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En Banc Federal Circuit Overturns Union Carbide and Rules that Methods Are Not Subject to s. 271(f) Infringement Claims
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En Banc Federal Circuit Overturns Union Carbide and Rules that Methods Are Not Subject to s. 271(f) Infringement Claims By Paul Devinsky
The en banc U.S. Court of Appeals for the Federal Circuit has overturned its 2007 Union Carbide Corp. v. Shell Oil Co. precedent, ruling that 35 U.S.C. s. 271(f) does not cover method claims. Cardiac Pacemakers, Inc. v. St. Jude Medical, Inc., Case Nos. 07-1296, -1347 (Fed. Cir., Aug. 19, 2009) (en banc) (Lourie, J.) (Newman, J.; dissenting).
Section 271(f) provides a form of offshore patent infringement relief against persons who sell the "components" of a patented invention in the United States for assembly abroad. The statue provides that one who "supplies ... 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" shall be liable as an infringer.
The History of s. 271(f) at the Federal Circuit and Supreme Court In its 2005 decision in Eolas Technologies, Inc. v. Microsoft Corp., the Federal Circuit held that Microsoft could not avoid s. 271(f) liability by exporting golden master disks containing software code that were subsequently copied onto computer hard drives and sold outside the United States. Although the Eolas decision involved both product and method claims, the context of "patented invention" in that case that was an apparatus claim. In holding that Microsoft was liable under s. 271(f), the Court found that the software code on Microsoft's master disks was a "component" of a patented invention under s. 271(f) and that the term "component" was not limited to physical items.
Shortly thereafter the Federal Circuit issued its decision in AT&T Corp. v. Microsoft Corp. (AT&T I). AT&T I involved a factual scenario similar to that in Eolas; Microsoft exported golden master disks containing software that was covered by a patent held by AT&T. The software, once shipped abroad, was copied onto hard drives and sold to foreign customers. In AT&T I, the Federal Circuit, relying on its Eolas decision, held that intangible software code was capable of being a component of a patented invention and that such software was "supplied" for purposes of s. 271(f) when a "single copy [was sent] abroad with the intent that it be replicated."
In 2006, in Union Carbide a Federal Circuit panel explicitly held that s. 271(f) applied to method claims. The Union Carbide case involved the export of a catalyst for performing a patented method for producing ethylene oxide. The panel held that the exportation of the catalyst and use of the patented method abroad implicated s. 271(f), finding the catalyst to be "component" under s. 271(f). The panel held that "because s. 271(f) governs method/process inventions, [defendant's] exportation of catalysts may result in liability" under that section.
Then, in 2007, the Supreme Court granted certiorari and reversed the Federal Circuit decision in AT&T I (AT&T II). In AT&T II, the Supreme Court held that Microsoft did not supply combinable components of a patented invention when it shipped master disks abroad to be copied. Because the foreign-made copies of Windows that were installed on computers were supplied "from places outside of the United States," the Supreme Court held that Microsoft had not supplied components from the United States. However, the Supreme Court reserved the issue of whether "an intangible method or process ... qualifies as a 'patented invention' under s. 271(f)," but noted that if so, the "combinable components of that invention might be intangible."
Federal Circuit Analysis Against that background, the Federal Circuit took, en banc, the issue of whether s. 271(f) applies to method claims--and ruled that it does not.
The Court disagreed with Cardiac's definition of "component" that would encompass "the apparatus that performed the process" as "clearly contrary to the text of s. 271(f)" and inconsistent with the statute considered in context. As the Court explained, s. 271(c) contrasts "a component of a patented machine, manufacture, combination, or composition" with a "material or apparatus for use in practicing a patented process" thus evidencing the belief of Congress that a "component" was separate and distinct from a "material or apparatus for use in practicing a patented process." On this basis the Court reasoned that "a material or apparatus for use in practicing a patented process is not a component of that process. The components of the process are the steps of the process." As the majority explained, s. 271(f) "requires that components be 'supplied' and it is that [that] requirement that eliminates method patents from s. 271(f)'s reach ... since supplying an intangible step ... is a physical impossibility."
In a passage almost certain to be quoted in scores of future briefs, the Court concluded:
"In sum, the language of s. 271(f), its legislative history, and the provision's place in the overall statutory scheme all support the conclusion that s. 271(f) does not apply to method patents. We therefore overrule,
to the extent that it conflicts with our holding today, our decision in Union Carbide (citation omitted), as well as any implication in Eolas or other decisions that s. 271(f) applies to method patents." Applied to the facts of this case, the Court found that the implantable cardioverter defibrillators (ICDs) shipped outside of the United States do not infringe Cardiac's method claim, which requires the steps of determining a heart condition, selecting cardioversion as the appropriate therapy and executing a cardioverting shock. Since Cardiac's allegation is only that St. Jude is shipping a device that is capable of performing the claimed method, the court concluded that St. Jude is not liable for infringement under s. 271(f) based on ICDs exported abroad.
The Dissent In Judge Newman's view "the statutory term 'patented invention' in s. 271(f) has the same meaning in this subsection as in every other part of Title 35:...
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