CAFC: Overseas Contract Requiring Delivery and Performance in the U.S. Constitutes a "Sale" under Section 271(a)

Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA Inc., No. 2009-1556 (August 18, 2010)

Transocean sued Maersk on patents relating to an improved apparatus for conducting offshore drilling.  The lower court granted summary judgment of noninfringement in favor of Maersk.  One of the issues involved the finding that Maersk contracted with another U.S. corporation (Statoil) to use an accused rig in the "operating area" of the U.S. Gulf of Mexico, and that Statoil had the right to use the rig outside the operating area with certain limitations.  The contract, which was signed in Norway, mentioned Transocean's patents and reserved the right for Maersk to make "alterations" to the rig "in view of court or administrative determinations throughout the world."

At the same time, Transocean successfully sued another competitor (GSF) for infringement of the same patent claims.  When GSF redesigned their rigs to get around Transocean's patents, the district court in that case held that the new design did not infringe.  Before delivering the rig to the U.S., Transocean modified its rig according to the noninfringing design.

Maersk maintained that the district court correctly held that because the negotiations and execution of the contract took place outside of the U.S., this could not be an offer to sell under § 271(a).

The CAFC disagreed:

[W]e 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 under § 271(a) as a matter of law. Maersk USA’s first argument, that the location of negotiation and contracting should control is contrary to our precedent in Lightcubes. There, we held that a sale does not only occur at a “single point where some legally opera-tive act took place.” Lightcubes, 523 F.3d at 1369-70. We may also consider other factors such as the place of performance . . . Maersk USA’s argument that Statoil could use the rig outside the U.S. ignores the plain language of the contract, which includes an “Operating Area” of the U.S. Gulf of Mexico.  It also ignores the fact that Maersk did in fact deliver the rig to U.S. waters.

On the issue of the re-design:

[Maersk's] remaining arguments regarding the right to alter the final design and the fact that the rig was not complete at the time of contracting do not change the result. Maersk USA and Statoil signed a contract and the schematics that accompanied that contract could support a finding that the sale was of an infringing article under § 271(a). 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.

Finally, we reject Maersk USA’s claim that the entire apparatus must have been constructed and ready for use in order to have been sold. Our precedent establishes that a contract can constitute a sale to trigger infringe-ment liability. See NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1319 (Fed. Cir. 2005). 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. Id. In this case, there was a contract to sell a rig that included schematics. On summary judgment, we must draw all justifiable inferences in favor of the non-movant, Transocean. Transocean argues that these schematics show sale of the patented invention. This is a genuine issue of material fact sufficient to withstand summary judgment.

Obviousness

The district court also found all claims obvious as a matter of law in light of two prior art references (Horn in view of Lund).  On appeal, the CAFC agreed that Horn and Lund established a prima facie case of obviousness.  However,

Although we hold that Horn in view of Lund present a prima facie case of obviousness, this is not the end of the analysis. At the district court, Transocean presented significant objective evidence of nonobviousness. First, Transocean presented evidence of industry skepticism. A Transocean competitor, in an article discussing simultaneous drilling operations, stated that dual drill strings would be a “radical departure” from conventional systems and that there was a high potential for underwater collision.  Others in the field described dual activity as “not being realistic” for the same reasons.  Second, Transocean presented evidence of industry praise for its dual activity rig.  An industry publication called the invention one of the top 50 innovations in offshore drilling history. Transocean also cites other examples of praise from clients and competitors, including Maersk USA. Third, Transocean presented evidence that its implementation of the dual activity invention has been a commercial success. It showed that its dual activity rigs command a higher licensing premium than standard rigs. Finally, Transocean presented evidence that the success of its invention caused others to copy it, including Maersk USA.

[W]e hold that the district court erred by failing to consider Transocean’s objective evidence of nonobviousness.  Our case law is clear that this type of evidence “must be considered in evaluating the obviousness of a claimed invention.” . . . While it is true that we have held in individual cases that objective evidence of nonobviousness did not overcome the strong prima facie case – this is a case-by-case determination. . . . To be clear, a district court must always consider any objective evidence of nonobviousness presented in a case.

REVERSED-IN-PART, VACATED-IN-PART, AFFIRMED-IN-PART, and REMANDED

Read/download the opinion here (link)