The Supreme Court on Friday held that WesternGeco, LLC (“WesternGeco”), owner of patents for a system used to survey the ocean floor, can recover profits from sales it lost outside the U.S. due to Ion Geophysical Corp.’s (“ION”) infringement of its patents. Under section §271(f) of the Patent Act, a company can be liable for patent infringement if it ships components of a patented invention overseas to be assembled there. A patent owner who proves infringement is entitled to recover damages under section §284. The question was whether these statutes allow the patent owner to recover for profits it lost from foreign sales that did not occur because of the infringing activity. The Supreme Court held that they do.

At trial, a jury found that ION was liable for infringement under §271(f) for selling a system that was built from components manufactured in the United States, shipped to companies abroad, and assembled there into a system indistinguishable from WesternGeco’s patented system. The jury awarded WesternGeco damages in royalties and lost profits. ION moved to set aside the verdict, arguing that WesternGeco could not recover damages for lost overseas sales because §271(f) does not apply extraterritorially. The District Court denied the motion, but the Federal Circuit reversed. After an earlier Supreme Court decision remanding the case in light of Halo Electronics, Inc. v. Pulse Electronics, Inc., the Federal Circuit reinstated the portion of its decision regarding §271(f)’s extraterritoriality, and denied the patent holder recovery of the profits it lost from overseas sales.