competitors do not infringe a combination patent if they merely manufacture the component parts within the United States and ship those parts overseas before assembling them into "operable" condition.15 This position was reached by construing very strictly the word "makes" in section 271(a) of the Patent Act.16 The leading case interpreting this provision of the Patent Act is the Second Circuit's decision in RCA v. Andrea.17 In that case, RCA had a combination patent on a type of radio receiver and Andrea began to manufacture similar radio sets for export abroad. The parts for these receivers-with the exception of vacuum tubes that were not placed in the sets prior to exportation-were manufactured and assembled by Andrea in its American plant. To make the set operable, the overseas buyer merely had to insert the vacuum tubes into the radio.18 The court held that RCA's combination patent did not cover the manufacture and sale of separate elements of the patented apparatus that never were combined to form the invention itself and that no direct or contributory infringement could occur unless the receivers were "made" operable within the United States. 19 The Andrea case came before the Second Circuit for a second time,20 because of additional evidence introduced by the plaintiff. In its final disposition of this case, the court found that prior to exportation the tubes had been inserted into the radios for testing purposes and that this constituted the requisite "combination" for holding Andrea liable for patent infringement.21 The court, however, did not overrule the position it had taken previously, but rather based its finding of infringement upon the factual distinction between nonassembly and temporary assembly for testing purposes.22 A number of cases with similar factual situations have arisen in the Third and Seventh Circuits since the Andrea decision. Based upon the underlying concepts that a combination patent protects only the combination and that monopolies conferred by patents are not to be viewed with favor,23 these circuits have followed the "final assembly test" articulated by the court in the first Andrea decision, and have held that no patent infringement can occur in the absence of a complete assembly of the device within the United States.24

15 Hewitt-Robins, Inc. v. Link-Belt Co., 371 F.2d 225 (7th Cir. 1966) (combination patent covers only totality of elements in claim and no element, separately viewed. is within the grant), Cold Metal Process Co. v. United Eng'r & Foundry Co., 235 F.2d 224 (3rd Cir. 1956) (in the case of a combination patent, the combination is not to be regarded as made until all its elements are completed); RCA v. Andrea, 79 F.2d 626 (2d Cir. 1935) (doctrine of contributory infringement permits elements of patented combination to be sold in the United States with intent that buyer make and use the invention abroad).

16 35 U.S.C. § 271 (a) (1970).

17 79 F.2d 626 (2d Cir. 1935).

18 Id. at 627.

19 "No wrong is done the patentee until the combination is formed. His monopoly does not cover the manufacture or sale of separate elements capable of being, but never actually, associated to form the invention. Only when such association is made is there a direct infringement of his monopoly, and not even then if it is done outside the territory for which the monopoly was granted." Id. at 628; see K. W. Ignition Co. v. Temco Elec. Motor Co., 283 F. 873 (6th Cir. 1922) (defendant held liable for patent infringement for exporting patented shock absorbers wholly made and assembled in the United States); Computing Scale Co. v. Toledo Computing Scale Co. 279 F. 648 (7th Cir. 1921) (defendant not liable for exporting parts of a patented scale to Canada when parts were assembled in Canada to form the combination and sold there); Bullock Elec. & Mfg. Co. v. Westinghouse Elec. & Mfg. Co., 129 F. 105 (6th Cir. 1904) (the making and selling of a single element of a patented combination, with the purpose that such element will be exported abroad and there used in combination with other elements, is not contributory infringement).

20 RCA v. Andrea, 90 F.2d 612 (2d Cir. 1937).

21 The court held that the tests were made to see if the radio receivers were marketable. Because this was a commercial use, the court stated that this violated the patent. Id. at 614.

In his dissent, Judge Swan, author of the first Andrea decision, states: "In holding that the sale in this country of the disassembled parts of the invention for assembly and use abroad is a direct infringement, I think we overrule our prior decision . . . ." Id. at 615 (Swan, J., dissenting).

