Proposed Amendment to Section 271 of the Patent Act

Last week, I wrote the Federal Circuit should re-hear the BlackBerry Case (RIM v. NTP).  Today, I propose a simple legislative change to move the debate concerning extra-territorial application of U.S. Patent laws to the legislature.

Section 271(a) of the patent act currently provides a definition of infringement.

Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

Generally, in order show that a patent is infringed, the plaintiff must prove that the defendant (or his agent) performed each element of the claimed invention.  In this case, RIM was found liable for infringement for using a patented method.  However, as the diagram shows, RIM performs an element of its infringing activity in Canada. 

From my point of view, RIM should not be held liable for patent infringement because a portion of the patented method was performed on foreign soil, and the statute requires that the use take place within the united states.  The Court, however, read an exception into the statute -- that internationally performed elements of the invention did not defeat an infringement charge so long as the "control and beneficial use" of the infringing system was within the United States. 

Rather than legislating from the bench, I would propose the following draft amendment that incorporates the rule created by the court in RIM. 

Proposed Amendment to 35 U.S.C. Section 271(j): Whoever without authority uses any patented invention, under the control and beneficial use of persons within the United States, shall be liable as an infringer so long as the preponderance of components of the invention are within the United States.

Does anyone have anything against my proposed legislation?

Update I: I have received several excellent comments on the proposed legislation. 

(i) A major issue is the "preponderance" language that requires a preponderance of components to be located within the United States.  This arises from the RIM v. NTP case where the court, in finding infringement, included as a factor that only one or two of the components of RIM's system were located outside of the United States.  Preponderance is a little vague and subject to too much interpretation -- so we need a better word.

(ii) Initially, I only included the "use" of a patented invention within the statute.  However, a reader asked that this be extended to include making and selling.  I agree that these actions should be included as well.

(iii) A colleague pointed out that the statute should be more clearly written to indicate that it is the patented invention that is under the control and beneficial use of persons in the U.S. 

Here is a new version of the Revised Amendment:

Revised Proposed Amendment to 35 U.S.C. Section 271(j): Whoever without authority makes, uses or sells any patented invention, where the patented invention is under the control and beneficial use of persons within the United States, shall be liable as an infringer so long as the clear majority of components of the invention are within the United States.

Update II:

CE Petit added more comments.  Rather than looking at the number of "components" of an invention he suggests looking at the number of elements of a given claim.  "This is particularly relevant when some or all of a claim concerns a process or an intangible. Since 'elements of claims' are parseable as a matter of law by the court."

Petit's version III of the Proposed Amendment to 35 U.S.C. Section 271(j) looks like this:

New Revised Proposed Amendment to 35 U.S.C. Section 271(j): Whoever without authority makes, uses, or sells any patented invention, where the invention is under the control and beneficial use of persons within the United States, shall be liable as an infringer so long as the clear majority of the elements of an otherwise infringed claim of the invention are within the United States.

I wonder what our blogging legislative guru has to say on this issue?

Update III: A couple of clients contacted me directly with more ideas and edits for the proposed legislation.  Our newly edited version is here, with changes underlined. 

271(j): Whoever without authority makes, uses, or sells any patented invention, where the invention is under the control and beneficial use of entities or persons within the United States, shall be liable as an infringer so long as either (i) at least one key claimed element is within the United States or (ii) at least one key claimed step takes place within the United States.

271(j) Definitions: A Key Claimed Element or Step is one that if missing, makes the invention inoperable, or that makes the claim patentable in view of cited prior art.

Let me know if you think that we should include other changes.  Either leave a comment below or e-mail me ([email protected]).

Update IV: The real trick here is, as Ken Hobday correctly pointed out, eliminating the potential for a company to set up computer servers in some foreign land, practicing claimed methods using those servers, and then simply providing a point of access through the internet to U.S. customers.  Any proposed legislation should be carefully examined to ensure that we capture this type of activity as infringement of U.S. patents. I'm not sure that the draft proposal is there yet.

Update V: Matt Buchanan made the point that we may be getting off-track.  He has a solution that is directly related to the "extra-territorial server farm" problem.

Matt's Proposal -- 271(j): Whoever without authority makes, uses, or sells any patented invention by providing persons located in the United States electronic access to a process performed by an extraterritorial computer shall be liable as an infringer notwithstanding the extraterritorial location of the computer so long as the provision of electronic access and the performance of the process is required by the claim at issue.

Comments

[Ken Hobday]

My concern would be that "preponderance of components" is too ambiguous. For example, if I sell an online service in the States but virtually all components of the service (other than the browser UI) reside extra-territorially, the "preponderance of components" test would fail.

That being said, I'm all in favor of moving this issue from case law to statutory law.

[Patrick L. Reilly]

I would complete the restriction as: "Whoever without authority makes, uses, offers to sell, or sells any patented invention, under the control..."

[C.E. Petit]

I'm not sure I buy this, as it seems an invitation to "bolt-counting" ("Over 700 parts, including washers, nuts, and bolts, were in Canada, while only 617 parts, including washers, nuts, and bolts, were in the US; therefore, the majority of parts are not in the US and the infringement claim fails."). It seems to me that what should be measured is the majority of elements of a given claim rather than "parts." This is particularly relevant when some or all of a claim concerns a process or an intangible. Since "elements of claims" are parseable as a matter of law by the court, that nonetheless provides a good (and early in the process) preservation of the record for the Court of Appeals.

