The Federal Circuit Court of Appeals affirmed a lower court’s ruling that there could be no finding of patent infringement in the US where the allegedly infringing products were made, shipped, and delivered outside the US.
The case of Halo Electronics, Inc. v. Pulse Electronics, Inc. involves Halo, a supplier of electronic components that owns several patents for surface mount electronic packages, and Pulse, another supplier of electronic components.
Pulse makes its products in Asia and delivers most of them to customers outside the US. In some cases, it sells to contract manufacturers for companies like Cisco, and the end products are sold and shipped to buyers around the world.
For products that Pulse delivered outside the US, all purchase orders were received at Pulse’s offices outside the US. However, Pulse negotiates prices within the US with customers like Cisco, and Pulse also quotes prices to foreign customers from within the US.
Pulse’s other US activities include:
- Meeting with customers’ product design engineers
- Sending product samples to US end users for pre-approval
- Attending sales meetings with customers
- Providing post-sale support for its products
In 2002, Halo sent Pulse two letters offering to license its patents. Pulse concluded that the patents were invalid and declined to take a license.
In 2007, Halo sued Pulse for patent infringement.
Pulse moved for summary judgment on the basis that it did not sell or offer to sell infringing products in the US. The district court granted the motion and the parties proceeded to trial on claims of infringement based on:
- products Pulse shipped directly to the US
- inducement of infringement based on products Pulse shipped outside the US that were incorporated into products imported into the US
The jury found that:
- Pulse directly infringed the Halo patents for products shipped to the US.
- Pulse induced others to infringe when it delivered products outside the US that ended up in finished goods imported into the US.
On appeal of the summary judgment, the court noted that section 271(a) of the patent statute provides:
whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States . . . infringes the patent.
The patent statute does not define the meaning of a “sale” within the US.
The court noted that it was undisputed that the products at issue were made, shipped, and delivered to buyers outside the US.
The court also noted the presumption against extraterritorial application of US laws, and concluded that Pulse’s sales-related activities in the US did not constitute “sales” under US patent law.
This case is a reminder that patent rights must be enforced on a country-by-country basis. A patent granted only in the US will not allow the patent owner to block foreign activities that would be infringing if they occurred in the US.
US patent owners often seek patent protection in other countries as well as in the US, in order to protect themselves in global markets.
If you have questions about protecting your patent rights internationally, please contact our office at 626-796-4000 or toll-free at 855-UR-IDEAS (855-874-3327) for a free initial consultation with one of our intellectual property attorneys. Please also visit our website at http://leechtishman.com/practices/intellectual-property/ for more information about us.
Photo Attribution: Meclee, Creative Commons Attribution-Share Alike 3.0 Unported license.