23 Laitram Corp. v. Deepsouth Packing Co., 310 F. Supp. 926 (E.D. La. 1970).

24 In Hewitt-Robins, Inc. v. Link-Belt Co., 371 F.2d 225 (7th Cir. 1966), the Seventh Circuit concluded that manufacture and sale in this country of parts for a "reclaimer" device to be assembled outside the territorial limits of the United States do not fall within the purview of 35 U.S.C. § 271 (1970); therefore no patent infringement resulted. The court followed that a combination patent covers only the totality of the elements comprising the invention and that no element, separately viewed, is within the protection of the patent. The Third Circuit in Cold Metal Process Co. v. United Eng'r & Foundry Co., 235 F.2d 224 (3d Cir. 1956), held that the monopoly of the patient extends only to the making of the patented device within the United States; therefore steel rolling mills manufactured in the United States, but shipped unassembled to foreign countries, did not constitute patent infringement.

In the instant decision, the Court recognized that, in enforcing the patent laws, courts must consider not only the protection of the patent holder's invention but also the preservation of competition by restricting the growth of monopoly power through the patent device.25 In addition, the majority noted that, because the statute in question 26 clearly indicates that it is not an infringement to "make" or use a patented product outside the United States, the patentee, in order to establish a violation of the patent laws, must prove that the alleged infringer made or used the invention within the United States.27 Having found that the Andrea standard for determining when a patented apparatus is "made" within the United States represents the overwhelming weight of authority 28 and having concluded that existing patent rights should not be expanded in the absence of a clear directive to do so from Congress, the Court held that the export of a patented machine in less than fully assembled form does not infringe the combination patent. The dissent maintained that the Court had construed too narrowly the meaning of to "make" in section 271(a) and had erred in applying the Andrea rule, since the status of the first Andrea decision as controlling authority was weakened considerably by the Court's disposition of the case on rehearing. In addition, the dissent argued that the adoption of the Andrea standard would subvert the constitutional scheme of patent protection.29

Although the Court's definition of the term "made" as used in section 271(a), adequately protects the patentee when the combination is assembled completely within the United States, it affords no protection at all to the patent holder when a competitor manufactures all the elements of the combination within the United States and has them assembled abroad. Under these circumstances, the technical Andrea rule adopted by the Court in the instant case subverts the constitutional policy of promoting the sciences and the useful arts through affording an inventor the opportunity to control the use of his discovery for a limited period of time because it allows another producer to deprive the inventor of his right to the exclusive use of his patented product when that product is traded in the international market. By basing its decision on the premise that the patent should only protect the completed machine and not its individual unassembled elements, the Court failed to recognize that the ultimate purpose of the patent laws is to protect the inventor's unique idea and not just to control the use of the physical object that is constructed from that idea. An examination of cases that involve similar factual situations but fall under the copyright laws further indicates the inappropriateness of the Court's decision.30 In those cases, the courts generally proceed on the assumption that the copyright laws were designed to protect the copyright owner at the expense of the infringer and do not emphasize the anticompetitive effect of those laws.31 There does not appear to be any sound reason for drawing a distinction between the property rights created under the copyright laws and those created under the patent laws. Furthermore, the property right of the patent holder should be protected by giving the word "makes" an interpretation in keeping with the ordinary meaning of the term instead of a technical construction. This result could be achieved by utilizing the "substantial manufacture" test, which would involve balancing the public's right to use the constituent parts against the patent holder's right to control the use of his invention, for determining whether a patented object was made within the United States rather than the "final assembly" test that was applied in the Andrea case. Although the substantial manufacture test is more subjective and, as such, more difficult to apply than the final assembly test, it would provide the patent holder with considerably more protection than the Andrea rule. In addition, adoption of the final assembly test by the courts would force the American patent holder to pay patent fees and to bring infringement actions in

25 See cases cited note 12 supra.

35 U.S.C. § 271 (1970).

27 See note 3 supra.

28 See note 12 supra.

20 406 U.S. at 532-34.

