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En Banc: 271(f) and Cardiac Pacemaker

Posted on | May 27, 2009 | 3 Comments

Photo 2007-1296 Cardiac Pacemaker v. St Jude
SD/IN 96-CV-1718
Judge David F. Hamilton

The Federal Circuit is hearing the case, en banc, directed to a single question:

Does 35 U.S.C. § 271(f) apply to method claims, as well as product claims?

The panel relied on Union Carbide Chems. & Plastics Tech. Corp. v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir. 2005) to answer in the affirmative, but some (St Jude, amici) argue that the Supreme Court's decision in Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007)–finding that software instructions were not "components"–mandates a different result.

Oral
argument is scheduled for Friday, May 29, 2009 at 2:00 P.M.,
Courtroom 201. 

§ 271(f) provides:

(1)
Whoever without authority supplies or causes to be supplied in or from
the United States all or a substantial portion of the components of a
patented invention, where such components are uncombined in whole or in
part, in such manner as to ac-tively induce the combination of such
components outside of the United States in a manner that would infringe
the patent if such combination occurred within the United States, shall
be liable as an infringer.
(2)
Whoever without authority supplies or causes to be supplied in or from
the United States any component of a patented invention that is
especially made or especially adapted for use in the invention and not
a staple article or commodity of com-merce suitable for substantial
noninfringing use, where such component is uncombined in whole or in
part, knowing that such component is so made or adapted and intending
that such component will be combined outside of the United States in a
man-ner that would infringe the patent if such combination occurred
within the United States, shall be liable as an infringer.

Summary of Argument from St Jude.  Jeffrey M. Olson from Sidley Austin LLP (Los Angeles, CA); Denis R. Salmon and H. Mark Lyon from Gibson, Dunn & Crutcher LLP (Palo Alto, CA); Mark A. Perry from Gibson, Dunn & Crutcher LLP Washington, D.C.) on brief.

Title 35 U.S.C. § 271(f) does not apply to method claims.

I. The text of Section 271(f) is limited to product claims. Section 271(f) prohibits the supply of components that are combined overseas to form a patented invention. The things that St. Jude supplied from the United States are not “components” of CPI's claimed method; conversely, the components of that method-the acts of “determining,” “se-lecting,” and “executing” (A134)– were not supplied by St. Jude from the United States. Thus, no liability attaches under Section 271(f). Microsoft Corp. v. AT&T Corp., 550 U.S. 437 (2007).

A. CPI maintains that the ICD devices that St. Jude ships to foreign countries are “components” of the claimed method, but that is wrong. The only conceivable components of a method are steps or acts themselves. A device or other physical thing cannot be combined with an act. CPI effectively concedes this point by arguing that the devices are used for practicing the claimed method; but be that as it may, the devices are not components of the invention as required by Section 271(f). The Supreme Court in Microsoft squarely held that Section 271(f) does not reach either things or conduct that merely facilitate the making or practicing of an invention overseas.

B. St. Jude also supplies from the United States instructions for programming the ICD devices, but those are not “components” either. Pellegrini v. Analog Devices, Inc., 375 F.3d 1113 (Fed. Cir. 2004). Even assuming, arguendo, that some intangibles are capable of combination, and thus could be “components,” the steps comprising CPI's method were not supplied by St. Jude from the United States, but carried out by foreign doctors abroad. In fact, no intangibles can be supplied from the United States because there is, literally, nothing to supply. Thus, Section 271(f) cannot apply to method claims.

II. Two complementary provisions of the Patent Act confirm that Section 271(f) is limited to product claims.

A. Section 271 (c) distinguishes between a “component” of a product, on the one hand, and “material or apparatus for use in practicing a patented process,” on the other. Congress thus understood that method claims do not have “components,” and is presumed to have adhered to that understanding in enacting Section 271(f). Indeed, Congress copied large parts of Section 271(c) into Section 271(f), but chose to omit the reference to things “for use in practic-ing” method claims. CPI is thus asking this Court to do something that Congress decided not to do.

B. Section 271(g) imposes liability for importing products made overseas using a patented process. The statutory history shows that Congress intended this provision to apply to method claims, and intended Section 271(f) to apply only to product claims. Indeed, Section 271(g) is the only provision of the Patent Act that imposes liability in con-nection with the overseas practice of a patented method, further foreclosing CPI's argument that Section 271(f) ex-tends to method claims.

III. The objectives of Section 271(f) confirm that it is limited to product claims. Section 271(f) was a congressional response to a Supreme Court ruling that it was not an act of infringement to assemble outside the United States a patented product out of components supplied from the United States. That case was about products; the congres-sional response was also about products. The Supreme Court held in Microsoft that further adjustment of Section 271(f) is a legislative decision, not a judicial one. This is due in part to the longstanding presumption against extra-territoriality, which applies with particular force in the patent context. Extending Section 271(f) to method claims would interfere with the policy decisions made by foreign sovereigns, such as the Europeans' decision not to allow most medical treatment methods to be patented. Absent clear congressional direction, liability for facilitating the foreign practice of method claims may not be imposed under the U.S. patent laws.

