Sturm College of Law
With a few narrow exceptions, U.S. patent law concerns itself with activity that either occurs within this country’s borders or crosses its borders. In the typical case, that means that a patentee can recover lost profits or reasonable royalties based on the domestic sales of infringing products. However, patentees have begun to successfully advance a new and creative approach that this Essay labels the “worldwide causation” theory. So long as some domestic infringement can be said to cause sales overseas, patentees argue that there should be no territorial limitation on their recovery, allowing recovery for damages suffered anywhere in the world.
This Essay argues that courts should reject this new theory on both doctrinal and policy grounds. Part I introduces the worldwide causation theory in the context of patent law principles. Part II contends that, as a purely doctrinal matter, permitting patentees to recover damages for sales that take place overseas would circumvent the explicit territorial limitations that are well established in U.S. patent law. This argument is reinforced by the general presumption against the extraterritorial application of any U.S. law.
Part III discusses why the worldwide causation theory of damages also makes bad international and domestic policy. Under the current international regime, each nation has its own patent system. This means that inventors must satisfy a country’s specific patent laws to obtain a patent, sue for infringement in its courts, and obtain remedies available under that country’s laws. The proposed worldwide causation theory would undermine this regime and allow United States patent law to trump laws in other countries. Of course, other countries could follow suit and exercise their own forms of “patent imperialism,” thereby wreaking havoc with notions of territorial sovereignty in patent law. In addition to causing problems abroad, the worldwide causation theory provides troubling disincentives for U.S. companies. Companies that locate key activities in the U.S. will be worse off than companies that offshore those activities. In sum, there are ample reasons to reject patent imperialism.
Bernard Chao, Patent Imperialism, 109 NW. U. L. REV. ONLINE 77 (2014).
First published by the Northwestern University Law Review Online, Volume 109. Copyright is held by the author. User is responsible for all copyright compliance.