Timothy R. Holbrook (Emory University) has posted Extraterritoriality and Proximate Cause after WesternGeco (Yale Journal of Law & Technology (Forthcoming)) on SSRN. Here is the abstract:
The Supreme Court’s decision WesternGeco LLC v. ION Geophysical Corp. appeared to be a narrow case about a rather obscure patent law provision. In reality, however, it had the potential to reach into a number of trans-substantive areas, including the nature of compensatory damages, proximate cause, and extraterritoriality. Instead of painting with a broad brush, the Supreme Court opted to take a modest, narrow approach to the issue of whether lost profits for foreign activity were available to a patent holder for infringement under 35 U.S.C. § 271(f)(2). In addressing this issue, the Court utilized its two-step framework for assessing the extraterritorial reach of U.S. law adopted in RJR Nabisco Inc. v. European Community. The Court skipped step one, but its analysis of step two confirmed that the territorial limits of damages is tied to the corresponding liability provision. Ultimately the Court allowed the damages for the relevant foreign activity.
This decision clarified a few things about the extraterritorial application of US law. By skipping step one, the Court made it clear that the presumption against extraterritoriality is distinct from the focus analysis of step two. The Court passed on the opportunity to further elaborate on step one and to answer definitely whether the presumption applies to remedial provisions. The Court also elaborated on step two and embraced a methodology that tied extraterritorial reach of a general remedy provision to the corresponding liability provision.
The Court’s decision also leaves a number of questions open. Specifically, it remains unclear whether the Federal Circuit’s Power Integrations and Carnegie Mellon decisions survive WesternGeco. I contend that they do, in disagreement with other professors. The Court also failed to explore the important role that proximate cause may play in future patent cases, particularly those involving global theories of damages, and issue that I take up here. The Federal Circuit could – and should – embrace a narrower conception of proximate cause to limit these types of global theories of patent damages.