The Expanding Strength of U.S. Patents Beyond U.S. Shores

Nearly half a century ago, a dispute about shrimp led to the global expansion of U.S. patent rights.

In the 1960s, a series of shrimp deveining machines manufactured by the Deepsouth Packing Company were found to infringe patents owned by its competitor, Laitram Corporation. To circumvent the infringement finding and continue selling to its foreign customers, Deepsouth divided the machines into sub-assemblies, and shipped them abroad in three separate packages; the machines would then subsequently be assembled at customer sites. Because Deepsouth was manufacturing and selling the machines in pieces, the machines as a whole were, technically speaking, not “made” or “used” in the United States. And because the Patent Act at the time only prohibited such activities within U.S. borders, the Supreme Court concluded that Deepsouth's activities could not constitute patent infringement. But in doing so, the court acknowledged that Deepsouth was “artful” in exploiting a loophole in the U.S. patent laws, one which only Congress could properly close.

Thus began the expansion of the territorial reach of U.S. patents to capture activities beyond U.S. shores, despite the judiciary's repeated invoking of the “presumption against extraterritoriality” of U.S. Patents. That expansion is being revisited through another case the Supreme Court is reviewing this term—WesternGeco v. ION Geophysical—in which the court will determine whether profits lost overseas can properly be captured as damages for infringement of a U.S. patent.