On Tuesday, the Supreme Court heard oral arguments in Life Technologies v Promega and considered the statutory and policy implications of selling a single component of a patented invention abroad.
The Court granted certiorari to address “[w]hether the Federal Circuit erred in holding that supplying a single, commodity component of a multi-component invention from the United States is an infringing act under 35 USC § 271(f)(1), exposing the manufacturer to liability for all worldwide sales.”
Components of a case about components
Life Technologies sells DNA testing kits made up of a number of components. The company was granted non-exclusive cross-licences for components for which Promega has patents, and one patent for which Promega has an exclusive license agreement. The only element of the kit that Life Technologies manufactures in the US is an enzyme called a Taq polymerase, which is one of the components of one patent for which Promega has an exclusive license. This component is shipped to Life Technologies’ UK facility, from which it and the other elements of the kit are together shipped to purchasers.
Promega filed suit against Life Technologies, claiming that the kits the latter was selling were not covered by the licences. The district court agreed with Promega, found Life Technologies’ kits to infringe and a jury trial to determine damages followed. But, because Life Technologies only manufactures one component of one of the patents Promega accused it of infringing in the US, the district court ruled that Life Technologies is not liable for damages for the Tautz patent, because the Taq polymerase does not constitute a “substantial portion” of the components of the patent, as is set out in Section 271(f)(1) of the statute.
On appeal, the Federal Circuit disagreed with that interpretation, and ruled that, although the taq polymerase is only one element of the Tautz patent, it is crucial enough to meet the requirement of being a “substantial portion”.
How much is enough?
During oral arguments (a transcript of which is here), the parties and the US government argued before the Supreme Court about whether “substantial” is to be measured quantitatively, qualitatively, or by some combination of the two, and how extraterritoriality issues come into play in interpreting the statute.
Arguing for Promega, WilmerHale’s Seth Waxman emphasised historical case law, the history of the statute’s development and the importance of bad intent. Waxman said that he and his client agree with the US government’s argument that whether Congress intended “substantial” to be defined qualitatively or quantitatively is dependent upon circumstances.
However, he argued Congress chose not to “enact something that counted down from all the components,” and, instead, “started from the ground up from contributory infringement, which is just one component specially designed, and active inducement, which doesn’t require the supply of any components.” By this he meant that his interpretation of that statute was that Congress intended for there to be increasing remedies from relatively minor infringements up, rather than diminishing to nothing from infringement of the total product down, and that this implied that the analysis of how substantive a component is could be (at least in part) qualitative.
This interpretation was complicated by extraterritoriality. Arguing for Life Technologies, Sidley Austin’s Carter Phillips said: “The United States has agreed that each country should regulate its own patent rights.” The ambiguity of the term “substantial portion,” Phillips claimed, is why “the principle against extraterritoriality drives you in the direction of saying Congress meant only to allow US patents to operate outside the United States in very narrow circumstances.” He said that an overbroad interpretation of Section 271(f) could give rise to “issues of international relations that...Congress is in a much better position than the courts to sort out.”
Risk of over-reach and impracticality
According to John DiMatteo of Holwell Shuster & Goldberg, Promega’s approach risks “punishing a US company for doing something anyone else in the world could do with impunity.” He says this is “beyond what Congress intended”.
The patent for the polymerase in question has expired in the UK, where Life Technologies exported it from the US. “This is a staple or commodity that has many uses besides this,” said Tom Duston of Marshall Gerstein & Borun. He said the Court questioned whether a ruling in favour of Promega “is going to disadvantage US suppliers as a pariah in the supply chain”.
DiMatteo feels confident that “Life Tech is going to win and I think the Federal Circuit is going to be reversed by the Supreme Court”. From his understanding of the oral arguments and the questions posed by the Justices, reading the statute as quantitative, as suggested by Life Technologies, rather than qualitative is more “practical, consistent and objective”. He says: “That seemed to be echoed throughout the majority of the Justices.”
