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[helensu]

If a US company engaging in sales and distribution of product A in US is sued by a patentee because the use of a module/component B infringes its patents (i.e. the B itself is the allegedly infringing product), not the finished goods A itself.

Ex.

Supplier (Taiwan) ---> Manufactuere (China) ---> Seller (US)

[Note] the US seller is affiliated with the Chinese manufacturer (they are sister companies to the same parent company).

Q1: Can the US company vouch-in the manufacturer? Implead the manufactuer? How about the supplier, the end liable person for such infringement? Vouch or implead?

Q2: What if there are more than one suppliers?

Q3: If it a DJ action, can the US seller or Chinese manufacturer sue patentee and the supplier(s) at the same time?

Q4: If there is NO written purchase agreement or indemnification agreement with the suppliers, will any answer to the above change?

[Isaac]

My understaning (and I have no litigation experience) is that
impleading is proper when the initial defendant's liability
is derivative or secondary to the party he wishes to implead.
This might or might not be the case for the hypothetical case
given here.  The defendant appears to be directly infringing
and it is not a given that the supplier or the manufacturer
were required to ensure that US law was not violated.  In fact
their activities might have been completely above board.

Also, there is the issue of whether the particular court hearing
the original claim can get jurisdiction over the putative defendants.

[davidlaw69]

There are several considerations:

1.    The supplier and the manufacturer may each be liable for contributory infringement or inducing infringement, assuming there is a basis for jurisdiction over them in the U.S.

2.  If there is a basis for U.S. jurisdiction over them, you might advise the patentee of their existence, and see if the patentee impleads them as additional defendants, at which time the the US seller can attempt to assert a cross-claim for indemnification.  The more suppliers the better (defendants may want to pool resources on common issues to reduce costs)

3.   Cases have held that a defendant in an infringement action cannot assert a claim of contribution (i.e., that damages should be divvied up according to degree of fault), but there is an argument to be made that a defendant can assert a claim of indemniity (damages should be shifted 100% from the innocent defendant to the truly guilty defendant).  I argued this in a case, but it never was decided as the matter became moot.

4.   The absence of a written indemnity agreement is not necessarily fatal.  The law recognizes equitable or implied indemnity in cases where an innocent defendant is made to suffer as a result of the wrongdoing of another.  Of course, it all boils down to the specific facts of your case.

David L. Finger
www.delawgroup.com

[helensu]

Thanks Isaac and David.

David, for your point 3 stated above, can we say that the importer of infringing goods without knowing the technology of a specific KEY component from the supplier(i.e. round up to 60~70% of the cost of a complete product) and without indemnification agreement with its direct manuafacturer (not to mention the manufacturer's supplier) CAN 100% shift the liability to either manufacturer or supplier?

[davidlaw69]

What you need to say is that the importer imported the goods without knowing or having reason to know that they contained an infringing item, and that equity and good consicence require that the seller of the foods containing the infringing item should be responsible for the damage.

One problem you may have is determining what country's law applies to the equitable indemnification claim.  That may be a function of the contract of sale.  The doctrine of equitable indemnification may be different or inapplicable if Chinese of Taiwanese law covers your relationship.

David L. Finger, www.delawgroup.com