1. Whether a foreign defendant who offers to sell a patented invention to a foreign entity is liable under 35 U.S.C. § 271(a) absent any proof of business dealings within the United States or communication with American third parties.
2. Whether a defendant may be found liable under 35 U.S.C. § 271(f)(2) for offering to supply a component of a patented invention to an entity outside the United States.
1. No. To find liability under the statute, a patentee must show that some act occurred within the United States, including a commercial offer for sale or a communication by the alleged infringer with a third party that could result in commercial detriment to the patentee.
2. No. The clear language of the statute does not cover a defendant's "offer to supply" a component of a patented invention, therefore a defendant who makes such an offer may not be held liable under 35 U.S.C. § 271(f)(2).
Rotec Industries, Inc. ("Rotec") is the assignee of U.S. Patent No. 4, 170, 291 ("the '291 patent") disclosing a tower crane supported concrete conveyor belt system. Rotec sells the system disclosed by the patent under the trade name "Tower Belt." On August 9, 1995, the People's Republic of China solicited bid proposals for five units of a concrete placing system. Mitsubishi Corp. ("Mitsubishi") and a French corporation, Potain, submitted a joint bid on January 16, 1996. After nearly a year of negotiations, the parties signed a purchase and sale agreement. Rotec asserted that most of the activity proceeding the agreement took place within the United States, and filed suit on February 14, 1997, alleging that the defendants infringed the '291 patent by making an "offer for sale" of a patented invention in the United States in violation of 35 U.S.C. §§ 271(a) and 271(f). The District Court granted of summary judgment in favor of the Mitsubishi, and Rotec appealed.
Mitsubishi did not dispute that the '291 patent claims the system they offered to sell, but instead disputed that they made any offer for sale in the United States. Mitsubishi claimed that their offer for sale was made in China and therefore they were not liable under § 271(a).
Looking to the statutory language, the Federal Circuit sought to determine "how much strength Congress wished to add to the parameters of a patent grant." The court observed that defendants did not offer to sell the entire invention as claimed in the patent, but only certain components of the delivery system. The Federal Circuit noted the Supreme Court's holding in Deepsouth Packing Co. v. Laitram Corp., 406 US 518, 527 (1972), that in order to infringe under § 271(a), an accused device must include all of the limitations contained within the patent claim, not just any one limitation. By analogy, the court held that an "offer to sell" under § 271(a) should be no different.
The Court focused on the word "offer" and relied by analogy on its holding in 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 48 USPQ2d 1773 (Fed. Cir. 1998), in which it declined to look to the "on-sale bar" analysis under 35 U.S.C. § 102(b) to construe the ‘offer to sell’ provision of § 271(a). That Court held that the defendants’ price quotation letters were in fact offers to sell, even though the Defendant argued otherwise. The Federal Circuit also drew upon with the Supreme Court's decision in Pfaff v. Wells Elecs. Inc., 525 US 55 (1998), which it read as indicating that the traditional notions of contract law should prevail. Thus, the Court held that the phrase "offer to sell" should be interpreted according to its ordinary meaning in contract law.
The Federal Circuit found that the evidence did not support a jury finding that Mitsubishi made an infringing offer to sell in the United States. None of the evidence established any communication by Mitsubishi with any third party. The Court noted that without such communication, no legitimate commercial detriment to the patentee could occur and upheld the district court's grant of summary judgment in favor of Defendants. Although Rotec claimed evidence that the parties conducted business in the United States prior to the agreement, the Federal Circuit determined that the evidence was inadmissible hearsay. The Court also rejected Rotec's contention that the statement was admissible on the grounds that it advanced the objectives of a conspiracy.
The Court also upheld the district court's grant of summary judgment under 35 U.S.C. § 271(f)(2). Section 271(f)(2) imposes liability on those who supply or cause to supply any component of a patented invention. The court rejected Rotec's contention that § 271(f)(2) also imposes liability on those who "offer to supply" any component of a patented invention. The court refused to look any further than the clear language of the statute, noting that if Congress had intended to impose liability on those offering to supply, as in § 271(a), it could have easily done so. Thus, because the record contained no evidence that Mitsubishi "supplied or caused to supply" any component of a patented invention, the Court upheld the district court's grant of summary judgment in favor of Mitsubishi.
Prepared by the liibulletin-patent Editorial Board.