(CN) – The Supreme Court ruled Wednesday that a manufacturer of genetic testing kits is not liable for patent infringement because it only shipped a single component of the kits from the U.S. to a foreign manufacturing facility, not a substantial portion of components.
Promega Corp. owns four patents, and exclusively licenses a fifth, related to "short tandem repeats" in DNA sequences, or STR loci.
The patents deal with methods or kits for determining the alleles — or markers for genetic variations — in a set of STR loci from a DNA sample.
Promega is the exclusive licensee of a patent about a process for examining genetic differences between people in DNA samples, referred to in court documents as the "Tautz patent."
Life Technologies Corp., or LifeTech, makes genetic testing kits "for carrying out a multiplex amplification of STR loci from DNA samples," court records show. The kits are sometimes used by police for forensic identification, and by researchers for the analysis of cancer cells.
Promega sued LifeTech in 2010 for patent infringement, accusing it of selling STR testing kits not covered by a 2006 cross license between Promega and LifeTech subsidiary Applied Biosystems.
A jury found that LifeTech willfully infringed Promega's patents and determined that Promega was entitled to $52 million in lost profits.
However, the district court granted LifeTech's motion for judgment notwithstanding the verdict based on Promega's failure to prove applicable damages, and vacated the finding of infringement.
Both companies appealed. A divided Federal Circuit ruled in December 2014 that LifeTech is liable for infringement of the licensed patent.
LifeTech petitioned the U.S. Supreme Court for review in 2015, arguing that the Federal Circuit misinterpreted the law when it found Promega was entitled to damages for LifeTech's worldwide testing-kit sales "even though the only connection between Life Technologies' foreign sales and the United States was that Life Technologies shipped a single, commodity component of the kits from its facility in the United States to its own manufacturing facility abroad."
The high court agreed to take up the case last summer and examine “the intersection of international supply chains and federal patent law.”
On Wednesday, the Supreme Court ruled for LifeTech, reversing the Federal Circuit and finding that liability under the U.S. Patent Act is not triggered by “the supply of a single component of a multicomponent invention for manufacture abroad.”
“A supplier may be liable under §271(f )(1) for supplying from the United States all or a substantial portion of the components (plural) of the invention, even when those components are combined abroad. The same is true even for a single component under §271(f )(2) if it is especially made or especially adapted for use in the invention and not a staple article or commodity,” Justice Sonia Sotomayor wrote for the court. “We are persuaded, however, that when as in this case a product is made abroad and all components but a single commodity article are supplied from abroad, this activity is outside the scope of the statute.” (Parentheses in original.)
The court’s decision was based on its view that a quantitative, not a qualitative, meaning must apply to the phrase “substantial portion” in the Patent Act.
“A qualitative reading would render the phrase ‘of the components’ unnecessary the first time it is used in §271(f )(1). Whenever possible, however, we should favor an interpretation that gives meaning to each statutory provision,” Sotomayor wrote. “Only the quantitative approach does so here.”
Justices Anthony Kennedy, Ruth Bader Ginsburg, Stephen Breyer, Elena Kagan, Clarence Thomas and Samuel Alito joined Sotomayor in the judgment. Chief Justice John Roberts did not participate in the decision.
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