US Supreme Court Allows Recovery Of Lost Foreign Profits

In WesternGeco LLC v. ION Geophysical Corp, decided today, the U.S. Supreme Court held that 35 U.S.C. Sections 271(f)(2) and 284 allow a patent owner to recover damages in the form of a reasonable royalty and lost foreign profits for patent infringement. In this case, the defendant manufactured the components in the United States, but then shipped those components (unassembled) abroad to companies for assembly and subsequent use of the assembled system. At trial, the plaintiff presented evidence that it had lost 10 contracts due to this activity. The jury awarded $12.5 million in royalties and $93.4 million in lost profits. At issue was the extraterritoriality reach of U.S. patent law. Authoring the opinion for the Court, Justice Thomas stated “[t]he conduct in this case that is relevant to that focus clearly occurred in the United States, as it was ION’s domestic act of supplying the components that infringed WesternGeco’s patents.” The Court held that the lost-profits awarded to the patent owner was a domestic application of Section 284: “Taken together, [Section] 271(f)(2) and [Section] 284 allow the patent owner to recover for lost foreign profits.”