Recent U.S. Court Decisions And Developments Affecting Licensing

By John Paul and Brian Kacedon

John C. Paul

Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

D. Brian Kacedon

Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

In the 1970s, the Supreme Court identified a loophole in the patent statute, whereby one could manufacture in the United States components of an infringing product and export those components for assembly and use of the infringing product outside of the United States. In response, Congress enacted 35 U.S.C. § 271(f)(1), which permits a finding of infringement where a party (1) supplies from the United States all or a substantial portion of the components of a patented invention and (2) actively induces 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. The Federal Circuit recently held that the statute does not require active inducement of a third party—inducing one’s own foreign subsidiary qualifies. The Court also held that “a substantial portion of the components” does not require any specific number of components and could include just “a single important or essential component.”

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