Section 271(f) Does Not Apply to Method Patents

The Federal Circuit Court of Appeals has overruled a 2005 decision which addressed the liability of exporters of components of patented inventions for infringement of method patents. Under 35 U.S.C. §271(f), anyone who exports a component of a patented invention that is combined outside the United States is an infringer. The Court of Appeals, in Union Carbide Chemicals & Plastics Technology Corp. v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir. 2005), held that §271(f) applied to method patents. In Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc. 2009 WL 2516346 (Fed. Cir. 2009), an en banc decision on August 19, 2009, the Court of Appeals reversed its holding in Union Carbide.

The court’s decision focused on subsection (1) of §271(f), although the court noted that its holding applies to subsection (2) as well. Section 271(f)(1) provides that:

“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.”

Cardiac Pacemakers, Inc. (“CPI”) owned several patents, including the ‘288 patent, which covered a method of using a device, an implantable cardioverter defribillator. CPI sued St. Jude Medical for patent infringment in 1996. After several appeals on various issues, the case was remanded to the district court.

The district court denied St. Jude’s motion for summary judgment limiting damages to U.S. sales of the device. The district court held that under §271(f), CPI was entitled to recover damages for the devices sold by St. Jude from the U.S. to foreign customers. St. Jude appealed.

A panel of the Federal Circuit affirmed the district court’s decision, based on Union Carbide. St. Jude petitioned for a rehearing en banc. The en banc court reversed the panel’s decision, holding that §271(f) does not apply to method patents.

The court reviewed the legislative history of section §271(f). That section was enacted to change the existing case law that held that manufacturers who shipped components of a patented device overseas, where the device was then assembled, were not infringers.

The court also reviewed its prior decisions under §271(f). In Eolas Technologies, Inc. v. Microsoft Corp., 399 F.3d. 1325 (Fed. Cir. 2005), the court had found Microsoft liable under §271(f) for infringement of a product claim based on its exportation of master discs with software code that were copied to hard drives and sold overseas. The component was the computer readable code in the product claim. In NTP, Inc. v. Research in Motion, Ltd., the court had analyzed §271(f) in connection with a method patent. The court had held that the sale of BlackBerry devices by RIM in the United States, when used with a network in Canada, did not infringe NTP’s method patent under §271(f). There, the court stated: “it is difficult to conceive of how one might supply or cause to be supplied… the steps of a patented method.”

In Union Carbide, the court had held that the exportation of a chemical catalyst that was used in performing a patented method overseas constituted infringement under §271(f). The catalyst was a component of the patented invention.

The court also discussed AT&T Corp. v. Microsoft Corp., 414 F.3d. 1366 (Fed. Cir. 2005). In that case, the Court of Appeals had reached a similar result to that of Eolas, again finding that software code was a component of a patented invention under §271(f). The court explained that the Supreme Court had reversed the Court of Appeals’ decision, in Microsoft Corp. v. AT& T Corp, 550 U.S. 437 (2007). The Supreme Court held that Microsoft had not supplied a component from the United States because the software code was supplied from outside the United States. The Court of Appeals stated that: “the Court sent a clear message that the territorial limits of patents should not be lightly breached.”

In analyzing §271(f) as it applied to CPI’s device, the court said that the words of the statute should be giving their ordinary meaning. CPI argued that the term “patented invention” in §271(f) referred to all categories of inventions. The court disagreed.

The court held that process or method inventions consist of a series of steps and that the components of those inventions are the steps. The court further held that the steps of a method patent are not the same as the physical components used in performing the method.

The court noted that §271(c) refers to components of a machine or article of manufacture as being distinct from a material or apparatus used in practicing a patent method. Thus, the court found that Congress distinguished between components of a patented invention and the materials used in practicing a patented method. The components of a patented method are its steps, not the materials used to perform the method.

The court held that because the steps of a method cannot be “supplied,” as is required by §271(f), that section cannot apply to method patents. According to the court, it is impossible to supply an intangible step. The court specifically overruled the Union Carbide case.

In concluding, the court emphasized that its decision was consistent with the legislative history of the statute and with the Supreme Court’s presumption against the extraterritoriality of patents.