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Suppose the following situation: A company is incorporated in a country other than U.S.A., which does not allow software patents (e.g. EU member countries). This company produces an invention as a result of its own research which is embodied as a software product. The results of this work are not screened for being patentable, because it's no even possible for this legal entity according to local law. The company is “in good will”, that it doesn't infringe anyone else's rights, selling the software internationally. Further suppose that there is a valid patent filed with the USPTO which covers portions of this company's idependent achievements.

What will be the legal consequences in the following cases:

  • the software product is sold in the US by means of electronic software distribution directly by the foreign company;
  • the software product is sold by a reseller incorporated in the US;
  • the company establishes a subsidiary in the US which then handles sales in the US?

Note that research and development in this case remains in a country which does not allow software patents.

Is the US patent holder empowered to file a lawsuit againts the foreign company / its reseller / its subsidiary in either case? Are there any other legal consequences, or claims made possible by either party?

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EU actually does grant “software patents” (patents on algorithms would be a more accurate term), but your question doesn't depend on that precise hypothesis, it could apply to any product that uses a technique patented in the US but not in the company's home country. –  Gilles Sep 6 '12 at 14:07
    
what about a web/internet only product/service with none of the web servers residing in the U.S. and the company not having a physical presence in the U.S. but that does have customers who are in the U.S.? –  codeslinger Oct 30 '13 at 18:27

2 Answers 2

up vote 4 down vote accepted

The holder of a valid US patent has two forums in which to assert its patent rights: Federal District Court and the International Trade Commission (ITC). In either forum, the court must have jurisdiction to try the case.

Generally speaking, a Federal District Court needs some "hook" to assert jurisdiction over a party. In the circumstances you describe, it seems likely that the reseller or subsidiary will be subject to the jurisdiction of at least one Federal District Court because the business exists or operates or has assets somewhere in the United States.

The ITC has the authority to prohibit the importation of goods into the United States. So even in the first circumstance you posit, the US company has recourse to halt the infringement (in the US) by bringing suit at the ITC.

In the Federal District Court both parties have the full panoply of rights and defenses normally available in the forum. At the ITC the parties face issues that are unique to that forum, such as proof of impact on a domestic industry, for example. But again, the rights and defenses of the parties within that forum are well established and fit the circumstances you propose.

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In all three cases, the company is selling the product in the U.S., and so can be sued in U.S. courts for infringing the U.S. patent. In the second case, the reseller would most likely also be named as a defendant in the lawsuit.

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