Transocean v. Maersk: How an Overseas Offer for Sale Can Infringe a U.S. Patent

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Nanda Alapati (Womble Carlyle's Tysons Corner, VA office) provides an excellent summary of a significant decision concerning patent infringement liability triggered by offers for sale.

Nanda Alapati (Womble Carlyle's Tysons Corner, VA office) provides an excellent summary of a significant decision concerning patent infringement liability triggered by offers for sale.

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  • 1. Transocean v. Maersk 610 F.3d 1296 (Fed. Cir. 2010) How an Overseas Offer for Sale can Infringe a US Patent © 2010 Womble Carlyle Sandridge & Rice, PLLC WCSR Patent Legal Issues Meeting Dec 14, 2010 Nanda Alapati
  • 2. Womble Carlyle presentations are intended to provide general information about significant legal developments and should not be construed as legal advice regarding any specific facts and circumstances, nor should they be construed as advertisements for legal services. DISCLAIMER
  • 3. Litigants & Patents
    • Plaintiff: Transocean Offshore Deepwater Drilling
    • Defendant: Maersk USA
    • Patents-in-Suit: “Multi-activity offshore exploration and/or development drill method and apparatus” USP 6,047,781; USP 6,068,069; USP 6,085,851, same spec
  • 4. USP 6,068,069(Transocean) Multi-Activity Offshore
  • 5. Claim 17 of USP 6,068,069
    • 17. Multi-Activity Drilling Assembly . . .. including:
    • a drilling superstructure … for simultaneously supporting drilling & operations auxiliary to drilling
    • first tubular advancing assembly… for advancing tubular members into the bed of body of water
    • second tubular advancing assembly. . for advancing tubular members simultaneously with said first means into the body of water to the seabed an assembly positioned adjacent to said first and second assemblies . . .transferring tubular assemblies between (the two) . . .wherein drilling activity can be conducted (by the first) and auxiliary drilling activity can be simultaneously conducted (by the second)
  • 6. Sales Agreement
    • Maersk A/S (Denmark) has Keppels FELS (Singapore) build Rig in 2005
    • Maersk A/S negotiates with Statoil ASA (Norway) for rig
    • Maersk USA (US) signs contract with Statoil G.O.M. LLC (US) in Norway
      • Contract has drawings & specs for a particular design
      • Operating area is for the US GOM, but can be used elsewhere
      • Contract mentions Transocean’s patents
      • Maersk US has right to make alternations in light of “court or administrative determinations throughout the world (Transocean had pending patent case against Global Santa Fe
  • 7. Delivered Rig
    • Transocean v. GSF case (S.D.Tex.)
      • Injunction requiring GSF to install a “casing sleeve” on one of two advancing stations to prevent advancing station from lowering a drill string into the water (and rendering it non-infringing)
    • Before delivery, Maersk learns of injunction and modifies rig for Statoil to have same casing sleeve
  • 8. District Court (S.D.Tex)
    • No offer to sell in the US
    • No sale in the US
    • No infringement – Maersk Modified Rig
    • Claims are Invalid for Obviousness – 103(a)
    • Claims are not enabled – 112,1
    • No Willfulness
  • 9. “ Offer to Sell” issue (1)
    • Maersk:
      • Offer was made in Norway, not in US. See Rotec v. Mitsubishi (Fed. Cir. 2000) (JP company makes offer for sale in China)
    • Transocean:
      • Requirement that “offer for sale” be made in US, would be inconsistent with Lightcubes v. NorthernLights (Fed. Cir. 2008) (irrelevant where title changes when foreign seller deals with US customers)
  • 10. “ Offer to Sell” issue (2)
    • 271(a) ..whoever without authority .. .offers to sell . . . any patented invention, within the United States. . . during the term of the patent therefor, infringes the patent.
    • History – 1994 TRIPS agreement
    • Goal: Prevent “generating an interest in a potential infringing product to the commercial detriment of the rightful patentee”
  • 11. “ Offer to Sell” issue (3)
    • “ [t]he location of the contemplated sale controls whether there is an offer to sell within the United States.”
    • “ To adopt Maersk USA's position would have us read the statute as “offers made within the United States to sell” or “offers made within the United States to sell within the United States.”
    • “ (A) company would generate interest in its product in the U.S. to the detriment of the U.S. patent owner, the type of harm that offer to sell within the U.S. liability is meant to remed
  • 12. “ Offer to Sell” issue (4)
    • “ We hold that the district court erred because a contract between two U.S. companies for performance in the U.S. may constitute an offer to sell within the U.S. under 271(a) . The fact that the offer was negotiated or a contract signed while the two U.S. companies were abroad does not remove this case from statutory liability”
