The lost profits recoverable for patent infringement do not stop at the water’s edge, the Supreme Court held recently. In its 7-2 decision in WesternGeco, LLC v. ION Geophysical, the Court ruled that a patent owner may recover lost foreign profits for domestic acts of infringement under 35 U.S.C. §271(f)(2).
The case arrived at the Court after a divided U.S. Court of Appeals for the Federal Circuit reversed a district court jury award of $93.4 million in lost profits to WesternGeco, based on 10 contracts for marine seismic surveys performed by ION’s customers in international waters.
Writing for the Court, Justice Clarence Thomas said the exportation from the U.S. of components of a patented invention, to be assembled abroad, involves “domestic” conduct that §271(f)(2) seeks to regulate. Having established domestic infringement in this way, the patentee’s remedy flows from §284 in any appropriate form, including lost profits.
“The overseas events were merely incidental to the infringement,” Thomas wrote.
The majority emphasized that its decision was a narrow one, and it did not address ancillary issues, such as the availability of lost profits damages due to extraterritorial inducement, or "the extent to which other doctrines, such as proximate cause, could limit or preclude damages in [this or other] cases.”