On May 30, 2017, the Supreme Court sought the Solicitor General's views on "foreign lost profits" for Section 271(f) infringement. Specifically, the Court sought the SG's views on availability of lost profits in Section 271(f) infringement cases where the profits arise from prohibited combinations occurring outside the United States. WesternGeco LLC v. ION Geophysical Corp., No. 16-1011.
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On May 30, 2017, the Supreme held that a patentee's decision to sell a product exhausts all patent rights regardless of any restrictions on the sale or any sale outside the United States. Impression Products Inc. v. Lexmark Int'l, Inc., 581 U.S. __ (2017). Lexmark sold printer toner cartridges and required U.S. buyers to agree not to reuse or resell the cartridges. Impression refurbished used cartridges originally sold in the U.S. and later sold them. Lexmark sued Impression for patent infringement. The district court found that Lexmark exhausted its patent rights as to the cartridges sold in the U.S. but not to the cartridges sold outside the U.S. In an en banc decision, the Federal Circuit affirmed the lower court's holding that international sales do not exhaust the patent rights of the patentee and reversed the lower court's holding on domestic sales explaining that the patentee reserves its patent rights if there are restrictions on post-sale use.
In an unanimous decision, the Supreme Court reversed the Federal Circuit holding that Lexmark exhausted its patent rights in the U.S. despite the contractual restrictions and authorized sales outside the U.S. likewise exhausted any rights. In so ruling, the Court relied on English common law and its own precedence including its recent decision in Kirtsaeng that the limited, exclusive monopoly rights granted to a patentee is exhausted upon the sale of the patented product. Full text of the opinion is available here. On May 22, 2017, the U.S. Supreme Court granted certiorari in SAS Institute v. Lee, 825 F. 3d 1341 (Fed. Cir. 2016), cert granted, No. 16-969 (June 12, 2017) regarding partial institution of IPR. The Court presented the following question: Does 35 USC 318(a) require the PTAB to issue a final written decision as to every claim challenged by the petitioner or does it allow the Board to issue a final written decision with respect to patentability of only some of the patent claims challenged by the petitioner.
On May 22, 2017, the Supreme Court held that a domestic corporation resides only in its State of incorporation for purposes of patent venue under 28 USC 1400(b). This decision will restrict where patent owners may file suit against domestic corporations but leaves open the question of what constitutes "regular and established place of business" for purposes of venue and where may a foreign corporation be sued.
Kraft Foods, a Delaware corporation with principal place of business in IL sued TC Heartland in Delaware district. TC Heartland, an IN corporation headquartered in IN, was not registered to do business in DE and had no meaningful presence in the state although TC Heartland shipped the allegedly infringing products into DE. TC Heartland moved to dismiss or transfer the case to Indiana. The district denied the motion and TC Heartland filed a writ with the Federal Circuit, which the appeals court denied on the grounds that under the 1988 amendments Section 1391(c) applied to Section 1400(b) redefining the meaning of "resides" and therefore, a defendant corporation resided in any judicial district where it was subject to the court's personal jurisdiction. TC Heartland then appealed to the U.S. Supreme Court. The Supreme Court reversed the Federal Circuit's decision holding that the general venue statute 28 USC 1391(c) does not supplant the patent venue statute 28 USC 1400. In reaching the decision, the Court reasoned that its 1957 decision in Fourco Glass v. Transmirra Products held that for the purposes of the patent venue statute a domestic corporation resides only in its State of incorporation. Further, the Court reasoned that in its 1988 amendments to the general venue statute, Congress did not intend to alter the the meaning of the patent venue statute and found that the 2011 Congressional amendments to the general venue statute failed to ratify the Federal Circuit's VE Holding decision. Full text of the opinion is available here. On May 1, 2017, the Federal Circuit held that an agreement for sale of the claimed invention contingent on regulatory approval, absent more, is a commercial sale for the purposes of AIA 102(a), the "on-sale bar" provision. Helsinn Healthcare S.A., v. Teva Pharmaceuticals USA, Inc., et al., Case Nos. 2016-1284, 2016-1787 (Fed. Cir. May 1, 2017). Helsinn Healthcare owned three patents that pre-dated AIA and one post-AIA, the patents were directed to formulations for reducing chemo-induced nausea. After Teva filed an ANDA, Helsinn sued for infringement and Teva asserted invalidity under the on-sale bar provision. Prior to AIA, the “on-sale bar” required that the invention not be “on sale … more than one year prior to the date of application.” The district court held the three pre-dated AIA patents valid finding that the supply and purchase agreement that Helsinn entered into was a sale under 102(b) but the claimed invention was not reduced to practice before the critical date and not ready for patenting under Pfaff’s second prong. On the post-AIA dated patent, the district court held that the “otherwise available to the public”, under 102(a) of the AIA, means that only public sales trigger the bar and the purchase agreement failed to disclose the details of the invention. In reversing the decision, the Federal Circuit held that details of the invention need not be publicly disclosed in the terms of the sale if the existence of the sale is public. Because the drugs were developed and subject to a contract for sale that identified price and quantity, the “on-sale bar” is triggered despite the sale being contingent on FDA’s approval of the drugs.
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Disclaimer: The content in this blog is solely for informational purposes and does not constitute legal advice.
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