Center for Advanced Study & Research on Innovation Policy


CASRIP Newsletter - Spring/Summer 2006, Volume 13, Issue 2

NTP v. RIM - Pushing the Envelope of Territoriality?

By Barry E. Bretschneider[1]

U.S. patent rights, like those of other countries, are normally viewed as being territorial in scope.  Direct infringement under 35 USC § 271(a) entails making using, selling, offering for sale or importing the invention within the territorial bounds of the United States.[2]  Under 35 USC § 271(f),[3] infringement may take place where the accused infringer supplies or causes to be supplied all or a substantial portion of the components of a patented combination so as to induce the combination of the components outside the U.S. in a manner that would infringe the patent if carried out in the U.S. or knowing that it would be combined outside the U.S.

35 USC § 271(f) was enacted in 1984 to overrule Deepsouth Packing Co. v. Laitram Corp.,[4] in which the U.S. Supreme Court held that separately manufacturing the components of a patented machine within the United States and then exporting the components for assembly in a foreign country of the components into the patented machine did not constitute infringement under 35 USC § 271(a) because the statute at that time "protect[ed] only against the operable assembly of the whole and not the manufacture of its parts."[5] 

The interface between 35 USC § 271(a) and 271(f) gives rise to questions about how far the territorial scope of direct infringement under § 271(a) extends and just what a "component of a patented combination" embraces.  In Eolas Technologies v. Microsoft Corp., the Federal Circuit defined "component" broadly by not limiting a "component" of a "patented invention" to physical machines and holding that software on a disk of program code to be loaded onto computers abroad can be a "component" of a patented method.[6]  The court further stated in dictum that 35 USC § 271(f) reaches any kind of "component" of any kind of patentable "invention," including method steps,[7] and that sending copies of software overseas is "supplying."[8],[9]

Against this backdrop, the Federal Circuit decided the famous "BlackBerry" Case (also known as "NTP v. RIM"), NTP, Inc. v. Research in Motion, Ltd.,[10]  which dealt with aspects of the familiar BlackBerry® handheld e-mail device and the e-mail system that routes messages from an e-mail network to the handheld devices.  The patents in suit included system claims that called for a "control point," and method claims which required use of an "interface" or "interface switch."  RIM argued that its activities did not constitute patent infringement because its "control point" was its relay processor in Canada and that the "interface" or "interface switch" was likewise the relay in Canada.  The Federal Circuit held that the jury could find that RIM infringed the system claims under 35 USC 271(a), but that the method claims were not infringed under either § 271(a) or § 271(f).

In essence, the court held that § 271(a) may reach systems, but not methods, with elements outside United States.  Since § 271(a) provides that unauthorized "use" of a patented invention constitutes infringement, the court held that the jury could find infringement on the basis that the entire system, including the "control point," was put in "use" within the United States by the users.[11]  This holding, which has attracted critical comment,[12] relied on the court's conclusion that "the location of the use of the communication system [by RIM's customers] as a whole occurs in the United States."[13] 

The author cannot resist noting the post hoc nature of this observation, which fails to draw any sort of meaningful distinction between uses of apparatus that are fully carried out within the United States and uses that involve portions of the apparatus abroad that the end users do not directly control but are put into action by acts by the users in the United States.  Under the court's analysis, any combination of apparatus components "used" in the United States and elsewhere might fall within the court's "use *  *  * as a whole" test and read the territoriality requirement out of § 271(a).  Since NTP v. RIM involved an appeal from a jury verdict, though, the court's holding can be defended as upholding the verdict of a "reasonable" jury supported by substantial evidence.

The Federal Circuit did hold that RIM did not infringe the method claims under § 271(a) since not all of the method steps were practiced in the United States, finding that "Congress has consistently expressed the view that it understands infringement of method claims under section 271(a) to be limited to use."[14]  The court did not attempt to reconcile this holding with its analysis of the system claims, probably because of its view that "use" of an apparatus could be carried out in a single location even if portions of the system as a whole were located elsewhere.  The court held that RIM's acts of offering the systems and the handheld devices to U.S. users did not constitute "selling" or "offering to sell" the complete method in the United States.[15]

Finally, the court resisted the temptation to extend its prior reading of § 271(f) in Eolas to hold that RIM's supplying of handheld devices to customers in the United States constituted "supplying a "component" of a method:[16]  "While it is difficult to conceive of how one might supply or cause to be supplied all or a substantial portion of the steps of a patented method in the sense contemplated by the phrase 'components of a patented invention' in section 271(f), it is clear that RIM's supply of the BlackBerry handheld devices and Redirector products to its customers in the United States is not the statutory 'supply' of any 'component' steps for combination into NTP's patented methods."[17]

NTP v. RIM has generated more heat than light in its analysis of patent infringement by "use" of an apparatus located both within and outside of the United States, but it remains to be seen if the court's "location of the use *  * * as a whole" test will end up expanding the effective territorial scope of U.S. patent rights.

[1]   Partner and Head of Northern Virginia Patent Group, Morrison & Foerster LLP, McLean, VA.  A.B., Princeton University; J.D., University of Iowa; LL.M., George Washington University.  Former Technical Advisor to Judge Giles S. Rich, U.S. Court of Customs and Patent Appeals (later Circuit Judge, U.S. Court of Appeals for the Federal Circuit).  Lecturer, CASRIP Summer Institute (1999-).

[2]   "(a) 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.

[3]   "(f)   (1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

(2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

[4]   406 U.S. 518 (1972).

[5]   Id. at 527.

[6]   399 F.3d 1325, 1339 (Fed. Cir. 2005).

[7]   Id. at xxxx.

[8]   Id. at xxxx.

[9]   Sending a Windows master disk to foreign replicators for them to use in installing the  Windows operating system on computers that would run infringing speech codec software held to be "supplying" a "component."  AT&T Corp. v. Microsoft Corp., 414 F.3d 1366 (Fed. Cir. 2005).  Since copying is "part and parcel of software distribution," so the act of copying patented software and distributing that copy is "supplying" within meaning of 35 USC 271(f).  Therefore, sending a single copy abroad with intent to replicate invokes 35 USC 271(f) liability for foreign copies.  However, a "component" must be supplied, not simply instructions.  Id.

[10]   418 F.3d 1282 (Fed. Cir. 2005).

[11]   Id. at 1316-17. 

[12]   See, e.g.,  Note, NTP, Inc. v. Research in Motion, Ltd.: Inventions are Global, but Politics Are Still Local - An Examination of the BlackBerry Case, 21 Berkeley Tech. L. J. 59, 69-70 (2006), which criticizes NTP for failing to follow the framework of Decca Ltd. v. United States, 544 F.2d 1070, 1073 (Ct. Cl. 1973), and analyze where the BlackBerry system control point was located.

[13]   418 F.3d at 1317.

[14]   Id. at 1317-19.

[15]   Id. at 1320.

[16]   The court also decided conclusively that 35 USC 271(g)did not teach RIM's activities:  "In this case, the relevant claims are directed to methods for the transmission of information in the form of email messages.  *  *  *. Because the 'transmission of information,' like the 'production of information,' does not entail the manufacturing of a physical product, section 271(g) does not apply to the asserted method claims in this case any more than it did in Bayer [AG v. Housey Pharmaceuticals, Inc., 340 F.3d 1367, 1377 (Fed. Cir.2003)]. "  Id. at 1323.

[17]   Id. at 1322.

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