In the underlying case, Cardiac alleged that under a specific patent law provision known as Section 271(f), St. Jude was liable for exporting heart stimulators that allegedly infringed Cardiac’s patent on a method for detecting heart arrhythmia. (Cardiac made lots of other claims in the long and tortured history of this case, but we’re just focusing on the method patent allegations.) On Wednesday, the Federal Circuit ruled that the provision applies only to apparatus patents, not method patents. The court concluded that Congress’s intent in passing Section 271(f) was to close a loophole that allowed companies to skirt U.S. patent laws by assembling a large percentage of a product in the U.S. and leaving the rest to be finished abroad. The judges then reasoned that because a patented method is not something that can be easily exported, Congress did not intend the provision to apply to method patents.
“Although such patented methods do have components…Section 271(f) further requires that those components be ‘supplied,’” wrote Judge Alan Lourie for the court. “That requirement eliminates method patents from Section 271(f) reach.”
In its 32-page opinion, the Federal Circuit reversed its own 2005 ruling in Union Carbide Chemicals v. Shell Oil Co., in which it held that method patents could be covered under 271(f). But as the Patently-O blog points out, the patent bar was expecting the appeals court to overturn its own precedent in the wake of the U.S. Supreme Court’s 2007 ruling in Microsoft Corp. V. AT&T Corp., which held that “master disks” could not be construed as “components” under 271(f) when shipped abroad and used in an infringing way.
The opinion was welcome news to businesses that faced liability if the Federal Circuit extended the reach of 271(f). Edward Reines of Weil, Gotshal & Manges, who filed an amicus brief for Cisco Systems, told us his technology clients would benefit from the ruling. “The en banc decision in Cardiac is a good decision and the right result for U.S. industry and U.S patent law,” he said.
Not everyone was as happy with the decision. For some fun reading, check out the dissent authored by Judge Pauline Newman. “The court’s new statutory interpretation is far more sweeping than is needed to decide this case, and far simpler than today’s technology deserves,” Judge Newman wrote.
Arthur Neustadt of Oblon, Spivak, McClelland, Maier & Neustadt argued the case for Cardiac, with Finnegan, Henderson, Farabow, Garrett & Dunner joining on the brief. Mark Perry of Gibson, Dunn & Crutcher argued for St. Jude, joined by Sidley Austin on the brief.