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August 9, 2006

35 USC 271(f) and the Federal Circuit

A recent Federal Circuit decision held that method claims can be infringed if the method is performed abroad, so long as "components of the method" are exported from the US. See Union Carbide v. Shell Oil Co. (Fed. Cir. 2005).

This case violates a number of statutory interpretation principles, in my view. The greater issue is that until is overruled (not unless, until), it is going to create mayhem in patent law and business planning.

The authority, of course, for patent infringement comes solely from statute. There is no federal common law of patent infringement or unfair competition. The statute at issue provides:

(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.

The legislative history shows that Congress enacted what is now Section 271(f)(1), in response to the Supreme Court's decision in Deepsouth, which held that it was not infringement to assemble abroad a product even where the unassembled parts were shipped from the United States with the intent that they be assembled abroad. It is clear that 271(f)(1) was designed to, and seems largely to have, made it so that the owner of a patent on a product can prevent someone in the US from exporting most or all of the components with the intent that they be assembled abroad. That was its purpose, and it seems to have done the job.

Does 271(f)(1) do more than make it an infringement to export components of a patented product for assembly abroad? The Union Carbide court said so. It held that 271(f)(1) permits the owner of a patent on a method to prevent the exportation of components that will be used abroad to practice the claimed method.

I believe this is wrong -- big time.  I'm not alone.  Professor Joseph Scott Miller has written a letter, signed by a few other professors (including me) to the Solicitor General, arguing that the Federal Circuit is wrong, and needs correction by the Supreme Court.

Professor Miller has written more eloquently than I will here, but I take a slightly different tact than he: plain meaning is enough.

Remember that method claims cover only use of the method. Method claims cover steps, not things. That's a basic point of patent law that is beyond well-settled, even though it's kind of odd.

We know that, as a general first step, you're supposed to construe statutes with ordinary meaning. Let's try. How do I export a step in a method? I can't imagine how that can be done, since once the step is done, it's over. I suppose maybe I could export a cannister, and inside the cannister there's a reaction occuring, and the occuring of the reaction is a step in a method. That might work. It's not enough to export instructions: instructions are not the doing of the method.

Plain language suggests that method claims aren't covered for the reason that there is no "component" of a "method." I've never heard anyone refer to a step in process as a "component." "Have you performed all the components in the process?" Now, "have you used all of the components specified in the method claim" makes sense, but notice that it is not the component that is an element in the method: it is the step of using that component. I can export a component that can be used in a method claim, but what is covered by the method claim is the use of the component, not the component.

Suppose we decide the plain language could -- somehow -- cover method claims. As you know, a key canon of statutory construction is that statutes have to be construed as a whole. Is the word "component" used somewhere else in 35 USC 271? You bet. Check this out: <blockquote>

(c) Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer…. </blockquote>

Notice that Congress used two phrases: "components" describe what are parts of patented products; "material or apparatus" are what are "for use in practicing a patented process." Thus, Congress used distinct phrases -- components are what go into products, materials or apparatus are what are used to practice method claims -- in this section. Thus, under this section, if someone sells in the US a material or apparatus used to infringe (and it's not a stapel article, etc), then they infringe.

Now look back at 271(f)(1): it says people who export components that are assembled abroad infringe; it says nothing about materials an apparatuses (apparati?) used for practicing a patented product.

So, where we are is the ordinary language of the statute doesn't apply, and the phrase "component" is used in the same statute to apply only to product claims.

How did the Federal Circuit miss this? I don't know. I do know, however, that the case is already the subject of discussion among CLE programs I've attended. "How do you draft a method claim to insure it includes components" was one question I heard asked.

You can't because they won't. But we won't get this fixed for a while.

August 9, 2006 | Permalink

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