The Multi-National Advantage

Most inventors know their patents are strictly territorial - that is, a patent only prevents others from making, using, or selling your invention inside the country which issued the patent. But in today's environment of multi-national corporations and instantaneous communications can a small company or individual inventor protect itself ?

Consider the case of sole inventor Gerald Pellegrini , who saw multi-national Analog Devices running a nice little business in motor controller chips ("ADMC" chips) - chips that probably infringed Pellegrini's patent. One problem, though. Pellegrini only held a U.S. Patent and Analog was manufacturing the chips outside of the country and only selling them to non-US customers. Clearly Analog, a U.S. company was profiting from this U.S. invention - and the owner of the patent was determined to get his fair share of those profits.

Pellegrini tried several arguments before the court. He (and, apparently, it was Pellegrini himself) pointed out that that Analog is incorporated in the United States and has executive, marketing, and product line responsibilities for ADMC product line ; that the ADMC chips were designed in the U.S.; that Analog arranged for the overseas manufacture of the chips from its U.S. headquarters; that Analog processed sales orders here and directed the shipments of orders from here. In short, he contended that Analog "supplie[d] or cause[d] to be supplied in or from the United States" a product that infringed his patent.

Unfortunately for Pellegrini, he overlooked a critical point . It is the product that must be supplied in or from the U.S. Running a business is not an act of infringement, even if the business is to make a product overseas that would infringe if it were made in the U.S. The Court of Appeals took one look at this case and stated clearly, "patent infringement occurs where the offending act [making, using, selling, offering for sale, or importing] is committed and not where the injury is felt." Additionally, "the plain language of [the law] focuses on the location of the accused components, not the accused infringer."

Perhaps Pellegrini should have taken a different tack (and perhaps he tried). Rather than suing Analog to stop it from selling ADMC chips overseas he should have concentrated on licensing Analog to import and sell them in the U.S.