Apple, Cisco win ruling limiting patent suit damages

Apple Inc., Cisco Systems Inc. and Microsoft Corp. won an appeals court ruling that limits the amount they would have to pay in patent damages for products that are shipped outside the U.S.
A U.S. appeals court, ruling Wednesday in a case involving a 13-year-old dispute between Boston Scientific Corp. and St. Jude Medical Inc., said federal law doesn’t allow patent owners to collect damages from infringers on overseas sales for certain types of patents.
“It’s good news for anyone sued in U.S. courts where the theory of infringement is based on foreign sales” and patents that cover a series of steps needed to implement an invention, said Ed Reines of Weil Gotshal & Manges LLP, who submitted court papers on behalf of Apple, Cisco, Microsoft and Intel Corp., the world’s largest chipmaker.
The law still applies when it pertains to patents for machines, manufacturing and composition of matter, said the U.S. Court of Appeals for the Federal Circuit. Boston Scientific had argued it applied to all “patented inventions,” no matter the type.
Wednesday’s decision builds on a 2007 Supreme Court victory won by Microsoft, the world’s biggest software maker. In that case, the high court narrowed the law that applies U.S. patent rights beyond the country’s borders in a ruling on software developed in the U.S. that’s installed on computers sold overseas.
“The court sent a clear message that the territorial limits of patents should not be lightly breached” in that 2007 decision, the Federal Circuit said Wednesday.
Wednesday’s opinion involved a 1996 dispute between Boston Scientific and St. Jude over implantable defibrillators. Repeating a ruling it made in December, the Federal Circuit overturned a judge’s decision to invalidate a Boston Scientific patent and ordered the case remanded for a determination of how much St. Jude should pay for infringing the patent.
The element of the patent that was infringed covers the steps of determining a heart condition, selecting the appropriate therapy and then executing the shock to the heart.
The shipment of a device capable of doing those steps overseas isn’t enough to find infringement, and thus St. Jude wouldn’t have to pay for devices sold overseas, the federal circuit said.
The entire 12-member appeals court agreed to reconsider that December decision to address the question of overseas sales at the behest of the technology companies that weren’t involved in the original case.
The scope of U.S. patent law was an issue in an appeal Waterloo, Canada-based Research In Motion lost in 2005. The case later settled with RIM paying $612.5 million to the patent owner.
“RIM is well aware of the potential consequences of extending the reach of the United States patent laws to activities in other countries,” RIM said in statement. The company, which had filed a brief in support of St. Jude’s position, said it was pleased with the decision.
In 2006, Natick, Mass.-based Boston Scientific and St. Paul, Minn.-based St. Jude agreed that royalties would be limited to 3 percent on the devices. Wednesday’s decision determines the base upon which those royalties would be applied, said Boston Scientific lawyer Arthur Neustadt of Oblon Spivak McClelland Maier & Neustadt of Alexandria, Va.
“There are certainly more damages from U.S. sales than from those abroad,” he said. He said the ruling on damages has more of an effect on technology companies than on those who make medical devices.
The case is Cardiac Pacemakers Inc. v. St. Jude Medical Inc., 2007-1296 and 2007-1347. The lower court case is Cardiac Pacemakers Inc. v. St. Jude Medical Inc., 96cv1718, U.S. District Court, Southern District of Indiana (Indianapolis.)