Late Notice Saves “In Transit” Shipment From § 271(g)

Posted on | May 16, 2008 | No Comments

2008-1349 Celanese Int’l v. Oxyde Chemicals
SD/TX H-07-2981

Plaintiff Celanese appeals from Judge Nancy Atlas’s Order granting Oxyde summary judgment on the patent infringement claims against it.  Following that Order, which disposed of all patent infringement related claims, the court certified it as final under Rule 54(b).  The court, however, denied Celanese’s motion to stay Oxyde’s counterclaims for tortuous interference and business disparagement based on statements made by Celanese to the industry and trade publications about the lawsuit.

Celanese asserted 5,144,068 against Oxyde for importing acetic acid from China that was allegedly made using Celanese’s patented method.  The acid was shipped from China on 01 September 2007 bound for the Port of Houston.  On 14 September, Celanese sent notice to Oxyde of the ’068 patent and its claim that the acid from China was made from the patented process.  The acid arrived at the Port of Houston in early October, and was transferred to another vessel for delivery to Oxyde’s customer in Mexico.

Following discovery, the court granted Oxyde summary judgment of non-infringement.  The court quickly found no direct infringement under § 271(a) because the method was not practiced in the United States, and under § 271(b) for inducement because there was no evidence of a direct infringer.

The court then turned to the importation claim under § 271(g):

Whoever 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. . . .

Oxyde did not dispute the importation of the acid, but argued that § 287(b)(2) precluded liability because it did not receive notice of the infringement until after the acid was in transit:

No remedies for infringement under section 271(g) of this title shall
be available with respect to any product in the possession of, or in
transit to, the person subject to liability under such section before
that person had notice of infringement with respect to that product.
The person subject to liability shall bear the burden of proving any
such possession or transit.

However, this limitation is conditional under of § 287(b)(1), and is not available to accused persons that:

(C) had knowledge before the infringement
that a patented process was used to make the product the importation,
use, offer for sale, or sale of which constitutes the infringement.

Celanese argued that "infringement" occurred when "inported"–i.e., when the acid reached the Port of Houston.  The 14 September letter, although received while the acid was "in transit," nevertheless provided actual knowledge to Oxyde "before the infringement."  Thus, according to Celanese, § 287(b)(2) does not apply.

The court rejected this argument, finding that "in transit notice" under (b)(2) could not be used to bootstrap "knowledge before the infringement" under (b)(1).  The court used standard canons of statutory construction, concluding that use of separate terms (knowledge v. notice) suggested different meanings.  Also, knowledge of infringement requires possessing more information than merely receiving notice of the patentee’s allegations.  Lastly, the protection to importers for "in transit" notice would be meaningless if that same "in transit" notice could be the "knowledge" that eliminated the protection in the first place.      

Documents:

2008-1349_Summary_Judgment_Order.pdf

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