Federal Circuit Rejects Extraterritoriality Limitation for Certain Patent Claims

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In our first posting (here) of Merial Limited, BASF Agro B.V. v. CIPLA Ltd., et al., Nos. 2011-1471, 1472 (Fed. Cir. 2012), we discuss the Court of Appeals ruling on Fed. R. Civ. P. 4(k)(2).  Here we address an equally important issue for the international practitioner:  the extraterritorial limits to a federal district court’s contempt power.  The contempt citation read on Cipla, which the defendants said limited its activities of a joint venture in India.  The District Court disagreed and found that Cipla has contemptuously “caused an infringing product to be sold in the United States”, in direct violation of” an earlier District Court order.

In analyzing the issue, the Federal Circuit first rejected “the blanket proposition that domestic patent law does not, and was not intended to, reach past the territorial limits of the United States”.  The Federal Circuit did acknowledge that “purely  extraterritorial conduct cannot constitute direct infringement” under Section 271(a) of the Patent Act in Title 35; that statute includes express language limiting its scope to domestic acts:

“[W]hoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States, or imports into the United States any patented invention during the term of the patent therefore, infringes the patent”

So for direct infringement there needs to be an infringing act in the U.S. 

At the same time,

where a foreign party, with the requisite knowledge and intent, employs extraterritorial means to actively induce acts of direct infringement that occur within the United States, such conduct is not categorically exempt from redress under § 271(b). Cf. DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1305–06 (Fed. Cir. 2006) (en banc in relevant part) (approving of a jury instruction that read, in part: “Unlike direct infringement, which must take place in the United States, induced infringe-ment does not require any activity by the indirect infringer in this country, so long as the direct infringement occurs here.”). 

The Federal Circuit concluded:  “We therefore reject the Appellants’ over-broad contention that acts outside of the United States cannot violate any provision of § 271″.  The Court of Appeals affirmed the District Court’s finding that Cipla had induced infringement, though it did not parse which acts did or did not occur in the U.S. and which acts needed to in order to establish indirect infringement.