The World in U.S. Courts: Spring 2014 - Intellectual Property (Patent)
A chip manufacturer sued a competitor (Freescale) in U.S. District Court in California, alleging patent infringement in the supply of chips used in the Amazon Kindle device. The chips were made and sold to entities outside the U.S., but were incorporated into devices then resold in U.S. Material elements of the non-U.S. transaction were governed by a contract entered into between defendant Freescale, a U.S. company, and an Amazon affiliate in the U.S. Freescale argued that it made no "sale" or "offer of sale" in the U.S., and therefore could not be liable.
The court agreed that the mere understanding by parties to a transaction that a product containing an allegedly infringing component would be sold to a U.S. customer does not establish the required "sale or offer for sale" in the U.S. The court similarly stated that "pricing discussions" in the U.S. supporting non-U.S. sales would not establish U.S. jurisdiction. Here, however, the court observed that the entire transaction was governed by a contract between two U.S. entities (Freescale and the Amazon affiliate), and that was sufficient to establish a U.S. "sales relationship" and therefore a basis for a U.S. patent infringement claim.