Morris Manning & Martin, LLP

Supreme Court Rules on IP Case Life Sciences Manufacturers Are Following

02.24.2017

By Mary An Merchant, Ph.D. / Intellectual Property and Life Sciences Groups – Morris, Manning & Martin, LLP

Do U.S. patent rights protect a patent owner from competitors that export key parts of inventions for reassembly in other countries? Competitive international activity is a common challenge for companies that only hold U.S. patents, especially when deciding whether, and where, to seek patent protection in other countries.  Diagnostic companies, medical device companies and others who hold patents on multicomponent inventions have followed this case closely.

The U.S. Supreme Court answered a part of the question recently, determining that exporting a staple article or commodity of a multicomponent invention – that someone else patented – for reassembly overseas is not an infringing act in the U.S. However, if the competitor exports all of the components, or a “substantial portion” of them, then the competitor is more likely to be found to infringe a U.S. patent for the invention.  If the competitor exports one component, but that component is not a staple or commodity product, then the competitor is more likely to be found to infringe a domestic patent. 

The Supreme Court was unanimous in overruling the Court of Appeals for the Federal Circuit and finding that Life Technologies Inc. did not infringe Promega Corp.’s patent, and thus Life Technologies did not have to pay $52 million in damages for patent infringement.[1]  The main issue in the case was the interpretation of “substantial portion” in § 271(f) of the Patent Act, which prohibits the supply from the U.S. of “all or a substantial portion of the components of a patented invention.” 

The patented invention in this case was a kit for identifying unknown DNA, such as DNA found at a crime scene. Promega held the patent on the kit, which had five components: a DNA polymerase – an enzyme that can copy DNA – and other components allow the DNA polymerase to copy the unknown DNA accurately.  Life Technologies manufactured the DNA polymerase in the U.S. and made all the other components in the U.K., where the kits were assembled and then sold internationally. 

Promega argued that the DNA polymerase was a “substantial portion” of the patented invention because without the DNA polymerase and its activity, the kit has no use. This argument is a qualitative definition of “substantial portion,” whereas the Supreme Court found that the quantitative definition of “substantial portion” was the correct definition and “substantial portion” was not just one component.  The Court declined to say how many components would constitute a “substantial portion,” and that question will likely be disputed in future patent export litigation actions.

Companies with world-wide manufacturing operations see the decision as reducing the liability for the manufacturing and shipping of components that are commonplace, i.e., commodity or staple articles, even where the components supply a crucial element or activity for multicomponent inventions. With the ambiguity as to what number of components is substantial, future courts will be deciding factual issues of what the components are, and how many components are needed to be a substantial portion.  With this ambiguity, it will also be more difficult to predict the outcomes of cases involving the shipping of more than one commodity component.

Patent owners may want to assess the number and criticality of components in a multicomponent patented invention to understand the risks of overseas manufacture of the patented invention. Keep in mind that components that are not commonplace, but instead are specially made or adapted for use in the multicomponent invention are still protected from export overseas by the U.S. patent, even if that specialty component is the only component shipped.  A component that is specially made or adapted for use, when first patented or used in a patented invention, may in time become a commodity product.  In the early days of DNA copying technology, the DNA polymerase component of this case would have been seen as specially made or adapted for use in the kit.  Thus, the status of components may change as a technology matures, and reliance upon U.S. patent rights for stopping assembly of the patented invention overseas may be impacted.

If you have any questions regarding this case and its implications for your IP portfolio or intellectual property assets, please contact the IP professional listed below. MMM’s Intellectual Property Group provides intellectual property counsel to its clients for patent, trademark and brand protection, copyright, trade secret, Internet-of-things, and licensing issues. MMM represents universities, research institutes, investors, entrepreneurs and commercial entities including emerging growth companies to multinational corporations.  The IP Group is experienced in commercializing IP assets and in providing strategic due diligence guidance for its clients in corporate transactions such as investment transactions, asset buy or sell activities, mergers and acquisitions or portfolio restructuring.

 

[1] Life Technologies v. Promega, Supreme Court, No. 14-1538, Feb. 22, 2017.

 

Mary An Merchant, J.D., Ph.D. is a partner with Morris, Manning & Martin, LLP, and chair of the Life Sciences Group. The information in this article is for informational purposes and does not constitute legal advice.