Patent Infringement: When Is A Product Sold "Within The United States"?

• Jurisdiction: United States,Federal
• Law Firm: Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
• Subject Matter: Intellectual Property, Patent
• Author: Mr Daniel Cooley and Gracie K. Mills
• Published date: 27 January 2023

Under 35 U.S.C. ' 271(a), a patent is infringed when someone "without authority . . . offers to sell, or sells any patented invention, within the United States."¹In this manner, "[t]he territorial reach of section 271 is limited,"²and the Supreme Court has long ago made clear that "the US patent laws do not, and were not intended to, operate beyond the limits of the United States."³But for many industries, where a sale occurs can be unclear: Perhaps some of the negotiation, con- tracting, importation, and/or delivery involved in a product's sale happens within the United States, while some happens elsewhere. For such products, when is 271(a) infringed?

Sale and Offer for Sale Under Section 271(a)

"It is the general rule under United States patent law," the Supreme Court has said, "that no infringement occurs when a patented product is made and sold in another country."⁴But as the Federal Circuit has observed, "[t]he patent statute does not define the meaning of 'sale' within the United States for purposes of ' 271(a)."⁵Instead, whether a party's actions constitute a sale or an offer to sell depends on a fact-intensive inquiry that examines what a party did-and where.

Substantial Activities

Time and again, the Federal Circuit has "rejected [a] formalistic approach" that defines a sale as occurring at "the single point at which some legally operative act took place."⁶As the court has explained, "[t]he standards for determining where a sale may be said to occur do not pinpoint a single, universally applicable fact that deter- mines the answer."⁷Instead, the court has looked to the "substantial activities" of the sale to determine whether they occurred in the United States.⁸These substantial activities may include any of negotiations; contracting; shipment; and delivery, as explained below.

Negotiations: Halo and CalTech

Before entering a contract, parties negotiate. Can negotiations in the United States constitute a sale, even if other substantial activities of the sale occur abroad?

In Halo Electronics, Inc. v. Pulse Electronics, Inc., Halo accused Pulse of infringing its patents on surface mount electronic packages.⁹Pulse disputed that infringement occurred "within the United States," as ' 271(a) requires, arguing it received purchase orders abroad from contract manufacturers outside the United States.¹⁰Halo countered that Pulse's negotiations with these contract manufacturers took place within the United States.¹¹The Federal Circuit agreed with Pulse, finding the negotiations were insufficient to create liability where the other substantial activities of Pulse's sales to the contract manufacturers, including not only receipt of the pur- chase orders but also delivery of the products, occurred abroad.¹²"Any doubt," the court explained, "is resolved by [a]...