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On June 22, 2018, in WESTERNGECO LLC v. ION GEOPHYSICAL CORP., the U.S. Supreme Court ruled that ION Geophysical owed WesternGeco lost profit damages for infringing WesternGeco’s patents on systems for surveying the ocean floor. The issue in the case was whether WesternGeco could recover damages from ION when it built its system from components manufactured in the United States and shipped them to companies overseas where they were assembled into infringing systems. The jury in the district court found ION liable for patent infringement and awarded WesternGeco damages in the form of royalties and lost profits. ION moved to set aside the verdict, arguing that WesternGeco could not recover damages for lost profits because the U.S. Patent laws do not apply extraterritorially—meaning that WesternGeco should not be allowed to recover damages for sales outside of this country to respect the sovereignty of other country’s laws.
The district court denied the motion, but the U.S. Court of Appeals for the Federal Circuit reversed. The Federal Circuit found that ION was liable for patent infringement, but the principle of extraterritoriality prevented WesternGeco from recovering lost profit damages for ION’s infringement. The U.S. Supreme Court reversed and remanded the case to the Federal Circuit, finding that WesternGeco’s award for lost profits was permissible because the U.S. patent laws, specifically Section 271(f) of the Patent Act, were infringed in the United States by ION’s exporting of the system components that were assembled overseas. The Supreme Court found that extraterritoriality did not apply in this case because the U.S. statute was infringed in the United States, and under Section 284 of the Patent Act WesternGeco was permitted to recover damages for infringement that occurred in the United States, even if the sales occurred overseas.
It’s notable that Section 271(f) was written to cover situations like this in which defendants attempt to avoid infringement by assembling infringing products overseas. This case is applicable to other forms of patent infringement that occur in the U.S. but sales occur overseas, for example when infringing products are made in the U.S. and shipped and sold abroad. The WesternGeco case is important for patent holders because it says that patent holders are entitled to recover damages for sales overseas when the infringement occurs in the United States.
The Corcoran Law Firm is knowledgeable and experienced in all areas of patent law and is ready to assist you with your patent infringement case. Please call us any time at (903) 945-6808 or email us at peter@corcoranip.com.
About the Author Peter Corcoran is the founder of The Corcoran Law Firm. He graduated from
law school in 2001 from The American University Washington College of Law
in Washington, DC and from the Georgetown University Law Center in 2007.