Halo Electronics v. Pulse Electronics

A patent can be infringed in any of several possible ways. One of those is selling or offering for sale a patented product.  While the essence of a sale is the transfer of title, this case affirms that a sale can be considered to have taken place in several locations.  One location can be the location where the sold goods are transferred. Another can be the location where the sale agreement including all essential terms is finalized.  Price negotiations in the United States, however, do not amount to a sale in the United States if the sale contract is finalized, the goods manufactured, and the goods delivered outside the United States.  In resolving the issue, the Court note the Supreme Court’s statement: “The presumption that United States law governs domestically but does not rule the world applies with particular force in patent law.” (Microsoft, 550 U.S. at 454–55.)

An offer for sale requires an offer sufficiently specific that the recipients would understand their assent to be sufficient to conclude a sale agreement. To infringe a United States patent, the offer must be to make a sale with delivery and performance in the United States. See Transocean, 617 F.3d at 1309 (“the location of the contemplated sale controls whether there is an offer to sell within the United States.”) (emphasis added).

Regarding whether an act of infringement is willful, the Court reiterated a two-part standard. First, “a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” citing In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc). Second, the patentee must “demonstrate that this objectively-defined risk . . . was either known or so obvious that it should have been known to the accused infringer.” Id. The Court determined that the defendant’s having been able to raise a substantial question of obviousness at trial was enough to defeat the first prong, even though the defense was ultimately unsuccessful and regardless of whether the defense was known to the defendant at the time of the accused acts. By this standard, it is now very difficult to prove willful infringement.

A radical shift has taken place from bygone days in which clients were advised to obtain formal written opinions of invalidity or non-infringement to insure against the possibility of being found to be a willful infringer. Willful infringement can triple patent infringement damages and allow the patent owner to collect attorney’s fees. In the past, clients were economically justified in paying tens of thousands of dollars for formal written opinions to defend against charges of willfulness, even where the conclusions of those opinions were not considered to be reliable. The Federal Circuit Court may again shift its standard for willfulness. A concurring opinion makes the case at hand suggests as much. But it seems the days of formal written opinions to provide a defense against a charge of willfulness are in the past. A written opinion today is more likely to be used either as a report for a file or as a tool to convince customers or investors not to be overly concerned about a particular patent.