringements. The overseas events giving rise to the lost-profit damages here were merely incidental to the infringement.
An award for lost profits with respect to goods, assembled outside of the United States from components manufactured in the United States, was a permissible domestic application of section 284 of the Patent Act.
SUPREME COURT OF THE UNITED STATES
Syllabus
WesternGeco LLC v. ION Geophysical Corp.
certiorari to the united states court of appeals for the federal circuit
No. 16–1011. Argued April 16, 2018—Decided June 22, 2018
Petitioner WesternGeco LLC owns patents for a system used to survey the ocean floor. Respondent ION Geophysical Corp. began selling a competing system that was built from components manufactured in the United States, shipped to companies abroad, and assembled there into a system indistinguishable from WesternGeco’s. WesternGeco sued for patent infringement under 35 U. S. C. §§271(f)(1) and (f)(2). The jury found ION liable and awarded WesternGeco damages in royalties and lost profits under §284. ION moved to set aside the verdict, arguing that WesternGeco could not recover damages for lost profits because §271(f) does not apply extraterritorially. The District Court denied the motion, but the Federal Circuit reversed. ION was liable for infringement under §271(f)(2), the court reasoned, but §271(f) does not allow patent owners to recover for lost foreign profits On remand from this Court in light of Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U. S. ____, the Federal Circuit reinstated the portion of its decision regarding §271(f)’s extraterritoriality.
Held: WesternGeco’s award for lost profits was a permissible domestic application of §284 of the Patent Act. Pp. 4–10.
(a) The presumption against extraterritoriality assumes that federal statutes “apply only within the territorial jurisdiction of the United States.” Foley Bros., Inc. v. Filardo, 336 U. S. 281, 285. The two-step framework for deciding extraterritoriality questions asks, first, “whether the presumption . . . has been rebutted.” RJR Nabisco, Inc. v. European Community, 579 U. S. ___, ___. If not, the second step asks “whether the case involves a domestic application of the statute.” Id., at ___. Courts make the second determination by identifying “the statute’s ‘focus’ ” and then asking whether the conduct relevant to that focus occurred in United States territory. Ibid. If so, the case involves a permissible domestic application of the statute. It is “usually . . . preferable” to begin with step one, but courts have the discretion to begin with step two “in appropriate cases.” Id., at ___, n. 5. The Court exercises that discretion here. Pp. 4–5.
(b) When determining “the statute’s ‘focus’ ”—i.e., “the objec[t] of [its] solicitude,” Morrison v. National Australia Bank Ltd., 561 U. S. 247, 267—the provision at issue is not analyzed in a vacuum. If it works in tandem with other provisions, it must be assessed in concert with those provisions. Section 284, the Patent Act’s general damages provision, states that “the court shall award the claimant damages adequate to compensate for the infringement.” The focus of that provision is “the infringement.” The “overriding purpose” of §284 is to “affor[d] patent owners complete compensation” for infringements. General Motors Corp. v. Devex Corp., 461 U. S. 648, 655. Section 271 identifies several ways that a patent can be infringed. Thus, to determine §284’s focus in a given case, the type of infringement that occurred must be identified. Here, §271(f)(2) was the basis for WesternGeco’s infringement claim and the lost-profits damages that it received. That provision regulates the domestic act of “suppl[ying] in or from the United States,” and this Court has acknowledged that it vindicates domestic interests, see, e.g., Microsoft Corp. v. AT&T Corp., 550 U. S. 437, 457. In sum, the focus of §284 in a case involving infringement under §271(f)(2) is on the act of exporting components from the United States. So the conduct in this case that is relevant to the statutory focus clearly occurred in the United States. Pp. 5–8.
(c) ION’s contrary arguments are unpersuasive. The award of damages is not the statutory focus here. The damages themselves are merely the means by which the statute achieves its end of remedying infringements, and the overseas events giving rise to the lost-profit damages here were merely incidental to the infringement. In asserting that damages awards for foreign injuries are always an extraterritorial application of a damages provision, ION misreads a portion of RJR Nabisco that interpreted a substantive element of a cause of action, not a remedial damages provision. See 579 U. S., at ___. Pp. 8–9.
837 F. 3d 1358, reversed and remanded.
Thomas, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Ginsburg, Alito, Sotomayor, and Kagan, JJ., joined. Gorsuch, J., filed a dissenting opinion, in which, Breyer, J., joined.
