Shapiro Arato Files Amicus Brief in Support of Supreme Court Challenge to Federal Circuit Rule Limiting Availability of Damages for Patent Infringement

On March 2, 2018, Shapiro Arato filed a brief in the United States Supreme Court on behalf of Power Integrations, Inc. as amicus curiae in support of the petitioner in WesternGeco, LLC v. ION Geophysical Corporation, No. 16-1011.  As leading innovators in the high-voltage power conversion market, Power Integrations invests heavily in the research and development of new technologies and relies on the patent system to protect those investments.

The question presented in WesternGeco is whether the Federal Circuit erred when it held that lost profits from overseas sales are categorically unavailable as damages in cases where patent infringement is proven under 35 U.S.C. § 271.  The petitioner argues that the presumption against extraterritoriality does not bar damages for lost foreign profits and that such profits are recoverable so long as they are reasonably and foreseeably caused by the domestic infringement.

We agree with petitioner and argue in the amicus brief that the Supreme Court should also reject the Federal Circuit’s categorical bar on the recovery of damages connected to lost foreign profits because it misapplies the doctrine of superseding causation.  In its opinion below, the Federal Circuit held that the “entirely extraterritorial . . . sale of an invention patented in the United States is an independent intervening act that . . . cuts off the chain of causation initiated by an act of domestic infringement.”

We argue that this holding is inconsistent with long-standing principles of superseding causation for three reasons.  First, the Federal Circuit disregards Supreme Court precedent limiting the superseding causation doctrine to situations where a later cause was independent from the earlier misconduct and not foreseeable.  Second, the Federal Circuit’s superseding causation holding is at odds with Goulds and Dowagiac—two Supreme Court cases that plainly permit the use of foreign sales when calculating damages for domestic infringement.  Finally, the Federal Circuit’s holding is inconsistent with many of its own cases that consider non-infringing conduct when determining damages and liability for patent infringement.

Partner Alexandra A.E. Shapiro and Philip Young authored the brief, a copy of which is available here.