A website may contain an "offer to sell" if it includes both pricing and ordering information.14 Recent cases have held that offers to sell exist even when the offer was made through a foreign website. In OptiGen v. International Genetics, the Northern District of New York denied the defendants' motion for summary judgment and held that OptiGen adduced admissible evidence establishing that the defendant sold or offered to sell infringing methods within the United States where the defendants' offers to sell were made exclusively through a website powered by an offshore server. The court found it persuasive that the website was accessible to customers located in the United States, and that customers within the United States could purchase the infringing methods through the offshore website.15
The Federal Circuit has addressed the issue of offers to sell in the form of negotiations outside the United States that contemplate a sale to a United States customer. In Transocean Offshore Deepwater Drilling v. Maersk Contractors USA, the Federal Circuit strengthened the rights of patentees when it held that a foreign company committed an infringing act when an offer was made in Norway by a U.S. company to another U.S. company to sell a product within the United States.16 The court focused on the location of the future sale that would occur as a result of the offer.
The court's rationale in Transocean raises another interesting issue -- whether liability under §271(a) extends to offers to sell that do not contemplate actual sales of goods within the United States. The Federal Circuit has not squarely answered the question, and the district courts that have considered the issue are divided. Interestingly, the Southern District of New York has gone both ways on this issue. In SEB, S.A. v. Montgomery Ward & Co., the court adopted the position that an offer in the United States to sell an infringing product outside the United States is actionable under §271(a). The court offered a meaningful explanation for this conclusion, noting that the key to an "offer to sell" under §271(a) is that the offer take place in the United States, and "if this Court required that both the offer to sell and the actual sale of the infringing product take place in the United States, it would make the 'offer to sell' language in §271(a) superfluous."17 But just one year later, the court held otherwise, stating that in order to be found liable under §271(a) for "offering to sell" an infringing product, the sale contemplated by the unlawful offer must be intended to occur in the United States.18 This issue may be academic, however, as more often than not, offers to sell to United States customers contemplate and result in a sale to U.S. customers.
A final issue that has been hotly contested in recent years is whether method patents can be infringed under the offer to sell and sale prongs of §271(a), particularly when the method is performed abroad. The district courts are divided, and the Federal Circuit has declined to decide the issue.19 In OptiGen v. International Genetics, the Northern District of New York adopted the District of Columbia's holding that an offer to sell or sale within the United States of a patented method constitutes infringement, even where the steps of the patented method are performed abroad.20 The Southern District of Texas has recently joined the position of these courts.21 The Eastern District of Virginia, however, declined to adopt the holdings in OptiGen and CLS Bank, suggesting that the offer to sell and sale prongs do not apply to method patents.22
SO WHAT ARE MY DAMAGES?
Once a determination has been made that the alleged infringer has committed an infringing act, the fact-finder must consider the amount of damages to award to the patentee. In patent law, damages are meant to put the patentee in the same financial position that it would have been had the infringement not occurred.23 The damages that flow from an unaccepted offer to sell and an actual sale of an infringing are consequently different.
With respect to a sale, a patentee may be entitled to all available damages flowing from the actual sale of an infringing product, including lost profits and/or reasonable royalties. But what is the harm to the patentee if the potential infringer's offer to sell did not result in an actual sale? Courts have infrequently addressed remedies on infringing offers to sell that do not result in an actual sale, but it is likely that a patentee may seek both injunctive relief and damages related to the offer.24 Often, the patentee may be content solely with injunctive relief, in order to put the brakes on the competition. But competing offers may require that the patentee reduce its price for the patented product, making price erosion damages a real possibility. The patentee may also be awarded damages resulting to an increase in its costs related to the infringing offers, including additional marketing costs.25
With an active Federal Circuit defining the contours of the patent laws, it has become more challenging to counsel clients on what may or may not constitute an infringing act when the act contains an offshore component. The courts have provided guidance on the unique issues related to extraterritoriality, and it is clear that the protection of patent rights is favored. With that in mind, practitioners should be aware of the increasingly creative attempts to design around the patent law, and counsel their clients accordingly.
Jodyann Galvin is a partner, and Melissa N. Subjeck is a senior associate, at Hodgson Russ, where both practice in the business litigation and intellectual property litigation groups.