Argument analysis: The word “substantial” may mean “a whole lot”
on Dec 7, 2016 at 10:30 am
The argument in Life Technologies v. Promega seemed to go well for the petitioners, Life Technologies, who argued that the statutory phrase “all or a substantial portion of the components of a patented invention” cannot refer to a single component of an invention, especially if that one component is merely a common commodity that has several non-infringing uses. Many of the justices’ questions seemed to be directed towards deciding not whether, but how, the decision below should be reversed.
The case involves a statute imposing patent infringement liability on U.S. companies that export “all or a substantial portion of the components of a patented invention” so as to actively induce a combination of components overseas that would infringe the patent if that combination occurred in this country. The U.S. Court of Appeals for the Federal Circuit held that supplying a single important component of a patented invention is sufficient to trigger liability under the statute; under that reading of the statute, the court held Life Technologies to be infringers of Promega’s patent. Life Technologies has asked the Supreme Court to overturn that ruling; the federal government, appearing as a “friend of the court,” also supports reversal.
Although the argument seemed to go well for Life Technologies, several of the justices seemed frustrated in trying to lock down precisely how to interpret the disputed statutory phrase. That frustration appeared to deepen as Zachary Tripp, arguing for the government, outlined a complicated position that interpreted “substantial portion of the components” to include a bright-line quantitative rule (“one [component] is never enough”) along with several qualitative factors (“look[ing] at the relative time, money, and effort” associated with each of the components). Dissatisfaction with the government’s approach led Justice Stephen Breyer to ponder whether “maybe the less said by us the better.” Breyer suggested that perhaps the court should simply say that a substantial portion means “a whole lot, tantamount to the whole lot, and good-bye.”
I for one would love to read a one-sentence Supreme Court opinion, especially if it ended with a nice “good-bye.” Yet even though the court is often wary of saying too much in reversing the Federal Circuit’s patent decisions, the opinion in this case will likely be a bit longer than one sentence. The oral argument provided some clues about the additional issues the justices are likely to address. Here are four points from the argument that I’ll be looking for in the opinion:
1. “Substantially all.” One of the oddest things about the oral argument is that multiple justices inaccurately paraphrased the statutory text as if it said “all or substantially all” of the components of a patent invention. Seth Waxman, representing Promega, noted the apparent misquotation at the beginning of his argument, politely stating:
Justice Breyer, I do want to correct one thing. You — you inadvertently kept saying this is all or substantially all. It’s not all or substantially all. It’s all or a substantial portion.
Yet a few minutes later, Justice Sonia Sotomayor seemed to assume that the relevant task for the court was to “give meaning to ‘all or substantially all’ the components.”
What to think of the repeated misquotations? My theory is that they are what card players would call “tells”—inadvertent, unintentional slips that reveal the other player’s thoughts. The apparent misquotations may show that several of the justices are leaning toward interpreting “substantial portion” to mean “substantially all” or, to use Breyer’s not-so-subtle tell, to mean “a whole lot.”
2. International trade and the extraterritorial application of U.S. patent law. In the wake of last month’s election and the recent deal to keep Carrier jobs in Indiana, everyone understands that international trade and jobs are big issues. And everyone includes advocates at the Supreme Court.
Carter Phillips, arguing on behalf of Life Technologies, began by stating that “this is largely an international trade case.” It’s easy to see how he could assert that. Under the Federal Circuit’s rule, a company with manufacturing operations in the U.S. can be held liable for exporting a single component if that component is later combined overseas to make a product covered by a U.S. patent. The company would have no liability, however, if it relocated its manufacturing operations outside the U.S. In other words, broad interpretations of this particular statutory provision create a powerful incentive to “offshore” manufacturing and its attendant jobs.
Yet despite the importance of international trade politically, it may not be truly important to the Supreme Court’s decision. No justice seemed willing to rely purely on international trade considerations to resolve the case. Furthermore, several justices, especially Chief Justice John Roberts, seemed to doubt that Life Technologies’ argument was bolstered by the canon against exterritorial application of U.S. statutes (a doctrine invoked by Life Technologies and the government as a means to limit the statute’s possible effects on international trade). As Roberts suggested, once a court is sure that Congress wanted a law to have extraterritorial effect, then the court should apply “normal principles of statutory interpretation” rather than continuing to apply the canon to narrow “the minutiae of every little clause” in the statute. As I noted in my preview of this case, the latter approach smacks of a judicial bias against such statutes and thus may be too aggressive an application of the canon.
3. Taq polymerase as a commodity. In his argument, Phillips repeatedly emphasized that the single component supplied from the U.S. in this case (Taq polymerase) was merely a common “commodity” with many non-infringing uses. This fact may be the strongest point for Life Technologies, and in my argument preview, I included an amazon.com link to emphasize that Taq polymerase really is a commodity.
Curiously enough, Waxman went out of his way during argument to assert that the Taq polymerase supplied as a component in this case was “very particular Taq polymerase … not your Amazon.com Taq that’s now available.”
Two thoughts on that. First, Life Technologies described Taq polymerase as a commodity in their question presented and throughout their opening brief. If the Taq polymerase needed for the patented invention were truly “very particular,” then Promega should have made that point somewhere in its brief, rather than waiting until oral argument. Second, even if this invention requires better than “your Amazon.com Taq that’s now available,” that point does not help Promega if the higher-quality Taq is also a commodity. Some cars need high-octane gas to run properly, but both regular and high-octane gas are commodities.
4. The statute’s inducement requirement. Promega placed a great deal of emphasis on the point that a U.S. company supplying a substantial portion of an invention’s components is not liable under the statute unless the supplier also has the intent to “induce” the overseas combination, and inducement in patent law requires some degree of encouraging another to infringe. Thus, as Waxman argued, “somebody who was simply responding to an order for supplies is in no way at risk” even if the Federal Circuit’s view is affirmed.
That point, I believe, is Promega’s best rejoinder to some of Life Technologies’ arguments about the statutory structure. In my preview, however, I said that the point was still not entirely convincing. I don’t think the justices were convinced either, and here’s why: The justices never asked Phillips or Tripp, the government’s lawyer, any questions about the implications of Promega’s inducement point. More than anything else, the justices’ apparent lack of interest in that argument makes me think that Promega will likely lose this case.
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In my argument preview, I predicted that Promega had a “substantial” chance of winning this case, but like Promega, I was willing to define “substantial” as merely 20 percent. What are the odds now? Well, maybe Promega’s chances are like the odds of a candidate behind in most polls winning an election, or the odds of team down three games to one winning the World Series. Surely, that chance can’t be “substantial,” can it? We will see soon enough. Oh, and good-bye!