Argument analysis: Breyer and Kagan seek middle ground on damages for patent infringing exports

Posted Mon, April 16th, 2018 11:02 pm by means of Ronald Mann

The justices’ 2nd argument the day gone by morning used to be WesternGeco v Ion Geophysical Corp., a case that calls for the justices all over again to believe  Section 271 of the Patent Act. Although the Patent Act in most cases does now not practice to behavior outdoor the country’s borders, that phase imposes a slim (and arguable) exception that allows a go well with for infringement of a home patent when elements are made within the United States and shipped in another country for meeting into the patented software.

The specific query right here comes to the damages to be had to the patentholder. Ordinarily, in a purely home patent case, the patentholder could be entitled to each a cheap royalty (what the infringer would have paid if it had authorized the generation from the patentholder) and misplaced income (alternatives misplaced as a result of the infringement). Here, for instance, the infringer (the respondent ION) used to be ordered to pay a royalty of about $12 million for production and delivery elements that, when assembled, would infringe patents of petitioner WesternGeco. Separately, the decrease courtroom ordered ION to pay damages of about $90 million that WesternGeco would have earned if it were in a position to promote carrier contracts to the in another country shoppers of the assembled gadgets. Although in the beginning look the 2 portions of the award appear to overlap, all agree that the wear and tear award could be correct if all the task happened regionally. The slim query for the justices is whether or not WesternGeco can get each the royalties and the misplaced income damages.

As a bunch, the justices gave the impression a ways from settled on a solution. About the one factor that gave the impression transparent from the argument used to be that few if any of the justices are in a position to just accept WesternGeco’s argument that it is kind of mechanically entitled to the damages – that the enactment of Section 271 (labeling ION’s behavior infringement) is sufficient to justify the overall vary of typical patent treatments with out regard to the positioning of the behavior. Justice Neil Gorsuch, for instance, commented to Paul Clement (representing the patentholder) that “you don’t have a … lawful monopoly to use this technology abroad. That doesn’t belong to you. …. And so why would you get lost profits … because of a third party’s use entirely abroad? …. Your patent doesn’t run to the high seas, and so your uses aren’t protected there.”

In a identical vein, Justice Stephen Breyer used to be pervasively nervous in regards to the “comity” implications of the dispute – the worries different nations would possibly have with an American rule implementing massive damages for business task outdoor the borders of the United States and wholly lawful within the nation the place it happens. So, for instance, at one level he requested Zachary Tripp (showing for the federal government in fortify of the patentholder) to believe what would possibly occur if:

France ha[d] this legislation that you wish to have right here, proper? Joe Smith is going to France at some point and he makes a tiny particle, which it seems violates anyone else’s French patent. He ships it again to the United States, the place it bureaucracy a small a part of an overly massive and treasured gizmo. And swiftly, we find that he’s paying all the income of all the gizmo business to a few French corporate that had a small patent on a small phase. Now all I’ve to do is generalize from that and I feel, my God, we have now a large number of issues right here.

For Breyer, the entanglement with international trade used to be troubling: “I can see how that would, in fact, upset foreign countries a lot, because, after all, it wasn’t even a violation of any foreign patent law.” Returning to that theme many times, Breyer emphasised his fear in regards to the possible backlash from a call in choose of the patentholder. “I mean, if we can have a law like this, so can every other country. … I mean, suppose 10 countries do this.  I try to think about that and I see chaos or confusion. And that point, I think part of comity is, what happens if everybody does it?”

At the similar time, a number of justices had been reluctant to offer protection to the infringer fully beneath a so-called presumption in opposition to extraterritorial studying of statutes – a presumption that the Patent Act must now not be learn to use in another country with out Congress’ specific approval.  Justice Samuel Alito, for instance, idea this sort of ruling may now not be reconciled with the textual content of the statute:

If you’ve a legal responsibility provision that claims there’s legal responsibility for acts which are dedicated in another country, what sense does it make to mention, neatly, even if Congress thinks there must be legal responsibility for those acts dedicated in another country, we need to analyze the remedial provisions one after the other to peer whether or not they sought after any treatment for those acts which are dedicated in another country?

Alito’s resistance to the infringer’s argument is especially disheartening for the infringer, as a result of Alito wrote the courtroom’s closing main determination on the presumption in opposition to extraterritoriality.

Similarly, Justice Anthony Kennedy many times pressed Kannon Shanmugam (who defended the decrease courtroom ruling protective the infringer) to confess that he used to be looking for to offer protection to his consumer from the results of its infringing habits: “[Y]our position is that the petitioner is not entitled to full compensation for its injury? That’s your position?”

Justice Ruth Bader Ginsburg appeared to succeed in a identical place from a distinct baseline, suggesting that copyright legislation would ponder absolutely compensatory damages in a case like this one: “Isn’t that exactly how the copyright law is applied under the so-called predicate act doctrine? The copyright owner can get damages flowing from the exploitation abroad of domestic acts of infringement. Isn’t this an application to the patent field of the same doctrine?”

You would possibly assume stark department would float from the stress between the feedback of Ginsburg and Kennedy (excited by departing from the regimen norm of complete reimbursement) with the feedback of Gorsuch and Breyer (involved in regards to the huge succeed in of American legislation important to supply complete reimbursement). But Breyer and Justice Elena Kagan gave the impression to be pushing for a middle ground, during which courts would use tort-law ideas of “proximate cause” to restrict unfastened awards of damages for behavior best tenuously associated with the home task of the infringer. Kagan, for instance, advised to Shanmugam that his parade of horribles used to be not anything greater than a “classic law school proximate-cause hypo. I mean, that’s what that hypo is. And it suggests that if there’s a problem here, it’s a problem about where you draw the causal line. It’s not a problem about some categorical extraterritoriality rule.” Welcoming Kagan’s advice, Breyer defined close to the top of the argument proximate-cause limitation on the in a position availability of misplaced income in circumstances like this one would unravel his considerations about comity:  “If you have a tough proximate-cause law, … you will stop people from being fully compensated, but the reason you do it is because you’re afraid with 92 district courts and juries and so forth, it’ll get out of control and be a kind of major problem with other countries.”

In the top, then, I be expecting an excellent quantity of again and forth a few of the justices ahead of they arrive to relaxation on this one. I wouldn’t be expecting the sorts of virulent dissents that we see so recurrently in late-June selections, however I do assume it’ll take fairly some time for the justices to settle on positions from such disparate beginning issues.

Posted in WesternGeco LLC v. ION Geophysical Corp., Featured, Merits Cases

Recommended Citation:
Ronald Mann,
Argument research: Breyer and Kagan seek middle ground on damages for patent infringing exports,
SCOTUSblog (Apr. 16, 2018, 11:02 PM),

Updated: April 17, 2018 — 3:07 am
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