What Counts As Extraterritorial in Patent Law?
38 Pages Posted: 6 Jun 2019 Last revised: 21 Oct 2019
Date Written: May 17, 2019
Patents are creatures of national law and are generally viewed as the most territorial of all intellectual property rights. Nevertheless, patent law has long deviated from a rule of strict territoriality. On many dimensions, U.S. patent law takes into account activities occurring outside of the United States.
This Article looks at various foreign activities that impact U.S. patents and places them into two categories. The first is foreign activities that can render a U.S. patent invalid or unenforceable. Within this category, the Article explores foreign acts that qualify as prior art, particularly after the America Invents Act removed the territorial limits on invalidating public uses and on sale activity. In particular, the Article notes that these forms of prior art create problems in terms of notice. In particular, for on-sale prior art, there could be an interesting choice of law issue: should U.S. law or the law in which the offer is made control whether the activity qualifies as prior art under U.S. law? The Article posits that U.S. law likely will apply, creating a potential conflict. Also in this category are overseas sales of the patented invention that will exhaust the patent rights, now that the Supreme Court's embraced international patent exhaustion in Impression Products, Inc. v. Lexmark International, Inc.
The second category are foreign or transnational acts that trigger patent infringement liability and the remedies. The issue of extraterritoriality and damages is particularly salient after the Supreme Court's decision in WesternGeco LLC v. ION Geophysical Corp. Other examples include extraterritorial protection in cases like Decca v. United States and NTP v. Research in Motion, and Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc.
Interestingly, only the second category has been treated as truly extraterritorial by the courts and implicating the presumption against extraterritoriality. The territorial principle is treated asymmetrically, with foreign publications and acts impacting the validity and enforceability not being deemed extraterritorial, whereas foreign acts in assessing infringement and liability are. Courts silently have embraced this dichotomy, however, without pausing to consider whether it is appropriate.
This Article calls the question of what should count as being extraterritorial in patent law. In particular, it argues that the first category – acts impacting validity and enforceability – perhaps should be viewed as extraterritorial. By allowing these foreign acts to invalidate or render unenforceable U.S. patent, it is likely that patent applicants and owners will alter their behaviors in foreign jurisdictions, potentially to the detriment of those markets. For example, in the exhaustion context, it is possible that patent owners in foreign markets will raise prices, could change the product, or withdraw from the market altogether. These represent more indirect forms of regulation of foreign activity that could be deemed as implicating the presumption against extraterritoriality.
The Article explores descriptively whether the first category should be deemed as implicating the presumption against extraterritoriality and then offers some prescriptions of the impact utilization of the presumption could have on these doctrines.
Keywords: extraterritoriality, territoriality, exhaustion, first sale, prior art, public use, on sale, lexmark, impressions, kirtsaeng, helsinn, morrison, infringement, invalidity, westerngeco, transocean, halo
Suggested Citation: Suggested Citation