WesternGeco LLC v. ION Geophysical Corp.
Headline: Patent owners can recover lost foreign profits when U.S. companies export specially adapted components for overseas assembly, allowing damages against exporters for overseas sales.
Holding: The Court held that when a company supplies from the United States specially made components intended for overseas assembly in a way that infringes under §271(f)(2), the patent owner may recover lost foreign profits under §284.
- Allows patent owners to recover lost profits from overseas sales tied to U.S. component exports.
- Exposes U.S. manufacturers who ship specialized parts abroad to bigger damage awards.
- Leaves open other legal limits on awards, like proximate cause or foreseeability.
Summary
Background
WesternGeco, a company that surveyed the ocean floor using a specialized lateral-steering system, sued ION after ION manufactured components in the United States, shipped them abroad, and those parts were assembled into competing survey systems. A jury awarded WesternGeco $12.5 million in royalties and $93.4 million in lost profits. The Federal Circuit reversed the lost-profits award, but the Supreme Court granted review and reversed the Federal Circuit, sending the case back for further proceedings.
Reasoning
The central question was whether the Patent Act’s damages rule allows recovery for lost profits tied to overseas uses when the infringing conduct was supplying components from the United States. The Court applied its two-step extraterritoriality framework and proceeded to step two, asking what the statute’s focus is. It concluded the focus of the damages provision, read with the export rule at issue, is the domestic act of supplying components from the United States. Because the relevant conduct occurred in the United States, the Court held that awarding lost foreign profits in this case was a permissible domestic application of the Patent Act’s damages rule. The majority noted it was not deciding how other legal limits, such as proximate cause, might affect awards in particular cases.
Real world impact
The ruling means U.S. companies that ship specially made components abroad may face larger damage claims when those parts lead to overseas competition. Patent owners who prove infringement under the statute at issue can seek lost foreign profits, though other legal limits may still apply. The decision reverses the Federal Circuit and sends the case back for further proceedings.
Dissents or concurrances
Justice Gorsuch, joined by Justice Breyer, dissented, arguing the Patent Act’s text confines patent rights and damages to the United States and that allowing recovery for foreign uses improperly extends U.S. patent monopolies abroad.
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