Summary of Argument from Cardiac Pacemaker.  Arthur I. Neustadt and Barry J. Herman from Oblon, Spivak, McClelland, Maier & Neustadt, P.C. (Alexandria, VA); J. Michael Jakes, Kara F. Stoll and Michael V. O'Shaughnessy from Finnegan, Henderson, Farabow, Garrett & Dunner, (Washington, DC) on brief.
This Court's March 6 order states – “The parties are requested to file new briefs addressing only the following question: 1) Does 35 U.S.C. § 271(f) apply to method claims, as well as product claims?” Emphasis added.[FN1]

FN1. St. Jude (at 7, n. 1 and 33) ignores this prohibition and requests that the en banc Court reverse those portions of the panel's decision that reversed the district court. This request should be denied as plainly violative of this Court's March 6 order.

The Court's question is best answered by considering (1) what Congress intended to do in enacting § 271(f) and (2) the lan-guage selected by Congress to do so. St. Jude ignores what Congress intended to do and, instead, bases its argument upon the “component” language while ignoring the effect of the “patented invention” language of § 271(f). The answer to the Court's question is best resolved by considering both Congressional intent and the “component” and “patented invention” language.

As to this intent, Congress wanted to reverse the result in Deepsouth, which involved a “machine” patent. If this was all that Congress wanted to do, it would have used the term “machine.” However, Congress used the catch-all term “patented inven-tion” which § 101 (“Inventions patentable”) defines as four classes of patentable invention (“process, machine, manufacture or composition of matter”).

Accordingly, the issue with respect to the Court's question is whether Congress, by use of the term “patented invention,” in-tended to cover all or only some of the four statutory classes of invention.

Since Congress intended to overrule the result in Deepsouth, it certainly intended to cover the “machine” class of invention. There is nothing to indicate that Congress was not also of the view that the problem that arose with respect to the result in Deepsouth could also arise with respect to other classes of invention. St. Jude does not suggest otherwise.

Congress' use of the term “patented invention” would seemingly apply to each of the four classes of invention, especially since the purpose of § 271(f) was to overrule the result in Deepsouth and not to leave a class of invention unprotected against a Deepsouth defense to a claim of infringement. St. Jude, however, suggests otherwise, arguing that the language used by Congress in § 271(f) specifically excludes the “process” class of invention, i.e., the language “components of a patented in-vention” does not fit with a process (since a process has steps and not components). The fundamental defect in St. Jude's ar-gument is that it inexorably leads to the conclusion that Congress, in enacting § 271(f) to overrule Deepsouth, intended to exclude one of the four classes of invention. There is no basis for any such conclusion and, indeed, such a conclusion will not withstand analysis.

A far more reasonable conclusion considering both Congressional intent and the § 271(f) language is that Congress wanted to leave no class of in
vention unprotected from a Deepsouth defense but that the catch-all phrase “patented invention” which it selected, although a good fit with some classes of invention, is not as good a fit with other classes of invention. More particu-larly, the term “components” fits well with “machine” and “[article of] manufacture” but less well with a “composition of matter” and even less well with a “process.” However, the fact that the term “components” does not fit as well with a “com-position of matter” or even less well with a “process” does not lead to the conclusion that Congress intended to exclude the “process” class of invention from the ambit of § 271(f).[FN2]

FN2. It should come as no surprise that § 271(f) may suffer from “legislative imprecision” since § 271(e)(1) suffers from this condition. As held by the Supreme Court in Eli Lilly, supra – “No interpretation we have been able to imagine can transform § 271(e)(1) into an elegant piece of statutory draftsmanship. To construe it as the Court of Appeals decided, one must posit a good deal of legislative imprecision; but to construe it as petitioner would, one must posit that and an implausible substantive intent as well.” Id. at 679.

St. Jude tries to overcome the fundamental defect in its argument (that it inexorably leads to the conclusion that Congress intended to exclude the “process” class) by asserting that process claims by their very nature (they refer to steps) are mark-edly different from product claims. However, such an argument is directly contrary to the Supreme Court's recent decision in Quanta Computer Inc. v. LG Electronics, Inc., 128 S. Ct. 2109 (2008), holding that method claims are subject to patent ex-haustion since “[a]pparatus and method claims ‘may approach each other so nearly that it will be difficult to distinguish the process from the function of the apparatus' ” and “methods nonetheless may be ‘embodied’ in a product.” Id. at 2117-18.

PATracer Note: Let Kyle know if you would like the briefs for this case.

Comments

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