20 See Mazer v. Stein, 347 U.S. 201 (1954).

E.g., Sheldon v. Metro-Goldwyn Pictures Corp., 309 U.S. 390 (1940) (defendant held liable for copyright infringement for making negatives of a motion picture here and exhibiting the positives abroad); Famous Music Corp. v. Seeco Records, Inc., 201 F. Supp. 560 (S.D.N.Y. 1961) (defendant's preparation of tapes that were sent to persons abroad to be used to manufacture phonograph records containing renditions of copyrighted muslcal compositions violated copyright law and involved company as joint tort-feasor in "manufacture").

numerous foreign countries, whereas, under the substantial manufacture test, one court could make a final determination of the patentee's rights.

APPENDIX D

Iowa Law Review, Vol. 57, No. 3 (February, 1972)

COMMENTS-TIGHTENING THE SCREWS ON MINOR ASSEMBLIES ABROAD: THE MEANING OF "MAKES" UNDER THE PATENT INFRINGEMENT STATUTE

In the recent case of Laitram Corp. v. Deepsouth Packing Co.,1 the United States Court of Appeals for the Fifth Circuit, despite directly conflicting authority in three other circuits,2 upheld the validity of a company's patents for certain shrimp-deveining machinery, by ruling that a minor final assembly, in a foreign country, of an identical machine manufactured by a rival company could not escape the reach of the federal patent infringement statute, 35 U.S.C. section 271.3 This section of the patent law provides that anyone who without authority makes any patented invention within the United States during the term of the patent, infringes the patent. Since the patent laws do not prohibit the manufacture of a patented article in another country, the question of patent infringement involved in Laitram goes directly to the heart of what constitutes the "making of an invention within the United States." 6

The answer to this interpretive dilemma is of paramount importance to the area of patent law. It is determinative of what comes within the reach of a patent claim and, therefore, will dictate substantial industrial policy in this Country. If "making within the United States" is construed so that a company, in order to escape liability under section 271, is permitted to manufacture the constituent elements of a patented invention leaving only a minor final assembly to be performed overseas, the result will be that the protection afforded a manufacturer, with a United States patent for inventions marketable overseas, is substantially less than that provided a manufacturer who sells a patented invention marketable solely within the United States. Thus, this interpretation of "making within the United States" will protect a manufacturer against patent infringement only where the patented invention is totally assembled within the United States prior to its sale or use in a foreign nation. This Comment will examine the Laitram decision to see what it adds to the development of the legal standards of patent infringement, urge its affirmance as in accordance with the congressional mandate in enacting section 271, and discuss policy arguments as to why the interpretation of the statute, which the case advances, should be upheld. Prior to this analysis of Laitram, however, it will be necessary to ascertain the state of the prior case law on the issue of patent infringement in similar fact situations where an alleged infringer has manufactured the constituent elements but does not complete final assembly until after the parts were shipped to a foreign country.

As indicated, three previous decisions have considered a patent infringement issue similar to that hypothesized and each reached a result opposite to that in Laitram. These cases permitted a manufacturer to make the constituent elements of a patented machine in the United States, assemble the elements once they arrive overseas, and sell the assmbled machine without being held in violation of section 271's prohibition against making a patented invention within the United States.8 Analysis of these decisions will show, however, that each reached an incorrect result in concluding that mere minor assembly of

1 443 F.2d 936 (5th Cir. 1971).

2 Hewitt-Robins, Inc. v. Link-Belt Co., 371 F.2d 225 (7th Cir. 1966); Cold Metal Process Co. v. United Eng'r & Foundry Co., 235 F.2d 224 (3rd Cir. 1956); Radio Corp. of America v. Andrea, 79 F.2d 626 (2d Cir. 1935).

3 443 F.2d 936, (5th Cir. 1971).

435 U.S.C. § 271 (1970).

(a) Except as otherwise provided in this title, whoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefor, infringes the patent. Id.

