Supreme Court Sidesteps Presumption Against Extraterritoriality, Allows Lost Profit Damages for Infringement through Export of Specialized Components

June 22, 2018

The US Supreme Court has issued its decision in WesternGeco v. ION Geophysical, ruling that patent plaintiffs may recover lost profits damages when an infringer has made specialized components for an invention that gets assembled abroad (2016-1011). However, the Court’s 7-2 majority opinion, authored by Justice Clarence Thomas, effectively sidestepped the underlying issue of the presumption against extraterritoriality, under which courts presume that federal statutes do not apply outside of the US. Rather, the majority held that the presumption was not triggered by the provision governing the type of infringement at issue, 35 USC Section 271(f)(2), holding that relevant behavior for that provision—the assembly of the infringing parts—was domestic conduct. Justice Neil Gorsuch dissented, joined by Justice Stephen Breyer, asserting that lost profits for foreign sales were barred by the plain text of the Patent Act and warning that the majority’s holding could invite foreign courts to enforce international patent rights based on conduct within the US.

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