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Discovery of Foreign Profits and Sales of Accused Products Found Relevant

On November 25, 2015, District Judge Laura Swain ordered defendant Bio-Rad to produce information related to foreign sales and profits of its Next Generation Chromatography (“NGC”) protein purification devices, overturning Magistrate Judge Netburn’s previous order that Bio-Rad need not produce such information.

Judge Swain explained, “[l]ong-established Federal Circuit precedent recognizes that, when an allegedly infringing product is produced in the United States and subsequently sold by the manufacturer to foreign buyers, the foreign sales are relevant to the determination of damages suffered as a result of the domestic act of infringement.”  2015 BL 389446, at *2 (citing Railroad Dynamics, Inc. v. A. Stuki Co., 727 F.2d 1506, 1509 (Fed. Cir. 1984) (sustaining damages award in form of royalties for foreign sales of infringing product produced in the U.S.)).

Bio-Rad’s argument in support of withholding foreign-sales information was based on an interpretation of the Federal Circuit’s statement in Power Integrations, Inc. v. Fairchild Semiconductor Intern., Inc., 711 F.3d 1348 (Fed. Cir. 2013) that “the entirely extraterritorial production, use or sale of an invention patented in the United States is an independent, intervening act that, under almost all circumstances, cuts off the chain of causation initiated by an act of domestic infringement.”  2015 BL 389446, at *2-3 (quoting Power Integrations, 711 F.3d at 1371-72).  Judge Swain, however, concluded that although Power Integrations concerns the presumption against territoriality, it neither addresses discovery regarding extraterritorial conduct, nor holds that extraterritorial conduct is entirely irrelevant to the determination of damages arising from infringement committed in the U.S.  Id. at 3.

Judge Swain held that Bio-Rad’s foreign-sales information is “relevant to GE’s claim for damages for allegedly infringing activities in the United States since it has, at a minimum, implications for the valuation of the invention.”  Even if GE were not entitled to lost profits, it might still be entitled to a “reasonable royalty for the use made of the invention by the infringer,” 35 U.S.C. § 284, and the profits that Bio-Rad obtained from foreign sales would be relevant to the determination of a reasonable royalty.

Case:  GE Healthcare Bio-Sciences AB v. Bio-Rad Labs., Inc., No. 14-CV-07080-LTS-SN, 2015 BL 389446 (S.D.N.Y. Nov. 25, 2015)