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Supreme Court Allows Recovery of Foreign Patent Damages
June 22, 2018

By Michael Snyder and Harry Vartanian

The United States Supreme Court today (June 22, 2018) ruled that a plaintiff in a patent case can recover damages for foreign sales, under certain circumstances. The case is WesternGeco LLC v. ION Geophysical Corporation, 2013-1527, 2014-1121, 2014-1526, 2014-1528.

WesternGeco LLC originally sought to recover damages for patent infringement based on Ion Geophysical Corp.’s sales of product components shipped outside the United States. The plaintiff argued that the Patent Act provided for recovery against patent infringement related to the supply of components of the patented invention abroad for assembly. In the plaintiff’s view, without compensating for such extraterritorial acts of infringement, a plaintiff in a patent case would not be fully compensated for the infringement.

In 2015, the Court of Appeals for the Federal Circuit (CAFC) ruled that foreign lost profits of $93.4 million awarded by the District Court were unavailable under the Patent Act. A petition for a writ of certiorari was granted in January 2018.

In a somewhat surprising outcome, the Supreme Court’s opinion written by Justice Thomas reversed and remanded the CAFC decision, finding that WesternGeco could recover damages for lost profits for overseas activities.

The Supreme Court found that “WesternGeco’s award for lost profits was a permissible domestic application of §284 of the Patent Act” and “the ‘overriding purpose’ of §284 is to ‘affor[d] patent owners complete compensation’ for infringements.”

The calculus of damages for patent infringement will be impacted by the opinion. Extending patent damages to some extraterritorial acts has always been a concern under the Patent Act, and will likely now be considered in more cases in view of the expanding global economy.

The case will now return to the Federal Circuit for further reconsideration and a calculation of damages. In another twist to the case, while the Supreme Court appeal was pending, the CAFC found three of the patents in the lawsuit invalid, which will also impact the damages assessment.