Lost Profits Patent Case Making Its Way to High Court

(CN) – The U.S. Supreme Court Friday agreed to determine whether a company can collect an award for lost profits in a patent infringement case if the violation of those patents occurred outside the United States.

The plaintiff in the underlying case, WesternGeco, developed and patented a technology used in  geological surveys to search for oil and gas under the ocean floor. What made the company’s technology unique, court documents say, is a proprietary method of “lateral steering,” which allows surveyors to control the movement of survey devices, rather than simply pulling them behind the ship.

In 2007, Ion Geophysical Corp. rolled out its own system, “DigiFin” and a lateral controller that WesternGeco said directly violated its patent.

A jury found Ion liable for infringement and awarded WesternGeco $12.5 million in royalties and $93,4 million in lost profits. A district court later upheld the verdict, as did the U.S. Court of Appeals for the Federal Circuit.

But the divided three-judge appeals panel held the jury’s award of lost profits must be reversed.

The majority concluded that profits lost outside of the United States are unavailable as a matter of law despite the patent law’s express coverage of combinations abroad arising from U.S. exports.

WesternGeco petitioned for rehearing en banc, which the court denied.

It asked the Supreme Court to determine whether the appeals erred in holding that lost profits arising from prohibited combinations occurring outside of the United States are categorically unavailable in cases in which patent infringement is proven.

The justices did not explain their rationale for taking up the case.

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