E.g., Brown v. Duchesne, 60 U.S. 183, 195 (1856); Radio Corp. of America v. Andrea, 79 F.2d 627, 628 (2d Cir. 1935); Bullock Elec. & Mfg. Co. v. Westinghouse Elec. & Mfg. Co., 129 F. 105, 109 (6th Cir.), cert. denied, 304 U.S. 573 (1904).

35 U.S.C. § 271 (1970).

See authority cited note 2 supra.

® Id.

the component parts in a foreign nation avoided direct infringement of the patent.

12

In the first of these infringement decisions, Radio Corp. of America v. Andrea, the defendants raised no question as to the validity or title of the plaintiff's patents. 10 Nor did they dispute that they would have "directly" infringed 11 the palintiff's patent if the elements which they had manufactured had been totally assembled for use in the United States. Rather, the defendants contended that the patented combination they had sold was incomplete and unassembled until it was out of the jurisdiction of the United States and the reach of its patent laws.13 Thus, they denied direct infringement.14 Additionally they argued that since they did not fall within the doctrine of contributory infringement, 15 they were not liable for infringement.16

In accepting the defendant's assertion that they did not infringe the platitiff's patent the court relied extensively on the contributory infringement test.17 The court stressed that the defendants escaped infringement because the elements which they manufactured had not been completely assembled within the United States, since they were shipped overseas for assembly.18 Thus, the court apparently adopted the theory that a manufactuer could escape infringement merely by sending the elements of the patented combination to a foreign country to be assembled even if it had the intent that the element be used there in combination with the other elements of the original patented invention.19

Even though the Andrea court held that there was neither direct nor contributory infringement, the ruling was substantially undermined in a modified opinion by the same court when confronted with the same fact situation.20 At this second trial 21 (Andrea II) new facts were admitted into evidence which showed that the component elements had been assembled for testing purposes in the United States and then disassembled for shipment overseas.22 Although the Andrea II court appeared to put major emphasis on the fact that the defendant had assembled the constituent elements in order to test the machine before shipment, it nevertheless explicitly recognized that the contributory infringement doctrine relates only to the aiding of another person by the sale of an element of the patented combination.23 The doctrine does not apply to the sale by a single manufacturer of all of the elements of the machine which are to be assembled abroad.24 The modified decision recognized, therefore, that the doctrine of contributory infringement was totally irrelevent to a factual situation where all of the constituent parts of a patented combination were shipped to a foreign nation for mere minor final assembly there.25 Based upon this analysis, it is readily apparent that the contributory infringement test is also irrelevent to the facts in the Laitram case since, in that case, more than a single element of a patented combination was manufactured by Deepsouth.26

79 F.2d 626 (2d Cir. 1935). 10 Id. at 627.

11 To constitute direct infringement "it is essential that there be present in the infringing device or combination every element of such [patent] claim. so combined as to produce substantially the same result operating in substantially the same way." Safety Car Heating & Lighting Co. v. Gould Coupler Co., 230 F. 848, 851 (D.C.N.Y. 1916). 12 Radio Corp. of America v. Andrea, 79 F.2d 626, 627 (2d Cir. 1935).

13 Id.

14 Id.

15 35 U.S.C. § 271 (c) (1970).

(c) Whoever sells a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same part to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity suitable for substantial noninfringing use, shall be liable as a contributory infringer. Id.

1 Radio Corp. of America v. Andrea, 79 F.2d 626, 627 (2d Cir. 1935).

17 Id. at 628-29.

18 Id. at 628.

19 More recent decisions have stated that there can be no contributory infringement without a direct infringement. 35 U.S.C. § 271 (c) (1970); Aro Mfg. Co., Inc. v. Convertible Top Replacement Co., Inc., 365 U.S. 336, 341 (1961); Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661, 677 (1944) (Frankfurter, J. dissenting).

