Imports and Process Patent Infringement

Usually, a patent dispute involving imported merchandise gets resolved by the International Trade Commission in what is known as a Section 337 (19 USC 1337) case. The relief in a successful 337 case is most often an "exclusion order," prohibiting the importation of the infringing merchandise. An exclusion order can be general or limited. A general exclusion order prohibits all specified merchandise, even merchandise made or imported by entities that were not party to the action. A limited exclusion order prohibits the importation of specified merchandise by entities named in the order. An ITC decision in a 337 case may be immediately appealed to the U.S. Court of Appeals for the Federal Circuit, which is also the court that decides appeals from the Court of International Trade.

Often, the exclusion order is all the relief the patent owner needs. It protects the market from the infringing foreign product and allows the patent holder to enjoy the intended benefit of exclusive use of the patented invention or process.

A 337 case is separate from an infringement action in which the patent holder seeks damages as well as an injunction against future infringement. A patent infringement case makes its way through the various U.S. district courts and is reviewed on appeal by the Federal Circuit.

A recent patent decision from the Federal Circuit caught my attention because it involves infringement by importation but does not involve a 337 exclusion order. The case is Syngenta Crop Protection, LLC. v. Willowood, LLC. All you need to know about the facts is that Syngenta owned a U.S. patent covering a fungicide and its manufacturing process. Process patents are distinct from the patent covering the invention itself and protect the means of making or accomplishing some useful thing. Willowood made a competing generic version of the compound in China through a related party and imported it into the United States. For purposes of this discussion, we can assume that if the product were made in the U.S. following the process that was employed in China, the production would infringe the patent.

The question here involves the definition of infringement in 35 USC 271(g), which states (with my emphasis):

Whoever without authority imports into the United States or offers to sell, sells, or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, offer to sell, sale, or use of the product occurs during the term of such process patent. In an action for infringement of a process patent, no remedy may be granted for infringement on account of the noncommercial use or retail sale of a product unless there is no adequate remedy under this title for infringement on account of the importation or other use, offer to sell, or sale of that product. A product which is made by a patented process will, for purposes of this title, not be considered to be so made after—

(1) it is materially changed by subsequent processes; or

(2) it becomes a trivial and nonessential component of another product.

Willowood imported into the United States a product that was made by a process patented in the United States. That would seem to fall squarely within the statute making Willowood an infringer.

Not so fast, says Willowood.

Section 271(a) covers infringement of patented inventions, as opposed to patented processes. That section provides:

Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

Prior decisions of the Federal Circuit have interpreted § 271(a) as imposing a "single-entity requirement" for a finding of direct infringement of an invention by the use of a patented process. Here, Willowood acted only as the importer. A related company produced the merchandise using the patented process. Applying the same reasoning, Willowood argued that it cannot be liable for infringement under § 271(g) because it was not the single entity responsible for the production and infringement of the merchandise.

The Federal Circuit disagreed. It held that "the single-entity requirement, which is necessary for direct infringement liability under § 271(a), has no application to acts that do not constitute infringement under § 271(g)." According to the Court, § 271(g) is focused on the act of the unauthorized importation of products that are made via a patented process. Infringement occurs under § 271(g) when an item is made abroad using a patent process and then imported into the U.S. without authorization. By focusing on the product rather than the exercise of the patented process, § 271(g) does not include the single-entity requirement.

While patent infringement may not be something that most import compliance professionals worry about, it is something that should be on the radar and covered with purchasing professionals. Suppliers should be be able to warrant that products and the means of production are not infringing any patents, trademarks, copyrights or other intellectual property. Steps should be taken to confirm that is true and the supplier should be willing to indemnify the buyer for losses if it turns out to not be true. In addition to patent liability, infringing imports may result in supply chain disruptions due to ITC exclusion orders and penalties for importations that are contrary to law. 

So, consider this a New Year's Eve reminder of one more thing to track in 2020.

All the best.