The Senate Judiciary Committee has posted Federal Circuit nominee Kathleen O’Malley’s answers to its written questions. You may recall that she appeared before the committee to answer questions back on July 28, 2010. If memory serves me correctly, the Senate Judiciary Committee asked no questions relating to patents during the in-person appearance or in the questions for the record.
Judge O’Malley’s written answers to the Senate Judicary Committee’s questions are available here: [Read].
Advocates at the Federal Circuit sometimes (although rarely) use poetry during oral argument. In Figueroa v. U.S., 466 F.3d 1023 (Fed. Cir. 2006), a case from 2006 concerning the constitutionality of patent fees, one of the attorneys used verse from Alice in Wonderland plus his own original composition: [Listen].
You can listen to the entire oral argument here: [Listen].
You can read the court’s opinion here: [Read].
In Transocean v. Maersk, 2009-1556 (Fed. Cir. Aug. 18, 2010), the Federal Circuit addressed the issue of whether an offer to sell that is communicated outside the territorial boundaries of the United States by the offeror to the offeree but for performance within the United States satisfies 35 USC §271(a)’s offer to sell provision. The district court ruled that it did not. The Federal Circuit reversed, stating:
Section 271(a) defines infringing conduct: “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States. . . infringes the patent.” 35 U.S.C. § 271(a). An offer to sell is a distinct act of infringement separate from an actual sale. An offer to sell differs from a sale in that an offer to sell need not be accepted to constitute an act of infringement. See MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1376 (Fed. Cir. 2005). Moreover, the damages that would flow from an unac-cepted offer to sell and an actual sale would likely be quite different. See Timothy R. Holbrook, Liability for the “Threat of Sale”: Assessing Patent Infringement for Offer-ing to Sell an Invention and Implications for the On-Sale Patentability Bar and other Forms of Infringement, 43 Santa Clara L. Rev. 751, 791-92 (2003). We analyze an offer to sell under § 271(a) using traditional contract principles. Rotec Indus., Inc. v. Mitsubishi Corp., 215 F.3d 1246 (Fed. Cir. 2000). There is no dispute that there was an offer to sell in this case, but Maersk USA argues that the offer was made in Norway, not the United States, thereby absolving it of § 271(a) liability.
Maersk A/S (a Danish company) and Statoil ASA (a Norwegian company) negotiated the contract that is the subject of this alleged offer to sell. Their U.S. affiliates, Maersk USA and Statoil executed the contract in Norway. The contract included an “Operating Area” of the U.S. Gulf of Mexico. The district court held that because the negotiations and execution took place outside the U.S., this could not be an offer to sell within the United States under § 271(a).
Transocean argues that to hold that this contract be-tween two U.S. companies for performance in the U.S. is not an offer to sell within the U.S. simply because the contract was negotiated and executed abroad would be inconsistent with Lightcubes, LLC v. Northern Light Products, Inc., 523 F.3d 1353 (Fed. Cir. 2008) (holding that a foreign company cannot avoid liability for a sale by delivering the product outside the U.S. to a U.S. customer for importation). Transocean argues that a contract between two U.S. companies for delivery or performance in the U.S. must be an offer to sell within the United States under § 271(a).
Maersk USA argues that Rotec, 215 F.3d 1246 and MEMC, 420 F.3d 1369 require that, for there to be an offer to sell within the U.S., the offer activities must occur within the U.S. It argues that the negotiations and execution outside the U.S. preclude offer to sell liability in this case.
This case presents the question whether an offer which is made in Norway by a U.S. company to a U.S. company to sell a product within the U.S., for delivery and use within the U.S. constitutes an offer to sell within the U.S. under § 271(a). We conclude that it does. Sec-tion 271(a) states that “whoever . . . offers to sell . . . within the United States any patented invention . . . infringes.” In order for an offer to sell to constitute in-fringement, the offer must be to sell a patented invention within the United States. The 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.
The offer to sell liability was added to the patent stat-ute to conform to the April 1994 Uruguay Round’s Trade-Related Aspects of Intellectual Property Agreement (TRIPS). The underlying purpose of holding someone who offers to sell liable for infringement is to prevent “generat-ing interest in a potential infringing product to the com-mercial detriment of the rightful patentee.” 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1379 (Fed. Cir. 1998). The offer must be for a potentially infringing article. Id. We are mindful of the presumption against extraterritoriality. Microsoft Corp. v. AT&T Corp., 550 U.S. 437, 441 (2007). “It is the general rule under United States patent law that no infringement occurs when a patented product is made and sold in another country.” Id. This presumption has guided other courts to conclude that the contemplated sale would occur within the United States in order for an offer to sell to constitute infringe-ment. See, e.g., Semiconductor Energy Lab. Co. v. Chi Mei Optoelectronics Corp., 531 F. Supp. 2d 1084, 1110-11 (N.D. Cal. 2007). We agree that the location of the con-templated sale controls whether there is an offer to sell within the United States.
