International supply chains and US patent litigation: supplying a single component of a multi-component invention

May 2017 | SPOTLIGHT | INTELLECTUAL PROPERTY

Financier Worldwide Magazine

Shipping a single component of a patented invention outside the US will not create patent liability within the US under § 271(f)(1) of the US Patent Act because, as the US Supreme Court recently held, a single component of an invention does not constitute a substantial portion of the components that can give rise to liability under the Patent Act. The opinion in Life Technologies Corp. et al. v. Promega Corp. is both dry and straightforward, hitting on, as Justice Sotomayor notes, the intersection of international supply chains and US federal patent law. While not the most entertaining read, it is often the dry opinions that have the greatest effect on your business. If an international supply chain is important to your company, it is worth assessing if and how the Life Technologies case may affect your business and your supply chain.

As background, Promega owned a patent that claimed a toolkit for genetic testing. The patented toolkit contained five components. Life Technologies manufactured one of the components, an enzyme known as the Taq polymerase, within the US and then shipped that component to the UK, where the four other components of the patented toolkit were manufactured. Promega sued Life Technologies claiming that infringement was triggered under section 271(f)(1) of the US Patent Act, which prohibits the supply from the US of “all or a substantial portion of the components of a patented invention” for combination with the other elements abroad.

The Federal Circuit appellate court found that a single important component, such as the enzyme Life Technologies manufactured in the US, could constitute a “substantial portion” of the components of an invention pursuant to section 271(f)(1), even if it was only one component of a multi-component invention. The Federal Circuit looked to the dictionary definition of substantial and concluded that a single important component could be a “substantial portion of the component of a patented invention”. The enzyme at issue, Promega argued, is a main and major component of the patented toolkits and therefore was “substantial”. The Federal Circuit agreed with Promega.

Life Technologies petitioned the US Supreme Court to review this issue and the Court obliged; first looking at whether section 271(f)(1)’s requirement of a “substantial portion” of the components of a patented invention refers to a quantitative or qualitative measurement. The Supreme Court found little help from the statute’s ordinary meaning, determining that either understanding was reasonable in isolation.

Like all statutes, however, the phrase is not used in isolation. The context in which “substantial” appears in the statute points to a quantitative measure. For instance, the words “all” and “portion” convey a quantitative meaning. The phrase “of the components of the patented invention” also points to a quantitative measure. For instance, the authors of the statute used the phrase “of the components” instead of removing that phrase and leaving “a substantial portion of the invention.” For these reasons, the Supreme Court found that “substantial”, in this context, referred to a quantitative measurement.

Under the quantitative approach, the Supreme Court found that a single component – even an important component – could not constitute a “substantial portion” triggering section 271(f)(1) liability. The Court noted that the section consistently refers to the plural “components”, indicating that multiple components make up the substantial portion. More interesting, however, is that reading section 271(f)(1) to cover any single component would “leave little room for section 271(f)(2)”, which speaks to whether a party has supplied “any” non-commodity component “especially made or especially adapted for use in the invention”. Reading these two sections together, the Supreme Court concluded that not allowing a single component to constitute a “substantial portion” would give each subsection its unique application, as intended.

Lastly, the Supreme Court stated that the history of section 271(f)(1) bolsters their conclusion. The Court noted that the effect of the subsection “was to fill a gap in the enforceability of patent rights by reaching components that are manufactured in the US but assembled abroad”. Again, the Supreme Court turned to section 271(f)(2), noting that this second subsection also fills the gap if a single component is especially made or especially adopted for use in the invention and not a staple article or commodity.

For these reasons, the Supreme Court held that the phrase “substantial portion” in section 271(f)(1) of the US Patent Act has a quantitative meaning and does not cover the supply of a single component of a multi-component invention.

When assessing how Life Technologies may affect your business, it is important to remember that section 271(f)(1) is not the only subsection related to the extraterritorial reach of the US Patent Act. A full assessment ought to be performed, including assessing whether section 271(f)(2) comes into play.

R. David Donoghue and Steven E. Jedlinski are partners and Anthony J. Fuga is an associate at Holland & Knight. Mr Donoghue can be contacted on +1 (312) 578 6553 or by email: david.donoghue@hklaw.com. Mr Jedlinski can be contacted on +1 (312) 715 5818 or by email: steven.jedlinski@hklaw.com. Mr Fuga can be contacted on +1 (312) 715 5771 or by email: anthony.fuga@hklaw.com.

R. David Donoghue, Steven E. Jedlinski and Anthony J. Fuga

Holland & Knight