Pricing And Contracting Negotiations Do Not Constitute Or Transform Substantial Extraterritorial Activities Into A Sale Or Offer To Sell Under § 271(a)

In Halo Electronics, Inc. v. Pulse Electronics, Inc., Nos. 13-1472, -1656 (Fed. Cir. Oct. 22, 2014), the Federal Circuit affirmed the district court's judgment that Pulse Electronics, Inc. ("Pulse") did not sell or offer to sell products that Pulse manufactured, shipped, and delivered outside the United States, and that Pulse's alleged infringement with respect to products that Pulse sold and delivered in the United States was not willful. As to Pulse's cross-appeal, the Federal Circuit affirmed the judgment of direct infringement of Halo Electronics, Inc.'s ("Halo") patents with respect to Pulse's products delivered in the United States, inducement with respect to products that were imported into the United States by others, and noninfringement of Pulse's U.S. Patent No. 6,116,963 ("the '963 patent"). The Federal Circuit also affirmed the judgment that the asserted claims of the Halo patents were not invalid for obviousness.

Halo, a supplier of electronic components, owns three patents directed to surface mount electronic packages. Pulse, another supplier of electronic components, designs and sells surface mount electronic packages and manufactures them in Asia. While Pulse delivers some of its packages to the United States, the majority are delivered outside the United States to contract manufacturers for companies such as Cisco, which incorporate the packages into their products and ship them to consumers around the world. Pulse's sales offices abroad received purchase orders for Pulse packages delivered abroad; however, Pulse engaged in pricing negotiations with contract manufacturers, approved certain foreign pricing, and engaged in other activities in the United States. When Pulse received purchase orders abroad, Pulse delivered the package products to Cisco contract manufacturers in Asia. The contract manufacturers then paid Pulse. After assembling the end products, the contract manufacturers sent invoices to Cisco, and Cisco paid the contract manufacturers for the end products.

After an initial unsuccessful attempt to license the Halo patents to Pulse in 2002, Halo sued Pulse for patent infringement in 2007. Pulse denied infringement and challenged the validity of the Halo patents. The district court granted Pulse's motion for SJ that it did not infringe the Halo patents by selling or offering to sell packages that Pulse manufactured, shipped, and delivered outside the United States. At trial, the jury found that Pulse directly...