Update on the Territorial Reach of US Patent Law:
System Claims and Method Claims
In August 2005, the United Stated
Court of Appeals for the Federal Circuit issued a ruling on a lower court
finding that Research in Motion, Ltd.’s (RIM) BlackBerry system infringed several of NTP Inc.’s
1. The Federal Circuit Holdings
The Federal Circuit ruling was multifaceted, but with respect to the infringement of system patents and process patents, the Court held that:
(a) A system claimed in a
(b) RIM’s performance of at least some of the recited steps of NTP’s process claims is not, by itself, be “selling” or “offering to sell” the invention under 35 U.S.C. Section 271(a). However the Federal Circuit cautioned that it was not broadly holding that method claims may not be infringed under the “sells” or “offers to sell” grounds under Section 271 (a).
(c) RIM’s performance of at least some of the recited steps of NTP’s process claims, by itself cannot be “importing” the invention under 35 U.S.C. Section 271(a).
(d) Merely by supplying products to its customers in the US, RIM did not “supply” or “cause to be supplied in the US” steps of a patented process invention for combination outside of the US as described under 35 U.S.C. Section 271(f).
(e) RIM did not infringe NTP’s method claims by importing into the US, offering to sell, selling or using in the US a product made by a process patented in the US as described under 35 U.S.C. Section 271(g) because email packets are simply the “transmission of information” and thus not a physically manufactured product.
2. The NTP Patents and RIM’s System
NTP’s patents were related to RIM’s system that integrated existing electronic mail systems with radio frequency wireless communication networks by transmitting electronic mail messages by wire to the user’s destination processor, and also via radio frequency to a portable receiver. Before this innovation, users had been required to “pull” electronic messages that had been sent to them off the server by initiating a connection with the server and download the messages.
RIM, a Canadian corporation with its
principal place of business in
There were several types of BlackBerry email redirector software. One was installed on the user’s personal computer, another on the user’s mail server. One type of redirector software was RIM’s “Internet solution.” RIM’s Internet solution was installed on the user’s mail server, and executed email redirector software called Internet Redirector.
new email was detected on the server by the BlackBerry
software installed on the user’s personal computer, another BlackBerry
program retrieved the message from the mail server, copied, encrypted, and sent
the message to the BlackBerry “Relay” component of
RIM’s wireless network that was located in
3. Procedural History
NTP filed suit against RIM in November 2001, alleging that various BlackBerry system configurations infringed over forty system and method claims in patents owned by NTP. After the district court construed the disputed claim terms according to their plain and ordinary meaning, the case went to trial on fourteen claims of infringement.
The jury found direct, induced, and contributory infringement by RIM an all asserted claims. The jury further found that RIM’s infringement was willful, and adopting a reasonable royalty rate of 5.7%, awarded damages of approximately $23 million to NTP. The district court awarded monetary damages to NTP in the following approximate amounts: (i) $33 million in compensatory damages; (ii) $4 million in attorneys’ fees; (iii) $2 million in prejudgment interest; and (iv) $14 million in enhanced damages. In addition, the district court permanently enjoined RIM from any of the manufacture, use importation, or sale of all accused BlackBerry systems, software, and handheld devices.
RIM appealed to the Federal Circuit.
First, RIM argued that the asserted claims, when properly construed did not
read on the accused RIM systems. Second, RIM argued that the physical location
of the relay component of the BlackBerry system put
RIM’s allegedly infringing conduct outside the reach of Section 271. Third, RIM
argued that the jury verdict of infringement lacked substantial evidence. This
article discusses only RIM’s second argument regarding the territorial reach of
4. The Direct Infringement Claim
Under US patent law, whoever makes,
uses, offers to sell, or sells any patented invention, within the US or imports
into the US any patented invention during the term of the patent, infringes that
patent. This provision is limited to
patent infringement that occurs in the
NTP alleged in its trial court
complaint that RIM had infringed its patents by making, using, selling,
offering to sell and importing into the US products and services, including the
BlackBerry products and their related software. In
response, RIM argued that because the BlackBerry
Relay component of the accused system was located in Canada, it could not be
liable as a direct infringer because the requirement that the allegedly
infringing activity occur “within” the US was not satisfied.11 The district court had specifically held
that the fact that the BlackBerry relay was located
in Canada was not a bar to infringement in the matter, and instructed the jury
that “the location of RIM’s relay in Canada does not preclude infringement.”