Record for the U.S.C.A. Federal Circuit has been returned. |
JUDGMENT ISSUED. |
Judgment REVERSED and case REMANDED. Thomas, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Ginsburg, Alito, Sotomayor, and Kagan, JJ., joined. Gorsuch, J., filed a dissenting opinion, in which Breyer, J., joined. |
Argued. For petitioner: Paul D. Clement, Washington, D. C.; and Zachary D. Tripp, Assistant to the Solicitor General, Department of Justice, Washington, D. C. (for United States, as amicus curiae.) For respondent: Kannon K. Shanmugam, Washington, D. C. |
Motion of the Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument GRANTED. |
Reply of petitioner WesternGeco LLC filed. (Distributed) |
Record from the U.S.C.A. Federal Circuit is electronic and located on PACER, with the exception of 1 Box of Confidential material. |
Record received from the U.S.D.C. Southern District of Texas Brownsville Division is electronic and can be accessed through the electronic case filing system for the Southern District of Texas. Sealed documents was sent to this Court, the record is electronic. |
Brief amici curiae of Electronic Frontier Foundation and R Street Institute filed. (Distributed) |
Brief amici curiae of Fairchild Semiconductor International, Inc., The Internet Association, SAS Institute Inc., Symmetry, LLC, and Xilinx, Inc. filed. (Distributed) |
Record requested from U.S.C.A. Federal Circuit. |
Justice Alito is no longer recused in this case. |
Brief of respondent ION Geophysical Corporation filed. (Distributed) |
Motion of the Solicitor General for leave to participate in oral argument as amicus curiae and for divided argument filed. |
CIRCULATED |
Brief amicus curiae of Intellectual Property Owners Association filed in Support of Neither Party. (Distributed) |
Brief amicus curiae of American Intellectual Property Law Association filed in Support of Neither Party. (Distributed) |
Brief amici curiae of Intellectual Property Law Scholars in support of neither party filed. (Distributed) |
Brief amicus curiae of United States filed. |
Brief amicus curiae of Power Integrations, Inc. filed. |
Brief amicus curiae of Intellectual Property Law Association of Chicago filed. (Distributed) |
Brief amicus curiae of Houston Intellectual Property Law Association in Support of Neither Party filed. (Distributed) |
Brief amicus curiae of Law Professor Stephen Yelderman filed. (Distributed) |
Brief amicus curiae of New York Intellectual Property Law Association in support of neither party filed. |
SET FOR ARGUMENT on Monday, April 16, 2018. |
Brief of petitioner WesternGeco LLC filed. |
Joint appendix filed. |
Blanket Consent filed by Petitioner, WesternGeco LLC. |
Blanket Consent filed by Respondent, ION Geophysical Corporation. |
Letter of amendment to corporate disclosure statement from respondent ION Geophysical Corp. filed. (Distributed) |
Petition GRANTED. Justice Alito took no part in the consideration or decision of this petition. |
DISTRIBUTED for Conference of 1/12/2018. |
DISTRIBUTED for Conference of 1/5/2018. |
Supplemental brief of respondent ION Geophysical Corp. filed. (Distributed) |
Brief amicus curiae of United States filed. |
The Acting Solicitor General is invited to file a brief in this case expressing the views of the United States. Justice Alito took no part in the consideration or decision of this petition. |
DISTRIBUTED for Conference of May 25, 2017. |
Reply of petitioner WesternGeco LLC filed. |
Brief of respondent ION Geophysical Corporation in opposition filed. |
Order extending time to file response to petition to and including April 19, 2017. |
Petition for a writ of certiorari filed. (Response due March 20, 2017) |
Application (16A576) granted by The Chief Justice extending the time to file until February 17, 2017. |
Application (16A576) to extend the time to file a petition for a writ of certiorari from December 20, 2016 to February 17, 2017, submitted to The Chief Justice. |
Prior History
- WesternGeco L.L.C. v. ION Geophysical Corp., No. 13-1527 (Fed. Cir. Sep. 21, 2016)
WesternGeco’s patents relate to technologies used to search for oil and gas beneath the ocean floor. WesternGeco manufactures the Q-Marine, and performs surveys for oil companies. ION manufactures the DigiFIN, and sells to its customers, who perform surveys for oil companies. WesternGeco filed suit. A jury found infringement and no invalidity and awarded $93,400,000 in lost profits and $12,500,000 in reasonable royalties. The Federal Circuit affirmed, rejecting arguments that WesternGeco was not the owner of the patents and lacked standing and that the court applied an incorrect standard under 35 U.S.C. 271(f)(1). The court upheld denial of enhanced damages for willful infringement and reversed the award of lost profits resulting from conduct occurring abroad. Following vacatur and remand after the Supreme Court’s 2016 decision, Halo Electronics, the Federal Circuit vacated the judgment with respect to enhanced damages, 35 U.S.C. 284. The Halo decision overturned the two-part Seagate test as “‘unduly rigid,” holding that district courts must have greater discretion in awarding enhanced damages in cases where the defendant’s infringement was egregious, cases “typified by willful misconduct."