A Sea Change in Patent Law?
Justice Stephen Breyer must be feeling pretty prescient these days. In
his 2015 book, “The Court and The World,” he wrote, “More and more, cases before the court involve foreign activity … It has become clear that, even in ordinary matters, judicial awareness can no longer stop at the border.”
The court’s final oral argument session for the term, beginning today, illustrates how correct Breyer was. Bookending the session are today’s WesternGeco LLC v. ION Geophysical Corp. on patent damages in foreign markets, and on April 25 the court will hear the intensely disputed
travel ban case Trump v. Hawaii. In between is Animal Science Products v. Hebei Welcome Pharmaceutical Co. Ltd., asking whether U.S. courts must defer to foreign countries’ interpretation of their own domestic law. This case will be argued April 24.
We’ll have more later on the travel ban and foreign legal interpretation cases. For now, here’s a look at today’s WesternGeco case, which underscores Breyer’s thesis in the sense that these foreign cases draw top-tier lawyers to the lectern.
Former Solicitor General
Paul Clement of
Kirkland & Ellis will argue for WesternGeco, going up against
Williams & Connolly’s
Kannon Shanmugam for ION. It’s the first time they will square off together at the high court, though they have argued on opposite sides at the U.S. Court of Appeal for the Federal Circuit
at least once.
Another measure of its importance may be the fact that
Justice Samuel Alito Jr., who was recused in the case when it was first granted in January,
“un-recused” himself on March 28, likely the result of him selling stocks in Schlumberger Limited, the parent company of WesternGeco. Maybe Alito didn’t want to miss the show.
The case is an important test of the territorial boundaries for imposing damages in patent infringement cases. WesternGeco is looking for infringement damages from ION for the profits it made through third parties in foreign markets. But ION, which sells components used to search for oil and gas under the ocean floor, claims that “the presumption against extraterritoriality … is at its peak in patent cases.”
The solicitor general’s office has weighed in on WesternGeco’s side, arguing that the Federal Circuit ruling against extraterritorial damages "systematically undercompensates U.S. patent owners for infringement when the patent owner derives profits from cross-border commerce."
Our colleague Scott Graham, who writes for our sibling IP newsletter
Skilled in the Art, recently offered these thoughts about the case:
➤➤ “A big, gaping question remains: whether the court's ruling will be confined to damages for induced infringement under Section 271(f) [of the Patent Act]—which targets the supply of components that are combined overseas—or whether it might expand to cover any damages arising from overseas sales of products that infringe U.S. patents.
➤➤ The SG’s position “worries the Electronic Frontier Foundation and the R Street Institute, two amici curiae often aligned with the tech industry. ‘The court’s ruling in this case could vastly expand the reach of U.S. patent law,’ the groups
warn in a brief … ‘Expanding patent damages in this way would effectively transform every U.S. patent into a worldwide patent.’
➤➤ “Backing ION is a group of law professors led by Emory's
Timothy Holbrook. They ask the high court to clarify that the presumption against extraterritoriality applies to all remedial statutes, not just the patent laws. ‘This court has never squarely addressed whether the presumption applies to remedial provisions,’
their brief states.
Others also think the court’s decision in WesternGeco could have broad impact.
Aaron Fahrenkrog, partner at
Robins Kaplan, sent these observations our way:
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