Single Entity Requirement Under 35 U.S.C. § 271(a-b) Does Not Carry Over to § 271(g)
Intellectual Property News
On Wednesday, the Federal Circuit held that infringement under 35 U.S.C. § 271(g) does not require a single entity to perform, direct, or control all of the steps of a patented process for infringement liability to arise from the importation or sale of the product made by the patented process in the United States. While the court’s decision in Syngenta Crop Protection LLC v. Willowood, LLC et al. is directed to only one part of 35 U.S.C. § 271, the opinion provides a good overview of the statute as a whole as it decides this issue of first impression.
Section 271(g) provides that “[w]hoever without authority imports into the United States or offers to sell, sells, or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer.” For one of the four asserted patents, — U.S. Patent No. 5,847,138 — Syngenta alleged that Willowood imported into the United States a product made by the claimed two-step process for manufacturing the fungicide azoxystrobin that includes an etherification step followed by a condensation step.
Prior to the appeal, a jury in the Middle District of North Carolina awarded Syngenta nearly $1 million in its suit against the various Willowood entities after finding that Willowood infringed one of four asserted patents (U.S. Patent No. 8,124,761). The award included damages for infringement of two other of the asserted patents (U.S. Patent No. 5,602,076 and U.S. Patent No. 5,633,256) since the lower court had previously found on summary judgment that both of these patents were infringed by Willowood, LLC and Willowood USA, LLC. The amount of damages awarded to Syngenta was far less than the $75 million that Syngenta originally sought due, at least in part, to the district court judge’s dismissal of Syngenta’s copyright infringement claims against Willowood. In addition, before the case went to the jury, the lower court had interpreted § 271(g) to require that all of the steps of the patented process be performed or attributed to a single entity. Thus, once the jury decided that Syngenta failed to prove that all of the steps of the claimed process in the ʼ138 patent were performed by or attributable to a single entity, the jury found no infringement of that patent. Once Syngenta’s post-trial motions were denied, it asked the Federal Circuit to find error in the district court’s interpretation of § 271(g) and reverse the judgment with respect to the ʼ138 patent.
For its part, Willowood attempted to save the non-infringement judgment from reversal by arguing that the Supreme Court’s decision in Limelight requires application of the single entity rule to § 271(g). In Limelight, the court held that infringement liability under §§ 271(a) and (b), i.e., direct and indirect infringement, for process patents is predicated on a single entity performing all of the claimed steps in the patented process. The Federal Circuit flatly rejected Willowood’s argument and explained that the act of infringement that gives rise to liability under § 271(g) occurs only after a patented process has already been used. On this basis, the court concluded that it is immaterial whether a single entity or multiple entities practiced that process outside of the United States.
To arrive at its decision, the Federal Circuit analyzed the other portions of the infringement statute, as well as the legislative history. In doing so, the court reminded us that the various subparts of the infringement statute purposely confer different rights upon a process patentee. For example, direct infringement under § 271(a) occurs only when a single party practices every step of the claimed process in the United States. Thus, § 271(a) covers all patented processes, whether or not they result in a product. For induced infringement to occur under § 271(b), direct infringement by a single entity must first be proven. In continuing to dissect the statute, the court reviewed liability for induced infringement under § 271(f) and concluded that, through the express language in § 271(f), Congress demonstrated that it knew exactly how to limit liability to situations where a single entity was required to practice the entire process, but it had not done so in § 271(g). In this vein, the Federal Circuit reminded us that “[w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.”
Referring to the legislative history, the court explained that § 271(g) was enacted to “extend protection to the products” resulting from practicing a patented process outside of the United States and to “prevent circumvention of a U.S. process patentee’s rights through manufacture abroad and subsequent importation into the United States of products made by the patented process.” In other words, § 271(g) filled a loophole that previously allowed entities to evade patent infringement by manufacturing products overseas and then importing them into the United States. Thus, the court concluded that the statutory language and legislative history leave no doubt that practicing a patented process outside of the United States does not give rise to liability under § 271(g) in the same manner that practicing the patented process in the United States does under § 271(a). As a final note, the Federal Circuit directed us to 35 U.S.C. § 295, which provides a rebuttable presumption that the process by which an accused product is made is the same as the patented process. The court opined that Congress would not have recognized the significant burden/difficulty to a patentee to prove how the product was made overseas and thus shift the burden the alleged infringer to provide evidence that the patented process was not used while at the same time require that the patentee prove that a single entity performed all of the steps of the patented process.
Since it was clear that the fungicide azoxystrobin imported into the United States by Willowood USA was made overseas by the process claimed in the ʼ138 patent, the court reversed the district court’s judgment that Willowood did not infringe under § 271(g). However, the court affirmed the lower’s court’s judgment that Willowood Limited (the Chinese entity) was not liable for infringement under § 271(g) as it did not import azoxystrobin into the United States. Finally, the court remanded for further consideration the question of whether Willowood, LLC had any role in the importation, sale, or use such that it would provoke liability under § 271(g).
In sum, because liability under § 271(g) is not predicated on practicing the claimed process, but instead is based on the act of importing into or offering for sale, selling, or using a product in the United States that is made by a U.S. process patent, it irrelevant whether the overseas manufacturing is performed by a single entity or multiple entities. And, based on 35 U.S.C. § 295, as long as the court finds that there is a substantial likelihood that (1) the product is made by the patented process and (2) the patentee has made a reasonable, but unsuccessful, effort to determine the process used to make the product, the burden shifts to the accused infringer to establish that the product was not made by the patented process. Accordingly, a patentee should consider alleging infringement under § 271(g) along with § 271(a) even when § 271(a) may seem more straightforward and already covers the infringing activity. For example, consider the following scenario:
- Patentee has two patents — Product Patent includes claims directed to a product, and Process Patent includes claims directed to a process for making that product.
- Alleged Infringer imports and/or sells Accused Product in the United States, but Accused Product is made abroad.
- Patentee has analyzed Accused Product and determined that is covered by Product Patent.
- Patentee has made multiple attempts to determine the manufacturing process for Accused Product but has been unsuccessful.
While Patentee could move forward with an infringement suit based on the Product Patent under § 271(a), it is also worthwhile to consider alleging infringement of the Process Patent under § 271(g), especially if Patentee feels confident that there is likely only one way the Accused Product is made and it is claimed in the Process Patent.