Supreme Court Rules That Supplier Does Not Infringe Section 271(f)(1) By Exporting a Single Component Used to Fabricate Patented Device Outside U.S.

Wednesday, February 22, 2017

In its second patent decision of the October 2016 term, the U.S. Supreme Court ruled today that 35 U.S.C. § 271(f)(1), which can create infringement liability when “all or a substantial part of the components” of an invention patented in the United States are exported for assembly outside the country, does not apply when an accused infringer exports only a single component. The Court based the result on a careful textual analysis of the statute. The Court’s decision leaves unresolved other important questions, including the number of exported components needed to trigger liability under the statute. Life Technologies Corp. v. Promega Corp., No. 14-1538 (Feb. 22, 2017).

Background

Promega Corporation sued Life Technologies Corporation for infringement of U.S. Patent No. RE 37,984, titled “Process for analyzing length polymorphisms in DNA regions.” The patent claims cover a genetic testing kit that contains five components, including an enzyme known as Taq polymerase. Life Technologies manufactured that polymerase component in the United States, then shipped it to the United Kingdom where it was combined with the other four kit components. Promega contended that Life Technologies was providing “a substantial portion of the components of a patented invention” in violation of Section 271(f)(1):

Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

(emphasis added). The district court granted judgment in favor of Life Technologies on the ground that a single component is not “all or a substantial portion of the components of a patented invention[.]” The Federal Circuit reversed, concluding that a “substantial” portion from Section 271(f)(1) means an “important” or “essential” portion, and in certain circumstances a single “main” component constitutes an “important” or “essential” portion of the components. Promega Corp. v. Life Technologies Corp., 773 F.3d 1338 (Fed. Cir. 2014).

Supreme Court Rules That “Substantial” Is Quantitative, Not Qualitative

In a 7-0 decision, the Supreme Court reversed and ruled that Section 271(f)(1) does not cover Life Technologies’ export of Taq polymerase. Chief Justice Roberts recused himself from the case. In the opinion, Justice Sotomayor wrote that the text of the statute indicates that “substantial” refers to the quantity of components exported by a defendant, not the qualitative importance of a component:

[T]he phrase “substantial portion” is modified by “of the components of a patented invention.” It is the supply of all or a substantial portion “of the components” of a patented invention that triggers liability for infringement. But if “substantial” has a qualitative meaning, then the more natural way to write the opening clause of the provision would be to not reference “the components” at all. Instead, the opening clause of §271(f)(1) could have triggered liability for the supply of “all or a substantial portion of . . . a patented invention, where [its] components are uncombined in whole or in part.” A qualitative reading would render the phrase “of the components” unnecessary the first time it is used in §271(f)(1). Whenever possible, however, we should favor an interpretation that gives meaning to each statutory provision. See Hibbs v. Winn, 542 U.S. 88, 101 (2004). Only the quantitative approach does so here. Thus, “substantial,” in the context of §271(f)(1), is most reasonably read to connote a quantitative measure.

Slip op. at 6 (emphasis added). The Court rejected Promega’s proposal that “substantial” could have both quantitative and qualitative aspects, noting that “the statute’s structure provides little support for a qualitative interpretation of the term.” Id. at 7.

The Court further held that Section 271(f)(1) requires more than a single component to be supplied. Again, the Court performed a textual analysis, emphasizing that “[t]he section is targeted toward the supply of all or a substantial portion ‘of the components,’ where ‘such components’ are uncombined, in a manner that actively induces the combination of ‘such components’ outside the United States. Text specifying a substantial portion of ‘components,’ plural, indicates that multiple components constitute the substantial portion.” Slip op. at 9. Noting that Congress enacted Section 271(f) in response to the Court’s Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972) decision, which held that creating a complete kit of parts for assembling a patented device overseas was not direct infringement under Section 271(a), the Court concluded that a quantitative interpretation was consistent with Congressional intent. The Court held that the requirement is also consistent with Section 271(f)(2), which can create liability for exporting a single component that is especially made or adapted for a claimed invention:

Our ruling today comports with Congress’ intent. A supplier may be liable under §271(f)(1) for supplying from the United States all or a substantial portion of the components (plural) of the invention, even when those components are combined abroad. The same is true even for a single component under §271(f)(2) if it is especially made or especially adapted for use in the invention and not a staple article or commodity. We are persuaded, however, that when as in this case a product is made abroad and all components but a single commodity article are supplied from abroad, this activity is outside the scope of the statute.

Slip op. at 11.

Practical Significance

Although the Life Technologies decision makes it clear that U.S.-based suppliers do not face liability under Section 271(f)(1) for exporting a single component to be used to assemble a patented invention, it did not address other issues. First, although a single component is not “substantial,” the Court did not discuss the actual number of components needed for liability, nor how to determine if exported materials are one or multiple “components.” See Alito, J. Concurring Opinion (“today’s opinion establishes that more than one component is necessary, but does not address how much more”)(emphasis in original). Second, the Court did not consider whether Section 271(f) is limited to cases where a defendant causes another entity to practice the claimed invention, but does not apply when a defendant “exports” to itself. See 773 F.3d, at 1358–1360 (dissent by Chief Judge Prost). Finally, the Court did not analyze the intent requirements for liability under Section 271(f).

Although the Life Technologies decision provides some guidance to suppliers exporting a single commodity component, careful analysis is warranted to assess potential liability for infringement in other circumstances.