SCOTUS Term: Extraterritorial remedies: How Far Will WesternGeco Go?

On Friday, the Supreme Court issued its opinion in WesternGeco v. Ion Geophysical Corp. The case involved a patent infringement claim. WesternGeco alleged that Ion Geophysical Corp. had manufactured component parts which it shipped overseas intending that they be integrated into a product for which WesternGeco held a US patent. The question before the Court was whether WesternGeco could recover damages for lost profits arising from sales of the product outside the United States, given the presumption against the extraterritorial application of U.S. statutes

                  In a 7-2 decision authored by Justice Thomas, the Court held that WesternGeco could indeed recover for the loss of profits from overseas sales. The Court held that it need not decide whether the presumption against extraterritoriality had been overcome (a difficult question that the Court acknowledged could have far-reaching effects) because “conduct relevant to the statutory focus in this case is domestic”—that is, the production of the component parts took place in the United States. Because the wrongful conduct took place within the US, the statute was not being applied extraterritorially.

                  Justice Gorsuch, joined by Justice Breyer, issued a dissenting opinion arguing that WesternGeco should not be allowed to recover for lost sales outside the US. The dissent pointed out that damages were being recovered for the foreign sales of the product—and those foreign sales did not themselves violate the U.S. Patent Act: “No doubt WesternGeco thinks it unfair that its invention was used to compete against it overseas. But that’s simply not the kind of harm for which our patent laws provide compensation because a U. S. patent does not protect its owner from competition beyond our borders.”

                  The Court’s decision is an interesting departure from its recent trend toward limiting litigation with foreign dimensions--a trend that Professor Pamela Bookman has called “Litigation Isolationism.” This decision potentially opens the door—at least a crack—to an increase in transnational cases. In allowing recovery based on foreign sales, Justice Thomas’s majority opinion criticizes the restrictive view held by Justices Gorsuch and Breyer, stating that the dissent’s “position wrongly conflates legal injury with the damages arising from that injury.” But of course, much litigation is driven by the possibility of damages—and this is doubly or triply true in transnational litigation, where the possibility of higher damages is a big part of what draws litigants to U.S. courts in the first place, “like a moth to the light.”

                  Going forward, the question will be how far the WesternGeco decision extends beyond its facts. Intellectual property lawyer Ronald Abramson has suggested that the logic of the decision is not “necessarily limited to patent damages,” and that it appears “to open up some more room for a full remedy for infringement (or other violation or tort), which addresses foreign consequences.” It remains to be seen whether the Court will in fact extend the decision in such a manner. Plaintiffs seeking a remedy for foreign harms caused by domestic action, however, will likely rely on WesternGeco’s rationale.