Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Schlumberger fights to boost patent damages at U.S. Supreme Court

Published 04/16/2018, 12:48 PM
Updated 04/16/2018, 12:50 PM
© Reuters. The exterior of Schlumberger headquarters building is pictured in the Galleria area of Houston
SLB
-
IO
-

By Andrew Chung

WASHINGTON (Reuters) - The U.S. Supreme Court on Monday appeared divided over whether to make it easier for companies to recoup profits lost due to the unauthorized use of their patented technology overseas in a dispute involving Schlumberger NV (N:SLB), the world's largest oilfield services provider.

The nine justices heard about an hour of arguments that will resolve the amount of money that rival ION Geophysical Corp (N:IO) must pay for infringing Schlumberger technology that helps search for oil and gas beneath the ocean floor. Both companies are based in Houston.

Some justices, including conservative Justice Neil Gorsuch and liberal Justice Stephen Breyer, expressed concerns about applying U.S. patent laws abroad, while others indicated that Schlumberger should be fully compensated.

Schlumberger is appealing a lower court ruling that barred it from recovering $93.4 million in lost profits stemming from foreign contracts the company said it missed out on as a result of the infringement.

Schlumberger said federal patent law protects against infringement that occurs when components of a patented invention are supplied from the United States for assembly abroad, and so it should be fully compensated for its lost foreign sales.

Gorsuch and Breyer expressed skepticism about imposing damages based on the use of the technology by ION's overseas customers. Breyer said if other countries did the same it could pose problems for U.S. companies as well.

"I see chaos or confusion," Breyer said.

Conservative Justices Samuel Alito and Anthony Kennedy, as well as liberal Justice Sonia Sotomayor, signaled sympathy for Schlumberger.

Kennedy told ION's attorney Kannon Shanmugam that the company's position would confine patent owners in how they use their own patents and mean they would not be fully compensated for infringement. Shanmugam said that U.S. patent laws have a "presumption against extraterritoriality."

A decision in Schlumberger's favor would expand the ability of patent owners to recover foreign-based damages, increasing the threat posed by certain infringement suits in the United States.

Schlumberger said that the lower court ruling harms innovation by allowing companies to infringe competitors' patents while risking minimal punishment.

Other observers, including a group representing internet-based companies, said the opposite is true because extending patent damages beyond national borders would expose U.S. high-technology firms to greater patent-related risks overseas.

The case involves four patents owned by Schlumberger subsidiary WesternGeco related to an invention that more efficiently completes marine seismic surveys to help identify oil and gas drilling locations.

ION developed a competing system and sold it to surveying companies abroad. WesternGeco sued in 2009, and a federal jury in Houston found that Ion infringed the patents and caused the company to lose contracts. The jury awarded $12.5 million in royalties as well as the $93.4 million in lost profits.

In 2015, the Washington-based U.S. Court of Appeals for the Federal Circuit, which specializes in patent disputes, ruled that Schlumberger could not recoup the lost profits portion, saying U.S. patent law does not apply outside the country.

President Donald Trump's administration backed Schlumberger, and urged the justices to overturn the lower court ruling, which it said "systematically undercompensates" U.S. patent owners who participate in cross-border commerce.

© Reuters. The exterior of Schlumberger headquarters building is pictured in the Galleria area of Houston

The justices are due to issue their ruling by the end of June.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.