RIM appealed this finding to the Federal Circuit, contending that an action for
infringement under Section 271(a) may lie only if the allegedly infringing
activity occurs within the
5. Federal Circuit Analysis
The Federal Circuit noted that the infringement analysis differs for different types of infringing acts (use, offers to sell or selling), and for different types of patent claims, and distinguished the case at hand from a previous US Supreme Court case that had held that the domestic production of all component parts of a patented combination for export, assembly, and use abroad was not direct infringement under US patent law.
(a) Use within the
Regarding use and NTP’s system
claims, the Federal Circuit noted prior cases holding that the situs of infringement is wherever an offending act of
infringement is committed, and not where the injury is felt. Because RIM’s
Regarding use and NTP’s method claims, the Federal Circuit noted earlier cases that had recognized the distinction between patent claims to tangible items such as a product, device or apparatus, and patent claims to a process consisting of a series of acts or steps and other case law holding that use of a “patent for a method or process is not infringed unless all steps or stages of the claimed process are utilized.”
Federal Circuit concluded that, as a matter of law, a process cannot be used
Regarding direct “sales” or “offers to sell” and NTP’s method claims, the Federal Circuit issued a narrow holding that RIM’s performance of at least some of the recited steps of the method claims as a service for its customers is not selling or offering to sell the invention covered by those claims.
The Federal Circuit noted that
because “sale” is not defined in
The Federal Circuit noted that
amendments to the patent law to make offering to sell and importing into the
The Federal Circuit emphasized it was not holding that method claims may not be infringed under the “sells” and “offers to sell” basis for liability under Section 271, but did conclude that RIM’s performance of at least some of the recited steps of the method claims could not be considered to be selling or offering to sell the invention covered by those method claims. For the same reason, the Court held that RIM had not infringed NTP’s method patents based on the importation basis for liability under Section 271.
(c) Contributory Infringement
The Federal Circuit then turned its attention to NTP’s claim of contributory infringement under Section 271(f).
RIM argued that it was not liable for
contributory infringement because it did not ship the handheld receivers and
software components from the
The Federal Circuit began by noting that, as evidence by the Congressional record, Section 271(f) was enacted in response to a case that had involved components of a manufactured product, and not a process. The Federal Circuit then held that by merely supply products to its customers in the US, RIM was not supplying or causing to be supplied in the US any steps of a patented process invention for combination outside the US and cannot be liable for infringement of NTP’s method claims under Section 271(f).
(d) Importation of a Product Manufactured by a Patented Process
Finally, the Federal Circuit considered the district court holding that wireless electronic mail specially formatted by using NTP’s patented process was a “product” that RIM imported into, offered to sell, sold, or used within the US, thereby giving rise to liability under Section 271(g).
RIM argued that the product created
by the NTP process was data or information, and that the Federal Circuit had held
in a previous case
that the production of intangible items, such as information, made by a
patented process is not subject to Section 271(g). NTP countered that a
“product” can be “information in the abstract,” and that email packets that
flowed from RIM’s email redirecting software, to the interface, and back to the
radio frequency receiver had a tangible structure which included the interface
address, a radio frequency address, and the inputted message. NTP further
argued that the transformation of data could produce a tangible result, that
RIM transformed data by moving email through the network, and that this
tangible result was a product imported into the
The Federal Circuit agreed with RIM,
concluding that for purposes of infringement under Section 271(g), the process
must be for the “manufacturing” of a “physical article.” The production of
information is not a product which is manufactured by a patented process that
may be imported into the
 35 U.S.C. Section 271(a) (2000).
 3D Sys., Inc. v. Aarotech Labs.,
 Joy Techs., Inc. v. Flakt, Inc., 6 F.3d 770, 773 (Fed. Cir. 1993).
 Roberts Dairy Co. v.
 35 U.S.C. Section 271(a).
 The Senate Report
explains, “Under our current patent laws, a patent on a process gives the patentholder the right to exclude others from using that
process in the
 The House Report: “With respect to process patents, courts have reasoned that the only act of infringement is the act of making through the use of a patented process . . . .” H.R. Rep. No. 99-807, at 5 (1986).
 Agreement on
Trade-Related Aspects of Intellectual Property Rights,
 This was based on 35 U.S.C. Section 271(f), which 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 actively 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 commerce suitable for substantial non-infringing 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 manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. 35 U.S.C. Sec. 271(f) (2000).
 Eolas Technologies Inc., v. Microsoft Corp., 399 F.3d 1325 (Fed. Cir. 2005). This case involved whether software code exported on a “golden master” disk could be a component of patented invention under Section 271(f). The claim at issue was directed toward a software product that comprised “a computer usable medium having computer readable program code physically embodied therein” and “computer readable program code.”
 Bayer AG v. Housey Pharmaceuticals Inc., 340 F. 3d 1367 (Fec. Cir. 2003).