Issue 05/51 | October 11, 2005
Foreign Sales of Components Used in Patented Processes are Encompassed by §271(f)

Components made in the US, exported, and thereafter used in a patented process or method are encompassed by 35 U.S.C. § 271(f). Damages based on the sale of those components abroad is therefore proper.

In Union Carbide v. Shell Oil, Nos. 04-1475, -1512 (Fed. Cir. Oct. 3. 2005), the federal circuit upheld a jury verdict that Shell infringed Union Carbide's '243 patent, but vacated the damages award based on an improper exclusion of catalysts in the damages calculation.

Union Carbide's '243 patent is directed to improved silver catalysts for the commercial production of ethylene oxide (EO). A jury found infringement of claim 4 and awarded Union Carbide $112 million, adjusted to $154 million with prejudgment interest. The district court denied Shell's JMOL motion for noninfringement, and held that the damages award could not account for Shell's exportation of catalysts because damages were unavailable for process claims under §271(f).

On appeal, the federal circuit held that although Shell had not waived its right to challenge the sufficiency of the evidence supporting the jury's infringement verdict, it was supported by substantial evidence nonetheless. First, Union Carbide's expert used a test to measure the efficiency of EO production that was described in the specification, and which yielded results placing Shell's catalysts well within the claimed limitations. Shell's argument that a different test should have been used was incorrect. Second, the claim requirement that the catalysts be characterizable by the clamed efficiency equation was met by tests in which that the concentrations of cesium and lithium was varied. It was not necessary, as argued by Shell, that each of silver, cesium and lithium all be varied in the EO production process to meet the efficiency limitation. Finally, Union Carbide's testing of Shell's catalysts in a representative EO production process did not violate the claimed recitation to use of the "same ethylene oxide production system" where the claim did not specify any particular form of testing.

The federal circuit also held that it was error for the district court to have excluded from the damages calculations Shell's sales of catalysts abroad, based on its ruling in limine that 35 U.S.C. § 271(f) "[was] not directed to process claims." Under Eolas, every component of every form of invention is protected under 35 U.S.C. § 271(f); the statute makes no distinction between patentable method/process inventions and other forms of patentable inventions. The court distinguished the NTP (BlackBerry) decision by noting that in that case: (1) BlackBerry devices were used both within and outside the United States, and (2) RIM did not supply any component of the BlackBerry device to a foreign affiliate. Here, Shell's infringing catalysts sold abroad were used in processes abroad, and damages were separately calculated from those based on domestic sales.

Please visit http://media.aplf.org/rm/20051011-public/Issue2005-51.pdf for a copy of the case for your reference.

To discuss these topics further, please feel free to contact the author Michael R. Dzwonczyk, (mdzwonczyk@sughrue.com), at Sughrue Mion, PLLC in Washington DC, USA.

The information contained in this email is provided for informational purposes only and does not represent legal advice. Neither the APLF nor the author intends to create an attorney client relationship by providing this information to you through this message.

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