The Problems Associated with the Expanding Reach of US Patents

November 13, 2007 by Tory Westbrook

Over the years, judicial and legislative efforts have
dramatically changed the face of US patent law. Traditionally, the United
States prescribed to a patent law regime which was territorial in nature,
meaning that in order for a finding of infringement to be made, the
infraction had to occur wholly within the United States. The recent
increase in globalization of both technology systems and inter-territory
trade has caused the traditional patent regime to be expanded to include
events occurring outside of the US. The actions taken by the US Courts and
the legislature regarding § 271(f) of the Patent Act, have unnecessarily
expanded the scope of US patent rights and created a great deal of
uncertainty surrounding this provision.

Section 271(f) imposes liability upon, “whoever without
authority supplies or causes to be supplied…from the United States any
component of a patented invention…intending that such component will be
combined outside of the United States in a manner that would infringe the
patent if such combination occurred within the United States.”[1] This
provision which deviates from the traditional territorial regime was
enacted by Congress in 1984 in response to the Supreme Court’s decision in
Deepsouth Packing Co. v. Laitram Corp.[2] In Deepsouth, the Court refused
to enlarge the extraterritorial scope of US patent law and held that the
exportation of domestically manufactured components of a patented product
to be assembled in a foreign country is not infringement.

Since the enactment of § 271(f), the Federal Circuit has had a
variety of chances to consider its scope, however; the jurisprudence in
this area is unclear and has resulted in a great deal of uncertainty. In
Pellegrini v. Analog Devices Inc.,[3] the court held that a corporation
who provides instructions to a manufacturer in another country which
explain how to build components of an infringing device is not liable
under § 271(f). The Federal Circuit in Union Carbide v. Shell Oil[4]
extended the scope of the provision to include components for patented
processes. Further, in Eolas Techs. Inc. v. Microsoft Corp.,[5] the court
refined the scope when they held that software code manufactured in the
United States and exported to a foreign country can be a ‘component’ of a
patented invention under § 271(f). The jurisprudence of the Federal
Circuit appears to expand the provision to include both tangible and
intangible components supplied for patented products and processes.

After witnessing the recent expansion of § 271(f), the Supreme
Court weighed in on the issue in the case of AT&T v. Microsoft.[6] In
Microsoft, the Supreme Court pulled back on the expansive interpretation
of the provision and held that abstract software code when separate from a
physical medium is not a ‘component’ under § 271(f).

As evidenced by the case law, the jurisprudence surrounding
the territorial scope of US patent law in cases involving foreign elements
is unclear. Uncertainty in circumstances such as these leads to a variety
of problems. Without certainty it is impossible for a business to know
whether or not they are infringing. Moreover, the system becomes unfair
when it fails to provide parties with adequate notice of the laws to which
they must comply.

An additional problem stemming from the expansion of the scope of the
provision is the existence of concurrent or overlapping legislative
jurisdiction. If more than one country has patent law which applies to a
single infringement than the infringing party will be exposed to the laws
of each country which may result in greater costs to that party. Further,
overlapping legislation may lead to unpredictable results, multiple
liability or inconsistent judgments.

In order to overcome the problems associated with the recent
expansion of the reach of US patents, both predictability and certainty
must be taken into consideration. A possible solution for solving
jurisdictional issues would be the implementation of a multilateral treaty
which establishes a clear set of rules pertaining to the legislative scope
of national patent law.

Short of this occurring, when a nation asserts or expands its law without
restraint or concern for the laws of another country, they create
uncertainty. Without certainty, both the state and the judiciary risk the
rise of international conflict, unfair litigation and reduce their chances
of obtaining an eventual treaty. In order to eliminate uncertainty, the
United States should apply their patent laws sensibly while taking into
account the rights and interests of other countries. Therefore, it appears
as though a retreat back to the traditional territorial patent law regime
may be in the best interests of the United States.

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[1] 35 U.S.C. § 271 (f)
[2] 406 U.S. 518, 532 (1972)
[3] 375 F.3.d. 1113 (Fed. Cir. 2004)
[4] 425 F.3.d. 1366, 1378-79 (Fed. Cir. 2005)
[5] 399 F.3.d. at 1339
[6] 127 S. Ct.