WESTERNGECO LLC V. ION GEOPHYSICAL CORP.

Before the Supreme Court. Thomas delivered opinion, joined by Roberts, Kennedy, Ginsburg, Alito, Sotomayor, and Kagan.  Gorsuch dissenting, joined by Breyer.

Summary: Patentee may recover foreign lost profits, where infringer violated § 271(f)(2) by exporting from the United States a component of a patented invention.

A jury found ION Geophysical liable for infringement under § 271(f)(2), and awarded WesternGeco lost profits for lost foreign sales under § 284.  On appeal, ION Geophysical argued this decision violated the general rule that federal statutes only apply within the territorial jurisdiction of the United States.  The Supreme Court addressed the question of extraterritoriality, by analyzing whether the conduct relevant to the statute’s “focus” occurred in the United States.  The focus of §284 is to award damages adequate to compensate for infringement—the focus is “the infringement.”  The infringement statute—§ 271(f)(2)—focuses on domestic conduct, namely supplying components from the United States.  And although WesterGeco recovered for lost foreign sales, the damages themselves were merely the means by which the statute achieves its end of remedying a domestic infringement.

In dissent, Gorsuch expressed concern that permitting damages for lost foreign sales under U.S. patent law would allow other countries to use their own patent laws to exert control over the U.S. economy.  Gorsuch also opined that because the act of patent infringement must be domestic, a patent owner’s recovery should likewise be limited to its own domestic activities, not its international activities.

This case is: WESTERNGECO LLC V. ION GEOPHYSICAL CORP.

Written by: April K. White and Mark Kachner

Editor: Paul Stewart