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Infringement By Source Code 'Golden Master': Developments in Patent Infringement Law Concerning Extra-U.S. Sales
Until recently, U.S. software companies comfortably operated under the assumption that selling software that was copied from a “golden master” CD outside of the United States, and which was sold only to customers outside of the United States, did not infringe U.S. patents. Recent developments in the law have destroyed that comfort and made clear that infringement liability may very well lie for exactly those types of foreign sales.
Before 1984, patent infringement liability existed only for the making, using, sale or offer for sale of patented inventions in the United States. This territorial limitation on infringement liability created a safe harbor ' or a loophole depending on your perspective ' for would-be infringers: Under the pre-1984 version of 35 U.S.C. '271, an alleged infringer could make the individual components of a patented system or apparatus in the United States and ship them abroad with instructions on how the parts should be put together, all without any liability for patent infringement.
Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972), presented just such a case. Deepsouth was a simple case involving Deepsouth's export of components to shrimp deveining machines, which machines were the subject of Laitram's patents. The Supreme Court ruled that Deepsouth was not liable because “the statute makes clear that it is not an infringement to make or use a patented product outside of the United States.” Id. at 527. Thus, under Section 271, the assembly and use of the deveining machines abroad could not be an infringement. Similarly, the Supreme Court reaffirmed the principle that “the unassembled export of the elements of an invention did not infringe the patent.” Id. at 529.
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