District Court finds no US “Offer for Sale” from Non-US Websites that did not Target Sales to US Customers

The World in U.S. Courts: Winter 2016 - Intellectual Property – Patent | November.10.2016

Sound Light Animatronics Co., Ltd. v. Cloud b, Inc., US District Court for the Central District of California, November 10, 2016

Cloud b, a US corporation, develops sound- and light-emitting products for children that are intended to promote sleep.  Sound N Light (SNL), is a Hong Kong-based manufacturer with which Cloud b contracted to manufacture the products.  Cloud b came to suspect that SNL had misappropriated its designs and other intellectual property and was selling counterfeit versions of Cloud b’s products directly to customers in Asia.  As relevant here, Cloud b sued SNL for patent, trademark, and copyright infringement.

Cloud b’s patent claims were based on allegations that SNL had offered to sell products covered by Cloud b patents in the US, with the most significant allegation that the products had been offered for sale on Alibaba and other eCommerce websites available to consumers in the US.  The District Court in California observed that the location of an allegedly infringing offer of sale is to be determined based on the location proposed for “delivery and performance,” not the location where the offer is made.  It concluded that a non-US website could be the source of such a US “delivery and performance,” but required that in such case a plaintiff show that (i) the products are accessible in the US, (ii) the website accepts US currency, (iii) the website provides for US delivery, and (iv) a “significant portion” of the website’s sales were made to US customers.  Finding the claim failed to make these allegations, the Court held that no domestic violation of the Patent Act had been alleged.

[Editor’s Note:  The Sound N Light Animatronics case is also discussed in the Intellectual Property-Copyright and –Trademark sections of this report.]

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