The statute precludes “offers to sell . . . within the United States.” To adopt Maersk USA’s position would have us read the statute as “offers made within the United States to sell” or “offers made within the United States to sell within the United States.” First, this is not the statutory language. Second, this 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. See 3D Sys., 160 F.3d at 1379. This company would generate interest in its product in the U.S. to the detriment of the U.S. patent owner, the type of harm that offer to sell within the U.S. liability is meant to remedy. Id. These acts create a real harm in the U.S. to a U.S. patentee.
Neither Rotec nor MEMC preclude our determination that an offer by a U.S. company to sell a patented inven-tion to another U.S. company for delivery and use in the U.S. constitutes an offer to sell within the U.S. First, SEB S.A. v. Montgomery Ward & Co., 594 F.3d 1360, 1375 (Fed. Cir. 2010) contemplated whether the territorial reach of the offer to sell language had been decided by Rotec and concluded that it had not. The defendants in Rotec did argue that because the offer was made in China, not the U.S., they did not infringe. Rotec, 215 F.3d at 1251. And the Rotec court discussed the evidence regard-ing meetings and communications made in the United States. Id. at 1255. The Rotec court held that there was no offer to sell, not because of the location of the offer or of the ultimate sale, but rather because there was no evi-dence that an offer was communicated or conveyed by the defendants. Id. at 1255 (“None of this evidence, however, establishes any communication by Defendants with any third party.”). In concurrence, Judge Newman indicates that she would have instead decided the case on the ground that there was no offer which contemplated a sale within the U.S. Id. at 1259 (Newman, J., concurring). The MEMC case is even further attenuated as it did not even consider location of the offer or the contemplated sale, but instead held there was no offer to sell because the emails at issue, which contained only technical data and no price terms, cannot constitute an offer that could be made into a binding contract by acceptance. 420 F.3d at 1376.
We conclude that neither Rotec nor MEMC control this case. We hold that the district court erred because 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). The fact that the offer was negotiated or a contract signed while the two U.S. companies were abroad does not remove this case from statutory liability. We therefore vacate the district court’s summary judgment of noninfringement.4
The offer to sell issue was discussed with appellant’s counsel during oral argument and can be heard here: [Listen].
The entire oral argument can be heard here: [Listen].
The court’s opinion is available here: [Read].
This might be of interest to patent practitioners in the D.C. area:
Last week, the Federal Circuit issued its opinion in Golden Hour Data Systems, Inc. v. EMSCHARTS, Inc. et al., 2009-1306 (Fed. Cir. Aug. 9, 2010). The main issue in the case concerned alleged inequitable conduct by the patent agent who prosecuted the application. Judge Ward of the Eastern District of Texas had ruled in the district court case that the patent was unenforceable due to inequitable conduct by the patent agent.
Essentially, the arguments on appeal centered on whether the patent agent had “intent to deceive the patent office.” As I understand it, the patent agent, prosecuting the application in 1998, had been given a brochure by the inventor shortly after the filing of the application. The brochure was undated. The patent agent had a practice of not submitting undated material to the patent office because it would not be considered by the examiners. So, the patent agent summarized the brochure and submitted the summary via an IDS. The summary, however, did not disclose information from the middle of the short brochure that Judge Ward found material.
The defendants’ attorney argued that because Judge Ward had found that even a cursory review of the brochure would have made someone aware of the material information that this amounted to “selective disclosure” by the patent agent rather than non-disclosure. The defendants also argued that it was inconsistent to say that you couldn’t submit the entire brochure as being undated and to say that you weren’t aware of the material information; because, even a cursory review to check for the date allegedly would have made one aware of the material information.
The Federal Circuit seemed to feel that Judge Ward danced around the intent issue. So, they remanded the case back to Judge Ward.
This oral argument is pretty interesting if you are a prosecutor. It highlights just how easy it is to get run over by the inequitable conduct bus ten years after you’ve filed an IDS and no longer have the necessary recollection of the facts to be able to defend yourself.
Here are some of the more interesting portions of the oral argument: [Listen], [Listen], [Listen], [Listen], and [Listen].
You can listen to the entire oral argument here: [Listen].
You can read the Federal Circuit opinion here: [Read].