20 Radio Corp. of America v. Andrea, 90 F.2d 612 (2d Cir. 1937).

21 Id.

25 Laitram Corp. v. Deepsouth Packing Co., 443 F.2d 936, 937 (5th Cir. 1971).

23-932-74-45

To further undermine the precedential value of Andrea I, the Andrea II court went on to state explicitly that if the components of a patented invention are sold in a substantially unified and combined form, direct infringement cannot be avoided by leaving a minor final integration to the purchaser.27 This statement describes the exact situation which was presented to the Laitram court. After an injunction was issued which prohibited Deepsouth and its affiliate Skrmetta Machinery Corporation from "making, using, or selling the infringing apparatus," ,"28 Skrmetta subsequently wrote a prospective foreign customer as follows:

We are handicapped by a decision against us in the United States. This was a very technical decision and we can manufacture the entire machine without any complication in the United States, with the exception that there are two parts that must not be assembled in the United States, but assembled after the machine arrives in Brazil. This assembly will take less than one hour.29

It is obvious then that the Court of Appeals for the Fifth Circuit in deciding Laitram must have recognized that it was the clear intent of Deepsouth and its affiliate company Skrmetta to try to use a technicality of minor assembly overseas to escape the protection given to the original patentee by the United States patent laws. The Fifth Circuit thus correctly recognized that regardless of whether the deveining machine had been assembled for testing purposes, it was the expectation of the foreign customer when it paid Skrmetta Machinery Corporation in United States currency that it would receive a "complete machine" not just a component part or parts. Therefore, in reality, Deepsouth was selling Laitram's patented machine with the commercial result for Laitram of the deprivation of a possible sale on a machine which, according to its patent, it had the right to exclude others from making and selling in the United States.30

There are only two other cases which deal with the infringement issues presented in the Andrea and Laitram cases. In Cold Metal Process Co. v. United Engineering & Foundry Co.,31 the Third Circuit followed the first Andrea case stating:

We are in full accord with the rule thus laid down in the Andrea case and we think that the master and the district court were right in applying it here. Its force, in our view, is not impaired by the later opinion of the court after final hearing in the same case. . . which held that the defendant had infringed the combination patent there sued on in view of evidence that the radio sets in question had been completely assembled in this country and tests of operation made after which they were disassembled and shipped to purchasers alroad. We do not quarrel with the conclusion of the court that such assembling and testing constituted a making and use of the patented combination in this country. In the present case, however, no such assembling or testing in this country took place. Accordingly, the rule laid in the first Andrea opinion applies here rather than that stated in the second.32

Therefore, the Third Circuit in Cold Metal was merely following what has already been shown as an incorrect reading of the Andrea II case.33 The court in the Andrea II decision did not rely entirely on the testing aspect of the assembly to hold that the manufacturing involved constituted infringement.34 This latter decision in the case recognized that direct infringement could not be avoided by a separation or division of parts which leaves to the purchaser a simple task of integration.35

The last of the cases which deals directly with the patent question raised in Laitram is Hewitt-Robins, Inc. v. Link-Belt Co.36 which involved substantial, not merely minor, assembly overseas.37 In that case the Seventh Circuit stated that:

27 Radio Corp. of America v. Andrea, 90 F.2d 612, 613 (2d Cir. 1937).

28 Laitram Corp. v. Deepsouth Packing Co., 443 F.2d 936, 938 (5th Cir. 1971).

29 Id.

30 Although none of the cases concerned with the activity dealt with in this Comment consider the infringement of a patent by "selling" the manufactured parts that are not completely assembled, this activity is also prohibited if done within the United States, 35 U.S.C. § 271 (a) (1970).

31 235 F.2d 224 (3rd Cir. 1956).

32 Id. at 230.

33 See text accompanying notes 19-29 supra.

34 Radio Corp. of America v. Andrea, 90 F.2d 612, 613 (2d Cir. 1937).

35 Id.

26 317 F.2d 225 (7th Cir. 1966).

37 See id. at 227-28.