Extraterritorial Sales Of Product Made From Patented Us Component Could Constitute Infringement Under 35 USC 271(f)(2) And “Irreparable Injury” Sufficient To Support Injunction

The World in U.S. Courts: Winter 2018 - Intellectual Property – Patents | November.02.2017

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Veeco Instruments Inc. v. SGL Carbon, LLC, US District Court for the Eastern District of New York, November 2, 2017

Plaintiff Veeco holds patents on and manufactures LEDs and other electronic components and devices. It licensed defendant SGL to manufacture a subcomponent for it and sued SGL for patent infringement when, in substance, it came to believe that SGL was manufacturing and selling an infringing copy of the subcomponent to one of Veeco’s competitors in China. SGL among other things denied that the products it sold were infringing. In this opinion, the District Court in Brooklyn considered Veeco’s motion for a preliminary injunction to prevent SGL from selling the subcomponent to Veeco’s competitors.

As relevant here, the Court first concluded that Veeco showed “a clear likelihood of success” on its claim of indirect infringement under 35 USC 271(f)(2). Although the Patent Act does not apply extraterritorially, Section 271(f)(2) generally establishes infringement where a defendant supplies or causes to be supplied from the US a patented component, having no substantial noninfringing uses, that it intends will be combined with other products outside the US in a manner that would constitute infringement if it had occurred domestically. The Court stated that Section 271(f)(2) should be understood as “designed to put [US] domestic entities who export components to be assembled into a final product in a similar position to [US] domestic manufacturers who sell the final product domestically or export the final product.”

The Court considered many factors in evaluating whether to issue a preliminary injunction, one of which was the extent to which Veeco had shown an “irreparable injury”—i.e., an injury that could not satisfactorily be remedied after trial through money damages. In the course of its discussion, the Court addressed SGL’s argument that its sales to customers in China could not cause an “irreparable injury” because those sales were outside the geographic scope of the Patent Act. The Court rejected this argument based on the interpretation of Section 271(f)(2) cited above.

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