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Is Your Process Patent Being Circumvented? Housey Forces Another Look at Section 271 Protections for Information-Producing Patented Processes

BY Andrew J. Olek
September 01, 2003

Patents containing process claims, especially those where the result of the process is information, such as some research method, business method or software, Internet or telephone-based process patents, may be among the most valuable elements of a portfolio. If used defensively, such patents may provide a competitive advantage to the owner or prevent competitors from entering into a key line of business. If used offensively, these patents offer licensing opportunities on transactions that may occur millions of times per year. Potential licensees that wish to practice the patented processes described above, however, may choose a course other than licensing – practicing the process abroad and sending the resulting information back into the United States. The recent case of Bayer AG v. Housey Pharmaceuticals, Inc., No. 02-1598, slip op. (Fed. Cir. Aug. 22, 2003), construing 35 U.S.C. '271(g), may make it more difficult to enforce these process patents with respect to such outsourcing and importing activities.

Housey's 'Physical' Limitation

In Housey, the Federal Circuit held that '271(g), which imposes infringement liability for certain products imported into the United States that are made abroad by processes patented in the United States, is “limited to physical goods that were manufactured and does not include information generated by a patented process. …” This development is the latest step in the evolution of 35 U.S.C. '271, the section of the Patent Act that identifies who is a patent infringer. Since the inception of '271, parties have identified and exploited gaps in this provision, weakening the protection of patent owners. In response, Congress passed laws, such as the Patent Law Amendments Act of 1984 and the Process Patent Amendments Act (PPAA) of 1988, which added '271(f) and '271(g), respectively, to close these loopholes. After Housey, however, legislative action may again be necessary ' this time to protect information-based process patent claims.

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