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].