The only question, then, would be how to treat dependent claims. That is, does one count each element as if fully set forth in the dependent claim (the logical way), or only what appears literally stated in the dependent claim?

I think that would leave us with this:

Sur-revised Proposed Amendment to 35 U.S.C. Section 271(j): Whoever without authority makes, uses, or sells any patented invention, when the patented invention is under the control and beneficial use of persons within the United States, shall be liable as an infringer so long as the clear majority of the elements of an otherwise infringed claim of the invention are within the United States.

[Ken Hobday]

A colleague of mine just raised another interesting issue with C.E. Petit's proposal for using claim elements:

In a typical claim, only certain elements are viewed by the examiner as novel while other elements are supporting characters except in combination with the main novel character.

So can you really give all claim elements equal weight when counting how many are performed in the US? Supposed most are performed extra-territorially, but the one really novel element is performed in the US. Or vice versa.

I would still like to see wording that specifically calls out "point of access" components sold or made in the United States even if the majority of components (or alternatively claim elements) reside elsewhere.

A number of us have had nightmares of server farms in various parts of Asia practicing any number of business method claims and simply exposing the client interface to US customers.

[J. Matthew Buchanan]

I can contribute two comments to this discussion:

1. Isn't blogging great! Dennis - this post is a great example of the power of blogging. You have proposed an interesting solution to a problem, and collected some wonderful input from the community. Everything is searchable and will be available for years to come. I love it.

Now onto the substance of the matter....

2. The RIM situation is quite interesting, and perhaps unique to computer-related technologies that lend themselves to such logistics. At this point in time, I think we are, as Ken points out, primarily concerned with the extraterritorial server problem. That being said, I would narrowly tailor the new section of 271 to address this problem.

I see these difficulties, though: 1) in a true extraterritorial server farm situation, I think the "control and benefical use of persons in the United States" test may fail, as the only connection to the US may be the access points. Is that control and beneficial use in the US? Probably not.

I agree that language such as "preponderance of components" and number of "elements" could raise difficulties in applying the law, so I would avoid these tests. I would also avoid reference to "the invention" as opposed to "the claim."

So how would I write the new section?

Let's try this for debate:

271(j): Whoever without authority makes, uses, or sells any patented invention by providing persons located in the United States computer access to a process performed by an extraterritorial computer shall be liable as an infringer notwithstanding the extraterritorial location of the computer so long as the provision of computer access and the performance of the process is required by the claim at issue.

[Anonymous Coward]

Instead of using the word "components", how about using "function". IANAL, but it seems to me that most method based patents aren't patenting the individual components, but rather the overall function of the method.

Counting "function points" is a genally accepted approach in IT for measuring the size of an application's functionality. So within the method's scope, one should be able to approximate how much of the system resides in the U.S.. How's that for "bolt counting".

[Spud Gardener]

Were the infringement in question that of an apparatus manufactured in whole or in part in another country but delivered to, sold in, and used within the U.S., then, the wording of Section 271 would seem entirely adequate.

As is often the case with a process or method claim, things are less clear because we try to make the intagible tangible.

I argue that Section 271 applies in this case and is adequate as it stands. Here is the parallel I propose. The practice of an apparatus claim yields a device. The practice of a process claim yields a result. The phrase "patented invention" in Section 271 is either a) a device that includes all elements of a patent claim, or b) the result yielded by practicing all steps of a patented process.

Because the end result of the patents in question is "imported into the United States" (resulting email delivered to someone in the US), is sold in the US (it is a service for sale), and is used in the US (email is read the end user), then clearly there is infringement.

No wording change in Section 271 is needed. Merely recognizing that the practice of a process yields are result is all that is needed.

As an example, let's say I patent (in the US) the process of converting a temperature measured on the Fahrenheit scale to an equivalent one on the Celsius scale.

My patent might read:

A method for converting a temperature measured on the Fahrenheit scale to an equivalent temperature measured on the the Celsius scale, comprising:

-- computing a interim result by subtracting 32 from the temperature measured on the Fahrenheit scale;

-- multiplying said interim result by the fraction 5/9.

The outcome of practicing any process is a result. The result may not be unique and may be the outcome of practicing other processes, equivalent or not. But still, the only reason to practice a process is to produce a useful result (a result that is or can be used).

I argue that the "patented invention" in such a process claim is the result produced by the practice of the claimed process. Thus, the patented invention in my example is a number resulting from practice of the steps shown. The encroachment of my U.S. rights for this process occurs at any time someone delivers the result generated by practicing the steps of my claims within the US, regardless of where those steps were practiced. Delivery, sell, or use of the number outside the U.S., provided it never enters the U.S., is not encroaching on my granted rights and is not infringement.

Are my rights infringed and is damage done to me by someone in the U.S. who provides a temperature in Fahrenheit to someone in Canada who subtracts 32 and multiplies by 5/9 AND THEN GIVES BACK THE RESULT? Surely, just as much as if the entire process had been practiced in the U.S.

I see no reason to change 271.