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The Intellectual Property StrategistFeaturesIntellectual PropertyLitigationPatent Licensing and TransactionsPatent Litigation

Foreign Lost Profits Recoverable for Patent Damages

By Elizabeth B. Hagan

The U.S. Supreme Court recently held that a patent owner may recover lost foreign profits for infringement under 35 U.S.C. §271(f)(2). WesternGeco LLC v. ION Geophysical Corp., No. 16-1011, 138 S. Ct. 2129 (June 22, 2018). This holding rejects the Federal Circuit's categorical exclusion of lost profits damages for foreign sales, and expands the potential for increased damages from domestic competitors operating in foreign markets.

Factual Background

WesternGeco and ION both manufacture devices for acoustically mapping the seabed, technology used by the energy industry to locate oil and gas drilling sites. WesternGeco manufactures a system called the Q-Marine, and sells its services performing surveys for oil companies. ION makes the DigiFIN, which is manufactured in the United States, but sold to customers overseas who assemble the systems and perform the surveys themselves. In 2009, WesternGeco sued ION for infringement of four patents related to this technology.

The jury found the patents infringed under §§271(f)(1) and (f)(2), and awarded WesternGeco both a reasonable royalty of $12.5 million and lost profits damages of $93.4 million, basing its lost profits award on 10 surveys performed by ION's customers using the DigiFIN. The survey contracts were all entered into abroad and performed on the high seas — that is, outside the borders of the United States.

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