WesternGeco LLC v. ION Geophysical Corp.
138 S. Ct. 2129
| SCOTUS | 2018Background
- WesternGeco owns U.S. patents on an offshore seismic surveying system and uses the technology in surveys rather than licensing it.
- ION manufactured system components in the United States, shipped them abroad, and those components were assembled overseas into systems that competed with WesternGeco.
- WesternGeco sued under 35 U.S.C. §§271(f)(1) and (f)(2); jury awarded $12.5M in royalties and $93.4M in lost profits.
- ION conceded liability under §271(f)(2) but challenged the lost-profits award as an impermissible extraterritorial application of the Patent Act.
- The Federal Circuit vacated the lost-profits award as barred by the presumption against extraterritoriality; the Supreme Court granted certiorari and reversed.
Issues
| Issue | WesternGeco's Argument | ION's Argument | Held |
|---|---|---|---|
| Whether awarding lost foreign profits under §284 for infringement found under §271(f)(2) is an extraterritorial application barred by the presumption against extraterritoriality | §284 is a remedial statute tied to the infringement found under §271(f)(2); because §271(f)(2) focuses on domestic supply from the U.S., awarding foreign lost profits is a permissible domestic application | Damages compensating foreign injuries are extraterritorial; §284’s award of foreign lost profits exceeds the domestic scope of U.S. patent rights | The Court held the award was a permissible domestic application: focus is the infringement (here §271(f)(2)’s domestic act of supplying in/from the U.S.), so §284 may compensate lost foreign profits causally tied to that infringement. |
| How to apply the two-step extraterritoriality framework | §284 should be analyzed with the infringement provision that triggered it; here that points to domestic conduct under §271(f)(2) | §284’s remedial character doesn’t avoid extraterritorial limits; awarding foreign damages effectively extends U.S. patent law abroad | Court exercised discretion to resolve at step two (focus test) and concluded the relevant conduct occurred in the U.S., so application is domestic. |
| Whether the ‘‘damage’’ (foreign loss) or the regulated conduct (supplying from U.S.) defines the statute’s focus | Focus is the infringement conduct that §284 remedies; damages are the means to compensate that infringement | Focus should be on where the injury (lost profits) occurred; foreign injury makes the remedy extraterritorial | Court held the statutory focus is the infringement (the domestic supply under §271(f)(2)), not the situs of subsequent injuries; foreign events were incidental. |
| Limits on damages despite holding for WesternGeco (e.g., proximate cause) | §284 allows adequate compensation including lost profits where causation and other doctrines are satisfied | Even if extraterritoriality is not a bar, statutory text and precedent mean foreign lost-profits recovery is not permitted | Court did not resolve other doctrines (proximate cause, foreseeability); left open that such doctrines may limit recovery on remand. |
Key Cases Cited
- Foley Bros., Inc. v. Filardo, 336 U.S. 281 (presumption that federal statutes apply domestically)
- Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (§271(f) vindicates domestic interests; warns against converting U.S. supply into a springboard for broad liability)
- Morrison v. National Australia Bank Ltd., 561 U.S. 247 (framework for identifying statute’s focus in extraterritoriality analysis)
- General Motors Corp. v. Devex Corp., 461 U.S. 648 (§284’s goal is full compensation for infringement)
- Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476 (measure of damages tied to the patent owner’s loss from infringement)
- Yale Lock Mfg. Co. v. Sargent, 117 U.S. 536 (lost-profits may be awarded to make patentee whole)
- Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (predecessor context: components made in U.S. then assembled abroad did not constitute domestic ‘‘making’’ absent statutory change)
- Birdsall v. Coolidge, 93 U.S. 64 (damages must be commensurate with unlawful acts)
- Brown v. Duchesne, 60 U.S. 183 (use of invention outside U.S. is not an infringement under U.S. patent law)