November 2014

Spotlight Info

In Halo Electronics, Inc. v. Pulse Electronics, Inc., Nos. 13-1472, -1656 (Fed. Cir. Oct. 22, 2014), the Federal Circuit affirmed the district court’s judgment that Pulse Electronics, Inc. (“Pulse”) did not sell or offer to sell within the United States products that Pulse manufactured, shipped, and delivered to buyers outside the United States, despite evidence that Pulse engaged in negotiations and contracting activities with respect to those products in the United States.  The Court explained that “when substantial activities of a sales transaction, including the final formation of a contract for sale encompassing all essential terms as well as the delivery and performance under that sales contract, occur entirely outside the United States, pricing and contracting negotiations in the United States alone do not constitute or transform those extraterritorial activities into a sale within the United States for purposes of § 271(a).”  Slip op. at 12.  According to the Court, any doubt as to whether such activities constitute a sale within the United States under § 271(a) is resolved by the presumption against extraterritorial application of U.S. laws.  After concluding that Pulse did not sell the products in question within the United States, it further held that Pulse did not offer to sell those products within the United States for purposes of § 271(a) because the locations of the contemplated sales were outside the United States.  The Court explained that, in order to be infringement, an offer to sell must be an offer contemplating sale in the United States. 

The Federal Circuit also affirmed the district court’s holding that Pulse did not willfully infringe Halo Electronics, Inc.’s (“Halo”) patents because, although Pulse was unsuccessful in challenging the validity of the Halo patents, Pulse did raise a substantial question as to their obviousness. Thus, the objective prong of the willfulness inquiry was not satisfied.  In their concurrence, Judges O’Malley and Hughes agreed with the majority’s decision to affirm all aspects of the district court’s decision but urged a reevaluation of the standard for enhanced damages in light of Highmark, Inc. v. Allcare Health Management Systems, Inc., 134 S. Ct. 1744 (2014), and Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014), and the terms of the governing statutory provision, 35 U.S.C. § 284 (2012).  See this month’s edition of Last Month at the Federal Circuit for a full summary of this decision.