Litigation Alert: The Supreme Court Reverses Federal Circuit Ruling on Extraterritorial Patent Infringement

In an opinion that will likely give peace of mind to businesses shipping products from the U.S. abroad, Justice Sonia Sotomayor, writing for a unanimous Supreme Court, reversed the Federal Circuit in Life Technologies v. Promega, holding that a single component does not constitute a “substantial portion” of the components that can give rise to liability under 35 U.S.C. § 271(f). Patent applicants and licensors, on the other hand, will face added challenges to maintain the broadest protection available for inventions commercialized in other countries based on a U.S. component.

Background: Can a Single Component Constitute "A Substantial Portion" of a Patented Invention?

The case began as a patent infringement action between Promega Corp. and Life Technologies Corp. Promega sublicensed a patent, which claims a toolkit for genetic testing, to Life Technologies. Life Technologies manufactured one of the kit’s five components, the enzyme Taq polymerase, in the United States. It then shipped the enzyme to the United Kingdom, where the remaining four components were manufactured. The Taq polymerase was then combined with the remaining four components and sold as a genetic testing kit.

35 U.S.C. § 271(f)(1) creates infringement liability for the supply from the United States of “all or a substantial portion of the components of a patented invention” for combination abroad (and other conditions not relevant to the case are met). Promega sued claiming the sales were outside the licensed fields of use and alleged that Life Technologies was liable under § 271(f)(1) on account of its supply of the Taq polymerase.

A jury returned a verdict for Promega, but the District Court granted a motion for judgment as a matter of law brought by Life Technologies, holding that § 271(f)(1)’s “all or a substantial portion” requirement did not include the supply of a single component of a multicomponent invention. The Federal Circuit reversed and reinstated the jury’s verdict. The Federal Circuit determined, based in part on expert trial testimony that the Taq polymerase is a “‘main’” and “‘major’” component of the kits, that the single component was a substantial component under § 271(f)(1).

Justices Weighed Quantity of Components

The issue before the Supreme Court was to determine whether a party that supplies a single component of a multicomponent invention for manufacture abroad can be held liable for infringement under § 271(f)(1).

First, the Court determined that the “substantial portion” requirement of the statute “has a quantitative, not a qualitative meaning.” The Court concluded that “substantial” is most reasonably read, in context, to refer to the number of components rather than their relative importance. Further, the Court noted that tasking a jury with considering the qualitative importance of a component may complicate its review of the case and not guide how market participants wanting to avoid liability could do so.

Next, the Court determined that a single component can never constitute a “substantial portion” so as to trigger liability under § 271(f)(1). The Court found that the text of the statute points to requiring multiple components because “[t]he section is targeted toward the supply of all or a substantial portion ‘of the components,’ where ‘such components’ are uncombined, in a manner that actively induces the combination of ‘such components’ outside the United States.” The Court also looked to the structure of the statute to bolster its interpretation, noting that that 271(f)(1)’s “companion provision,” § 271(f)(2), refers to “any component” in the singular. The Court reasoned that requiring multiple components to satisfy the “substantial portion” requirement allows each subsection of the statute a unique application, which supported its reading of the text. The Court also looked to the legislative history and found that it supported the Court’s interpretation based on the text and structure of the statute itself.

Accordingly, the Court held that under 35 U.S.C. 271(f) a “substantial portion” has a quantitative, not a qualitative, meaning and that it does not cover the supply of a single component of a multicomponent invention.

Takeaways: Ruling Raises Questions for Similar Patent Claims and License Agreements

While Promega will provide some guidance to businesses supplying products from the U.S. on how to avoid infringement liability from a single component aimed to be combined with others abroad, it leaves the answer to some questions for further development in the law. For example, the Court’s opinion does not explain what (quantitatively) constitutes a “substantial portion.” As Justice Samuel Alito noted in his concurrence with Justice Clarence Thomas, the opinion only “establishes that more than one component is necessary, but does not address how much more.” Further, what exactly does (or does not) constitute a single component likely also will need to be established.

For patent applicants and patentees, the opinion raises other issues. Those preparing patent claims for inventions potentially commercialized as the Taq was here will need to consider how to prepare some claims to provide the greatest likelihood of § 271(f) protection. Similarly, those structuring license agreements like the one underlying the dispute at issue in Promega may want to add any additional provisions to provide an adequate alternative structure or remedy for risks created by single-component supply believed to be in violation of the terms of a license.

Justice Alito, along with Justice Thomas, concurred in the judgment and in all parts of the opinion except for the analysis of the legislative history. Chief Justice Roberts took no part in the decision of the case.