When Outsourcing Manufacturing Can Be A Patent Killer

In recent decades, companies seeking to reduce manufacturing costs and improve profit margins have increasingly employed contract manufacturing – that is, the outsourcing of partial or complete manufacturing of products to third party producers, particularly those in countries with lower labor costs such as China, India, and the like.

More recently, next generation manufacturers have explored the possibility of bringing manufacturing back in-house in an effort to better control quality and to take advantage of the noticeably softened U.S. labor market (colloquially referred to in manufacturing circles as "reshoring").

Last month, the U.S. Court of Appeals for the Federal Circuit provided yet another reason to consider rethinking the use of contract manufacturing. The Court provided a sobering lesson for patent owners that under certain circumstances, relying on contract manufacturing can be fatal to the validity of a patent. Unfortunately for the plaintiff in this