23 February 2017
Washington DC
Reporter: Barney Dixon

Life Tech v Promega brings curbs and uncertainty, say experts

The Supreme Court’s ruling yesterday in Life Technologies v Promega will curb the extraterritorial reach of US patent law, according to experts, but its failure to define “substantial portion” is another example of increasing uncertainty.

Life Tech had asked the Supreme Court whether supplying a single commodity component of a multi-component invention from the US is an infringing act.

The Supreme Court ruled: “A single component does not constitute a substantial portion of the components that can give rise to liability, because only a single component of the patented invention at issue here was supplied from the US.”

Mark Whitaker, partner at Morrison Foerster, said the ruling “curbs the extraterritorial reach of US patent law”, and “provides certainty for US producers, which can now export a single component of a foreign-manufactured, multi-component patented product without running afoul of Section 271(f)(1)”.

But John DiMatteo, partner at Holwell Shuster & Goldberg, added: “The court left open the question of how many components are required to be a ‘substantial portion of the components’—is two of five components substantial? What about three? That issue is left for another day.”

According to Baldassare Vinti, partner at Proskauer, supporters of Life Tech’s position will view the decision as “benefitting modern supply chain systems and promoting the global sourcing of components”.

Vinti noted that the court “went out of its way” to say that the decision did not define how close to all of the components a “substantial portion” must be.

“There may be instances where the specifics quantities and/or qualities of the components come into play such as in a 20-component product where two components were manufactured in the US.”

“In such a case, it is likely that a jury will be tasked with this intricate determination despite the Court’s desire to avoid complicating the fact finder’s review.”

Critical of the judgement, Ron Abramson, partner at Lewis Baach, was unsure whether he “buys the fine points of the court’s statutory construction reasoning” and sees “many open questions raised by this decision.”

He said: “However, the big point here is that the Supreme Court has, quite properly in my view, cut off an argument that could have expanded US patent jurisdiction beyond reason by an exporter who did nothing more with respect to the US than supply a commodity component that is later used in making some further product abroad, where only the final product would have infringed, had it been made in the US.”

“There will no doubt be plenty of ambiguous cases under this ruling, but that is preferable to a rule that turn into US patent infringement the mere act of exporting generic items that are incorporated abroad into products sold into the US.”

Abramson added: “I do not believe this case will have huge impact, but it does straighten out an area where the Federal Circuit had pushed US law too far.”

Once again, the Supreme Court has overturned efforts to improve certainty and predictability in the law by failing to supply a substitute, according to Matthew Siegal, partner at Stroock & Stroock & Lavan.

Siegal explained: “The more we chip away at the value of patents, and the more uncertainty we bring to patent enforcement, and this decision does both, the less likely finance managers at corporations will allocate money to R&D.”

“The patent system is in place to foster innovation. As the patent system diminishes, so will innovation.”

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