Federal Circuit nominee Judge Kathleen O’Malley was affirmed by the Federal Circuit last week. To be clear, she has not yet been “confirmed” by the Senate; but, her district court judgment was “affirmed” by Judges Bryson, Gajarsa, and Prost in Baran v. Medical Device Technologies, Inc. et al., 2010-1058 (Fed. Cir. Aug. 12, 2010).
Judge Linn noted during his presentation at the AIPLA CLE in Denver that when the Federal Circuit sits in Atlanta this November, they will be sitting at: Georgia State University College of Law, Emory University School of Law, Atlanta’s John Marshall Law School, and the U.S. District Court in Atlanta.
TruePosition, Inc. v. Andrew Corp., 2009-1389 (Fed. Cir. Aug. 12, 2010) was decided today via a Rule 36 affirmance. The curious thing about this case is that the oral argument took place back on February 5th. Typically, Rule 36 opinions issue within a few days of oral argument. The district court’s infringement judgment was for more than $48M.
The oral argument is interesting in that in addition to discussing standard setting issues, it also deals with when activities in the U.S. might constitute an offer for sale in the U.S. that is actually communicated in a foreign country to an offeree. [Listen]. One proposed hypothetical was the sending of an email with the offer details from the U.S. to the offeror’s agent in the foreign country, who would then communicate the offer to the offeree on foreign soil.
The appellant argued for application of Rotec Industries v. Mitsubishi Corp. et al., 215 F.3d 1246 (Fed. Cir. 2000). [Link].
The entire oral argument is available here: [Listen].
The opinion is availble here: [Read].
Have you ever run across a patent that discusses a prior art reference in the Background of the patent; but, in looking at the References Cited section of the patent as well as the file wrapper for the patent you see that the reference mentioned in the Background was neither IDS’d by the applicant nor cited by the examiner? Have you ever wondered whether that amounts to inequitable conduct? I’ve researched the issue a little in the past and never was able to locate a case that decided the issue. So, I was intrigued to hear the oral argument in Ring Plus v. Cingular Wireless, 2009-1537 (Fed. Cir. Aug. 6, 2010) which had similar facts.
The panel determined that there was insufficient evidence to prove intent to deceive the PTO. It noted that this was not a non-disclosure case because the references at issue were disclosed in the application itself (i.e., in the Background section). The district court’s finding of unenforceability due to inequitable conduct was reversed. The opinion stated:
Cingular notes that the applicants prepared, but decided not to file, an IDS that listed both Strietzel and Sleevi. Again, this evidence relates to materiality, but not intent. While it may have been relevant if this was a non-disclosure case, it is not; Sleevi and Striezel were disclosed in the application itself.
The exchanges between the judges and the attorneys during the oral argument were very interesting. The defendant-appellee argued that MPEP Section 609 in force in 2004 required citation of the reference by the applicant. [Listen] and [Listen].
The plaintiff-appellant argued that the MPEP requires the examiner to read the application before conducting a search. Since a search was conducted, the plaintiff-appellant argued that the examiner must have read the entire application and been aware of the references. . . . [Listen].
You can listen to the entire oral argument here: [Listen].
You can read the court’s opinion here: [Read].
Judge Lourie of the United States Court of Appeals for the Federal Circuit recently sat by designation on the United States Court of Appeals for the Third Circuit.
Here are a few of the opinions that he authored:
United States v. Martinez, 2008-1027 (3d Cir. Mar. 4, 2010). [Read]
LionHeart Holding GRP v. Phila. Contributionship Ins. Co., 2008-1533.1 (3d Cir. Mar. 4, 2010). [Read]
Hua Lan An v. Attorney General of the United States, 2008-3732 (3d Cir. Mar. 8, 2010). [Read]
Bapu Corp. et al. v. Choice Hotels Intl., Inc., 2009-1011 (3d Cir. Mar. 16 2010). [Read]
You probably already saw retired Chief Judge Michel’s editorial in yesterday’s New York Times (and mentioned on the Patently-O blog today). If not, here is the link: [LINK].
The goal of the $1 B infusion into the Patent Office is to reduce the backlog of patent applications over the next few years. If you haven’t sent the article to your clients, congressional representatives, or editor at your local business journal, you might want to do so. After all, all politics is local. Here are links for helping you contact your local congressperson, if you are interested in doing so: [HOUSE] [SENATE].
While it is easy to see where the PTO could spend the money and increase staffing, increasing the ranks of registered patent attorneys to respond to the increase in applications being processed could be a different matter. I suspect associate salaries could be in store for a roller coaster ride if such funding is secured.