By: Audrey Millemann
A patent is infringed by one who, in the United States, makes, uses, sells, or offers to sell the patented invention, or imports the patented invention into the United States. 35 U.S.C. Section 271(a). The Federal Circuit Court of Appeals in Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractrors USA, Inc., 617 F.3d 1296 (Fed. Cir. 2010), clarified the meaning of “offers to sell.”
In Transocean, the plaintiff sued the defendant, Maersk USA, for infringement of three patents covering a system for offshore oil drilling which included an improved derrick. The district court for the Southern District of Texas granted summary judgment in favor of Maersk on the grounds of noninfringement, among others.
The district court held that there was no offer to sell in the United States. The court based its holding on the facts that the contract for sale was negotiated by Maersk’s Danish parent company with the buyer, a Norwegian company. The contract was signed in Norway by two U.S. companies, Maersk USA, as the seller, and a subsidiary of the Norwegian company, a Texas corporation, as the buyer. Under the contract, the buyer was to use the accused oil rig in the United States Gulf of Mexico. The district court held that there was no offer to sell in the United States, however, because the contract was negotiated and signed outside the United States.
On appeal, Transocean argued that an offer between two United States companies for delivery or performance in the United States should be an offer to sell within the meaning of the statute because it would otherwise be inconsistent with prior case law. That case law held that a foreign company cannot escape liability for a sale simply by delivering a product to a U.S. buyer at a location outside the U.S. On the other side, Maersk argued that there could be no offer to sell within the United States unless the offer itself was made in the United States, and that its contract negotiations outside the United States were not covered.
The Court of Appeals reversed. The court said that offers to sell are analyzed under general contract law. The court held that an offer made in Norway by a U.S. company to a U.S. company for the sale of a product in the U.S., for delivery and use in the U.S., was an offer to sell within the meaning of section 271(a). Id. at 1309.
The court stated that “the focus should not be on the location of the offer, but rather the location of the future sale that would occur pursuant to the offer.” Id. The court explained that the legislative intent in adding offers to sell to the patent statute was to preclude parties from “generating interest in a potential infringing product to the commercial detriment of the rightful patentee.” Id.
The court rejected Maersk’s argument that the statute should be construed to read “offers made within the United States to sell within the United States,” stating that such an interpretation would “exalt form over substance by allowing a U.S. company to travel abroad to make offers to sell back into the U.S. without any liability for infringement.” Id. The court concluded that “the fact that the offer was negotiated or a contract signed while the two U.S. companies were abroad does not remove this case from statutory liability.” Id. at 1310.