31 Pages Posted: 21 Sep 2011 Last revised: 8 Jun 2014
Date Written: September 21, 2011
For many years, 35 U.S.C. § 271 capably addressed the different types of infringing conduct that patent holders faced in this country. But technology has changed the world, making products increasingly complex – both in the number of components they contain and in where those components are made. These changes have placed new pressures on the extraterritorial application of U.S. patent law.
Traditionally, patent holders were primarily concerned with companies that made or sold their products in the United States or imported them into this country. If those products infringed a patent, that conduct was considered to be direct infringement under § 271(a). Alternatively, if the products were material parts of larger infringing products, the conduct was considered contributory infringement under § 271(c). Today, many companies now make and sell products abroad knowing that others will import their products into this country. Since § 271(a) and (c) have express territorial limitations, direct and contributory infringement do not apply to these types of overseas conduct. Nevertheless, patent holders have attempted to prevent others from making and selling infringing products abroad by turning to § 271(b)’s inducement provision. Section 271(b) has no territorial limitation and patent holders have successfully argued that making and selling infringing products abroad “induces” infringement in the United States.
But relying on inducement as the primary foreign infringement theory leads to unintended consequences. Since direct infringement is a strict liability offense, companies that make and sell products in the United States can be found liable even when they do not know about the patent. But, inducement requires specific knowledge. Consequently, the same company making the same product abroad will not be liable unless it knew of the patent and thought it infringed. It makes no sense for the patent laws to discriminate against domestic conduct in this manner.
This article takes no position on whether U.S. patent laws should or should not encompass foreign conduct. Regardless of which side one favors, we can all agree that the patent laws should take a consistent approach to infringement regardless of where the conduct is located. This article offers three alternate proposals, each assuming different goals. All provide a more coherent framework than the current regime. The proper choice depends on this country’s appetite for extending or limiting the reach of U.S. patent laws and which actor — Congress or the courts — should make that decision.
Suggested Citation: Suggested Citation
Chao, Bernard, Reconciling Foreign and Domestic Infringement (September 21, 2011). 80 UMKC Law Review 607 (2012); U Denver Legal Studies Research Paper No. 11-16. Available at SSRN: https://ssrn.com/abstract=1931643