    • FN4 - “Offer for sale” analysis has nothing to do with whether the product as delivered infringed.
  • 13. “ Sale” issue (1)
    • Maersk:
      • Not a sale since Rig was not complete at time of contract
      • In any case, sale was overseas – contract contemplates rig would be used in US GOM & elsewhere
      • What we delivered did not infringe (design-around)
    • Transocean:
      • Sale contemplates delivery in US
      • Schematics in contract show that “sold rig” infringes
  • 14. “ Sale” issue (2)
    • CAFC:
    • As with the offer to sell, we hold that a contract between two U.S. companies for the sale of the patented invention with delivery and performance in the U.S . constitutes a sale
    • “ A sale does not only occur at a single point where some legally operative act took place.”
    • “ We may also consider other factors such as the place of performance.”
    • “ Maersk delivered the rig to US waters”
  • 15. “ Sale” issue (3)
    • CAFC:
    • “ No rule that the entire apparatus must be built for there to have been a sale”
    • “ A sale is not limited to the transfer of tangible property; a sale may also be the agreement by which such a transfer takes place”
    • “ Our precedent establishes that a contract can constitute a sale to trigger infringement liability” (citing NTP v. Research in Motion, Fed. Cir. 2005)
    • The fact that Maersk USA, after the execution of the contract, altered the rig in response to the GSF injunction is irrelevant to this infringement analysis. The potentially infringing article is the rig sold in the contract, not the altered rig that Maersk USA delivered to the U.S.
  • 16. “ Modification of Rig” issue
    • CAFC:
    • The fact that Maersk USA, after the execution of the contract, altered the rig in response to the GSF injunction is irrelevant to this infringement analysis.
    • The potentially infringing article is the rig sold in the contract, not the altered rig that Maersk USA delivered to the U.S.
  • 17. “ Obviousness” issue
    • Transocean provided secondary considerations
    • Industry skepticism (“collision”, “not being realistic”)
    • Industry praise (publication, customers, competitors)
    • Commercial success (higher price, evidence of copying)
    • Dt. Ct.
    • Did not consider these fully
    • CAFC
    • “ To be clear, a district court must always consider any objective evidence of nonobviousness presented in a case” (emphasis original)
    • “ No rule that the entire apparatus must be built for there to have been a sale”
    • “ A sale is not limited to the transfer of tangible property; a sale may also be the agreement by which such a transfer takes place”
    • “ Our precedent establishes that a contract can constitute a sale to trigger infringement liability” (citing NTP v. Research in Motion, Fed. Cir. 2005)
    • The fact that Maersk USA, after the execution of the contract, altered the rig in response to the GSF injunction is irrelevant to this infringement analysis. The potentially infringing article is the rig sold in the contract, not the altered rig that Maersk USA delivered to the U.S.
  • 18. “ Enablement” issue
    • Maersk:
      • Patents do not teach how to build the “transferring assembly” without undue experimentation;
      • Transocean had trouble with it; they had to outsource to Varco
    • Transocean:
      • Maersk’s expert (former Varco CEO, testifying on obviousness, said that building such a thing would be trivial
      • We disclose how to build one embodiment (though not perfect)
    • CAFC:
      • “ [t]he district court erroneously required Transocean to enable the most efficient commercial embodiment, rather than the claims”
  • 19. “ Willfulness” issue
    • Maersk:
      • We knew about patents;
      • Contract included option to design-round
      • We delivered non-infringing design
    • Transocean:
      • They knew about patents;
      • Their contract included option to design-round
      • They sold infringing design
    • CAFC
      • Maersk did not act with reckless indifference
      • No Willfulness
  • 20. Observations & Lessons (1)
    • 1. Analysis of overseas “offer for sale”
      • Location of offeror & recipient of offer
      • Location of contemplated sale
      • Whether it generates interest in product that is commercially detrimental to patentee
    • Overseas “sales”
      • Contract, not consummated sale
      • Overseas contract does not save defendant if the contemplated use/benefit is in the US
  • 21. Observations & Lessons (2)
    • Defendant should make sure that the obviousness argument does not undermine enablement
    • Willfulness
      • Helps if you show good faith in avoiding infringement
  • 22. THE END