Winter 2015
AIPLA Chemical Practice Chronicles Newsletter
By Eric P. Raciti; Clara N. Jiménez
Authored by Eric P. Raciti and Clara N. Jiménez
In Promega Corp. v. Life Technologies Corp. No. 13-1011 (Fed. Cir. Dec. 14, 2014) the Federal Circuit, among other things, reversed the district court's grant of LifeTech's motion for judgment as a matter of law of non-infringement of one of the asserted patents.
At issue in the case were five patents that claim methods or kits for carrying out a technique of forensic DNA identification known as "short tandem repeat"(STR) profiling. Id. slip op. at 5. In particular the claims related to multiplex amplification of STR loci, which allows the generation of a detectable amount of DNA that can be used to provide a DNA "fingerprint" unique to each individual. Id. Promega owned four patents ("Promega patents") and licensed the fifth ("the Tautz patent"). Id. The accused products are genetic testing kits that use the claimed STR profiling technique and are used by law enforcement agencies for forensic identification, and by clinical and research institutions for analyzing, for example, cancer cells. Id. at 8-9.
Promega entered into a non-exclusive cross license agreement with Applied Biosystems ("AB")—now a wholly owned subsidiary of LifeTech in 2006. Id. at 9. Under the license AB had the right to use the claimed inventions in the Promega and Tautz patents for "Forensic and Human Identity Applications." Id. Promega later sued LifeTech. For infringement of the Promega and Tautz patents alleging that LifeTech sold testing kits not covered by the cross license. Id. LifeTech responded that it was licensed to practice all of the patents-in-suit and filed counterclaims alleging that the Promega patents were invalid. Id. at 9-10. The district court denied LifeTech's summary judgment motion that the Promega patents were invalid due to lack of enablement and obviousness. Id. The Federal Circuit reversed, finding that the claims were not enabled by the specification, and did not address the issue of obviousness. Id. at 20-21. LifeTech did not challenge the validity of the Tautz patent. Id. at 10.
At the close of evidence, over LifeTech's objection, the district court asked the jury to consider LifeTech's liability under 35 U.S.C. §§ 271(a) and 271(f)(1), explaining that "United States sales" included "all kits made, used, offered for sale, sold within the United States or imported into the United States, as well as kits made outside the United States where a substantial portion of the components are supplied from the United States." Id. at 11. One of the components of LifeTech's kits is manufactured in the United States and shipped to a LifeTech manufacturing facility in the United Kingdom. Id. at 9. The United Kingdom manufacturing facility then assembles and sells the kits worldwide, including in the United States. Id. LifeTech challenged the inclusion of the §271(f)(1) language arguing that it was improper because an alleged patent infringer could not induce itself within the meaning statute. Id. at 11. The jury found that LifeTech willfully infringed the patents and awarded damages to Promega. The district court granted LifeTech's motion for judgment as a matter of law, finding that Promega failed to present sufficient evidence to sustain a verdict under §§ 271(a) and 271(f)(1). On appeal, the Federal Circuit only considered the district court's decision as to the Tautz patent—because the Promega patents were found to be invalid. The Federal Circuit reversed the district court, finding that there was substantial evidence of LifeTech's infringement under both § 271(a) and §271(f)(1).
LifeTech admitted that sales of these accused kits in the United States infringe the Tautz patent under § 271(a). Id. at 22. With respect to infringement under § 271(f)(1), the Federal Circuit noted that the district court had determined that §271(f)(1) requires (1) the involvement of another, unrelated party to "actively induce the combination of . . . components," and (2) that at least two components be supplied from the United States to satisfy the "substantial portion of the components" language of the statutory provision. Id. at 22. Since no other party was involved in LifeTech's assembly of the accused kits, and LifeTech supplied only a single component from the United States a finding of infringement under §271 (f)(1) was not supported by the evidence.
The Federal Circuit concluded that "to actively induce the combination" does not require the involvement of a third party. Id. at 23. The Court began by taking a look at the ordinary meaning of the term "induce" and its use in the legislative history. The Court concluded that if "Congress wanted to limit 'induce' to actions completed by two separate parties, it could easily have done so by assigning liability only where one party actively induced another" to combine the patented components. Id. at 24 (emphasis added). "Another," however, is absent from § 271(f)(1). Id. Instead, the Court noted, the focus of the statute is to induce "the combination of the components of the patented invention." Id. Explaining that the statutory provision was a solution to close the loophole created by Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972)—where an accused infringer circumvented an infringement injunction by shipping separately the components of the infringing machine overseas where the foreign buyers would assemble them the Federal Circuit explained that it is unlikely that Congress intended to hold companies liable for shipping components overseas to third parties, but not for shipping those same components overseas to themselves or their foreign subsidiaries. Id. at 25-26. Finally, the Federal Circuit rejected LifeTech's argument that to actively induce the combination" requires involvement of a third party based on its interpretation of the phrase "actively induces infringement" in the context of 35 U.S.C. § 271(b), citing to Global-Tech Appliances, Inc. v. SEB SA, 131 S. Ct. 2060, 2065 (2011). The Court noted that because § 271(f)(1) lacks the strict liability companion statute, i.e., § 271(a), comparisons to § 271(b) are of limited value. Turning to whether infringement under § 271(f) (1) requires that at least two components be supplied from the United States, the Federal Circuit held that there are circumstances in which a party may be liable under § 271(f)(1) for supplying or causing to be supplied a single component for combination outside the United States. Id. at 27. The Court explained that nothing in the ordinary meaning of the word "portion" suggests that it necessarily requires "a certain quantity or that a single component cannot be a 'portion' of a multi-component invention." Id. at 27. To the contrary, the Court noted, the ordinary meaning of "substantial portion" suggests that a single important or essential component can be a "substantial portion of the components" of a patented invention. Id. The Federal Circuit, then determined that there was substantial evidence to support the jury's conclusion that the kit components supplied by LifeTech from the United States to its foreign facility is a "substantial portion" of the components of the LifeTech's accused genetic testing kits because without it the testing kit recited in the Tautz patent would be inoperable. Id. at 32. The court relied on, for example, testimony from LifeTech's witnesses that the component was the "major" or "main" component of the accused kits. Id.
Chief Judge Prost dissented with the majority's decision regarding infringement under § 271(f)(1). According to Judge Prost, the requirements of active inducement under that statutory provision necessarily mean inducement of another. Dissent at 2. Indeed, Judge Prost noted, the Federal Circuit has never before held—in the context of either § 271(f) or § 271 (b) that a party can induce itself to infringe. Id. The Chief Judge noted that "[t]wice the Supreme Court has held that inducement liability requires a third party," citing Global-Tech and Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005) (an analogous copyright case). And that "[t]he majority cannot point to a single case—from the Supreme Court or otherwise—that supports its contrary interpretation of inducement." Id.
The decision has particular importance for companies that engage in distributed manufacturing in the United States and abroad. As long as the accused infringer "supplies . . . a substantial portion of the components" for the infringing product, it will be liable under § 271 (f)(1). The quantity of the components manufactured and shipped abroad, seems to be irrelevant under this decision as long as the patentee can prove that the component(s) are an essential to the accused infringing product. Because all the elements recited in a claim must be found in the infringing product, one can argue that every component that is covered by a claim element can arguably be "substantial" under the Court's interpretation of the statute. At first blush, the decision seems to expand liability for accused multinational infringers, but we will have to wait and see how district courts implement the decision before drawing conclusions.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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