Patent Suits Have Global Impacts

Authored by Dori J. Hines and Justin A. Hendrix

It's common for electronics companies to engineer their products in the United States but manufacture and sell them abroad. But it's not always clear when such activity is a U.S. "sale" or "offer for sale" that would be covered by U.S. patent law, as we explained in a recent article.

A recent federal court decision showed this uncertainty also exists in the context of a court-imposed injunction following a finding of patent infringement. By understanding the contours of what constitutes a U.S. sale or offer for sale, companies can better understand the range of activities in which they can still operate should they be held liable for patent infringement and find themselves subject to an injunction.

Under U.S. patent law, infringement exists when, among other things, anyone offers to sell or sells a patented invention in the United States without permission from the patent owner. In a recent decision by the Court of Appeals for the Federal Circuit the appeals court having exclusive jurisdiction over patent matters the court explained that no offer to sell occurs in the U.S. when the offer is made in the U.S. but the products are destined for shipment abroad. The court explained that no sale occurs when the parties merely conduct negotiations in the U.S. for sales that occur abroad.

If a court finds a company liable for patent infringement, the court might, in addition to awarding money damages, issue an injunction banning the company from conducting various activities. For example, the injunction might bar the manufacture or sale of infringing products in the U.S., or might bar the import of products into the U.S.

Before recent clarifications in the law, a court imposing an injunction against a patent infringer might ban it from conducting any activity in the U.S. relating to the infringing product. Indeed, in a case involving infringing sales of semiconductor wafer inspection systems, one federal court issued an injunction banning the infringing company from having communications with companies in the U.S. for purposes of selling the infringing systems.

But after the Federal Circuit's recent clarifications, that same court revised its order. In particular, after considering what activities would constitute a sale or offer to sell, the court issued a revised injunction allowing the defendant to both conduct negotiations and to offer to sell its products within the U.S., but only when the products were destination for use abroad.

Thus, the company was allowed to conduct marketing and sales activities that in the past had been prohibited. Similarly, should your company be selling its products overseas and held liable for infringement, it may still be allowed to conduct many activities—including negotiating the sales of those products in the U.S.