WesternGeco LLC v. ION Geophysical Corp.
The Supreme Court ruled that WesternGeco could collect lost-profits damages for foreign business it lost because a competitor exported patented components from the United States for assembly overseas.
The decision means patent owners can sometimes recover damages tied to lost foreign sales when the underlying infringement itself happened through a U.S. export, even though patents normally don't reach conduct abroad.
How it got here: A jury found ION liable and awarded lost-profits damages; the Federal Circuit reversed those damages, and the Supreme Court reviewed that ruling.
The Case in Depth
What happened
WesternGeco developed technology for surveying the ocean floor and used it to perform surveys for oil and gas companies rather than licensing it. A competitor, ION Geophysical, built a competing system from components made in the United States, shipped them abroad, and had them assembled into a system that copied WesternGeco's technology, costing WesternGeco specific foreign survey contracts.
The question before the Court
Could a company that owns a U.S. patent collect damages for profits it lost overseas because a competitor shipped patented components abroad for assembly?
The Court's answer
Yes — the Court ruled that WesternGeco's lost-profits award counted as a permissible domestic application of the Patent Act's damages law, even though the lost profits stemmed from foreign business. Because the infringement claim was based on ION's act of exporting patented components from the United States for assembly abroad, and that export itself happened domestically, the damages tied to that infringement were treated as domestic rather than extraterritorial.
The Court reasoned that a damages provision must be read together with the infringement rule it compensates for, and here that infringement rule specifically targets exporting from the United States. The overseas assembly and lost foreign sales were incidental consequences of infringement that had already occurred domestically, so awarding compensation for them did not improperly extend U.S. law beyond its borders.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Companies that manufacture patented components in the United States and export them for foreign assembly can now face larger damages awards, including lost overseas profits, not just royalties on the exported parts. This raises the financial stakes of U.S.-based manufacturing for export and gives patent owners a stronger tool against export-based competition.
What changes now
The case returns to the lower courts for further proceedings consistent with this ruling, meaning WesternGeco's lost-profits award stands as a valid application of the patent damages law. The decision does not resolve every question about calculating such damages, including how other legal limits like proximate cause might restrict recovery in future cases involving exported components.
What this does not decide
The Court expressly limited its ruling to the export provision at issue, §271(f)(2), and did not address a related export provision, §271(f)(1). It also noted it was not deciding whether other legal doctrines, such as proximate cause, might still limit or block similar damages in future cases.
Concurrences and dissents
Dissent — Justice Gorsuch
“By failing to heed the plain text of the Patent Act and the lessons of our precedents, the Court ends up assuming that patent damages run (literally) to the ends of the earth.”Gorsuch's central objection that the ruling extends U.S. patent rights beyond what Congress authorized.
Justice Gorsuch agreed that the case did not run afoul of the extraterritoriality presumption, but argued the Patent Act's own text still forecloses recovery for lost foreign profits, since infringement and patent rights only exist within the United States. He argued the export provision merely expands what counts as domestic infringement but does not let damages reach into foreign markets where the patent has no legal force, warning the ruling effectively extends U.S. patent monopolies abroad.
How the Court got there
The legal reasoning, step by step
- The Court used a two-step framework for deciding whether a law reaches conduct outside the United States: first asking whether the law clearly says it applies abroad, and if not, second asking whether the specific case actually involves domestic conduct relevant to the law's purpose.
- The Court chose to skip the first step and go straight to the second, reasoning that resolving the broader question here could affect many other federal laws beyond patents without changing the outcome of this case.
- To find the law's 'focus' -- the specific conduct or interest it aims at -- the Court held that a damages provision must be read together with the infringement provision it compensates for, rather than analyzed alone.
- Because the infringement claim here was based on the provision that punishes exporting patented components 'in or from the United States' for assembly abroad, the Court found that the relevant conduct -- the export itself -- happened inside the United States.
- Since the conduct tied to the law's focus occurred domestically, the Court concluded the damages award, even though it covered lost foreign profits, counted as a domestic and therefore permissible application of the patent damages law.
Doctrinal impact
Cases affected by this decision
Distinguishes RJR Nabisco, Inc. v. European Community (579 U. S. ___)
The Court said RJR Nabisco's rule about foreign injury applied to a different legal element, not to damages provisions like this one.