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Taking Notes Global Portfolio Management Strategies in view of Life Technologies v. Promega

Contents

Life Tech v. Promega 1-3

Pop Quiz 3

Selected IP Precedent 4

As expected another patent decision came down last

month from the US Supreme Court. Life Technologies v.

Promega, Case No.: 14-1538 (Feb. 22, 2017). This case involves the question of “substantiality” with respect to

inducing infringement by manufacturing some portion of a device’s components in the United States for what would be

an infringing configuration abroad, had the configuration been assembled domestically. 35 USC §271(f)(1). Global

portfolio managers will want to take notes, this question can

be an important one for domestic patent holders that sell their products globally. One does not want a competitor to

benefit from the manufacture or sale of all or a “substantial portion” of a patented invention locally and compete with

their products abroad without obtaining a license.

The Court was unanimous as to its holdings that: (1) the “substantial portion” limitation in the statute was strictly a

quantitative measure (not qualitative) and (2) a singular

March 2017

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component of the patented invention is

insufficient to create liability under §271(f)(1), without being tailored for infringement under

§271(f)(2). Justice Sotomayor, writing for the Court,

started by answering the first question –

whether “a substantial portion of the components of a patented invention” in

§271(f)(1) regards a quantitative measure? Finding in the affirmative, the Opinion first

looked at the plain and ordinary meaning of the word “substantial.” Though, the Court

conceded that “‘[s]ubstantial,’ as it is commonly

understood, may refer either to qualitative importance or quantitatively large size.”

(emphasis added). Not finding a disposition of the issue in the plain and ordinary meaning of

the term “substantial,” the Court next looked to

its neighboring text: “[b]oth ‘all’ and ‘portion’ convey a quantitative meaning.” Nothing in the

neighboring text gives clues as to intent for a qualitative meaning. From there the court

employed a common canon of statutory

construction to construe the statute in a manner as to give meaning to all terminology in

the code. “A qualitative reading would render the phrase ‘of the components’ unnecessary

the first time it is used in §271(f)(1).” The Court found it impractical to task fact-finders,

specifically jurors, with determining what a

“substantial portion” means from a qualitative standpoint on a case-by-case basis.

(Interestingly enough, the “black box” in this case found in favor of inducement based upon

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the manufacture of a single component; was

this boundary-pushing verdict reached by interpreting “substantial portion” to have a

purely quantitative or quasi-qualitative meaning? In any event, something about the

case caused them to rise to the occasion at the

district court level and find for liability.). The Court’s Opinion to this point begs the

question: well, if quantitative is the measure of substantiality, how much is enough? Leaving

us panting, the Court dodged that bullet, only

telling us that a single component in a multicomponent invention is not enough. In

arriving at this conclusion, the Court looked to the plain and ordinary meaning of the word

“components” in §271(f)(1). Seeing that it is written in the plural sense the Court reasoned

that Congress must have intended for more

than one component to be exported in order to trigger liability. The Court also found

guidance in the neighboring statute §271(f)(2) indicating that it works in tandem with §(f)(1),

which defines the only circumstance where the

exportation of a single component could create liability for inducement in a multicomponent

device. I.e., that is where the component is “especially made or especially adapted for use

in the invention.” The Court reinforced the

presumption against the extraterritorial effect of domestic laws, citing Microsoft v. AT&T.

Justice Alito and Justice Thomas signed onto the Opinion in large part, concurring in

the judgment. They wrote separately, however, to taunt the notion that Deepsouth

Life Technologies v. Promega cont.

Packaging (a case involving the exportation of all patented

components, which served as the impetus for this legislation)

provided any competent instruction as to the interpretation of

the term “substantial portion.” The overall Opinion granted

some substantial peace of mind to global manufacturers as

many answers were provided.

IP stakeholders now know that the extraterritorial effect

of §271(f) is more limited than before. Practically speaking,

however, we still don’t know how much of a multicomponent

invention (above a single component) need be shipped abroad

to create liability and licensing obligations. Certainly, with the

probability of being heard at the US Supreme Court in the low

1% range these days, one could reasonably rely on the Federal

Circuit’s more liberal bent on the matter to revise ones

portfolio-management strategy. Remember, the hippie CAFC

thought one component was enough, which suggests that two

components of ten might also be sufficient to impose liability.

Undoubtedly, the term substantial – whether quantitative

or qualitative in measure – is a comparative term. This

meaning that whatever subcomponents are shipped, their

“substantiality” will be compared to the completed invention.

Did the Supreme Court also rule that one fifth or 20% of the

invention is insubstantial?... I guess we will find out.

Until then, a reasonable portfolio-management strategy

considering Life Technologies would be to continue enforcing

licensing obligations for the manufacture or sale of

components greater than one. It can be expected, still, that

an optimistically reasonable manufacturer might now

challenge licenses for subcomponent manufacturing in any

quantity less than… “all” or something proximate to the same.

Pop Quiz

These two inventors each

celebrated their birthdays

in March, one on the 3rd

and the other on the 14th.

Their contributions are in

the areas of

communications and

physics, can you guess

who they are?

Answer to the last quiz:

February is National

Library Lover’s Month!!!

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Life Technologies v. Promega cont. cont.

Authored by

Kristy J. Downing, Esq.

Send comments to kristyjdowning@gmail.com

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Secure Axcess, LLC v. PNC Bank National Association, et al., Case No.: 2016-1353 (Fed. Cir. Feb. 21, 2017)(reversing the PTAB’s finding of unpatentability under §103 in a CBMPR because the patent did not meet the definition of a “financial product or service” as claimed. Examples of “financial products” were found in several prior cases cited: Versata at 1312-13, 1325-26, Blue Calypso at 1339-40 and SightSound at 1315-16.)(J. Lourie dissented as to the determination of “financial” or non- “financial” as claimed because the specification made “clear that the invention is to be used in the management of a financial service.”).

PersonalWeb Technologies, LLC v. Apple, Inc., Case No.: 2016-1174 (Fed. Cir. Feb. 14, 2017)(the Patent Trial and Appeal Board’s inter partes review findings of unpatentability under §103 were reversed for lack of adequate support for the findings:

The Board did not sufficiently explain and support the conclusions that (1) [the prior art] disclose[d] all of the elements recited in the challenged claims of the ‘310 patent and (2) a relevant skilled artisan would have been motivated to combine [the prior art references] in the way the ‘310 patent claims and [then] reasonably expect[] success.

).

Selected IP Precedent