In a recent decision affecting patent licensing, the Supreme Court addressed whether companies can be liable for patent infringement caused by domestically manufacturing a single component of a multicomponent invention, and then internationally assembling it with other components. Life Techs. Corp. v. Promega Corp., 197 L. Ed. 2d 33 (U.S. 2017). The Supreme Court held that a single component does not give rise to such liability, reversing the decision by the Court of Appeals for the Federal Circuit. As described below, this decision of the Supreme Court creates a new pitfall for licensors and calls for creative approaches to license agreement provisions.
In this case, Promega Corporation ("Promega") was the exclusive licensee of a patent that covered a diagnostic kit for genetic testing. Promega sublicensed the patent to Life Technologies Corporations and its subsidiaries ("Life Techs"). The license was restricted to the manufacture and sale of the kit in law enforcement fields. The patented kit included five components, one of which was Taq polymerase. Life Techs manufactured the Taq polymerase component in the United States and then shipped that component to the United Kingdom, where it was combined with the other four components. When Life Techs began selling the kit outside of the law enforcement field, Promega brought a suit against Life Techs for patent infringement. Promega alleged that Life Techs' supply of the single component constituted infringement under 35 U.S.C. § 271(f)(1) of the Patent Act. Life Techs denied such infringement on the basis that the single component was not a "substantial portion" of the patented invention.
The article can be found here: New Strategies For Licensing Of Multicomponent Inventions