ILNews

SCOTUS rules on patent exhaustion case

Back to TopCommentsE-mailPrintBookmark and Share
The U.S. Supreme Court has limited the ability of companies to collect royalties after the first sale of a patented product. The case tackled an issue of patent exhaustion that hasn't been ruled on in 66 years.

In a unanimous opinion this morning in Quanta Computer, et al. v. LG Electronics, No. 06-937, the nation's highest court said that longstanding patent law precedent extends to method patents that are often part of high-technology components and products.

"For over 150 years this Court has applied the doctrine of patent exhaustion to limit the patent rights that survive the initial authorized sale of a patented item," Justice Clarence Thomas wrote in the 22-page opinion. "Because the exhaustion doctrine applies to method patents and because the license authorizes the sale of components that substantially embody the patents in suit, the sale exhausted all patents."

Justices reversed a decision by the Federal Circuit Court of Appeals, which came in a case focusing on whether South Korean company LG could sue to force the computer suppliers to pay royalties on components they legally purchased from Intel, even though Intel already paid royalties to LG in a technology licensing agreement.

One of those companies sued was Quanta, which argued that it didn't have to pay royalties to the original patent holder because of the patent exhaustion doctrine that only applied to the first sale.

In its ruling, the court rejected arguments that patents are never exhaustible. It relied on precedent that it described as supplying "solid footing" and focused heavily on the one last tackling this issue, U.S. v. Univis Lens Co., 316 U.S. 241 (1942) that involved patents for finished eyeglass lenses.

Indianapolis attorney Todd Vare with Barnes & Thornburg, who wasn't involved in this case but has watched it closely, urged other intellectual property lawyers to carefully review this opinion, whether they represent patent-holders, licensees or those offering patent indemnification.

"This could dramatically change patent licensing programs," he said, though he noted the ruling wasn't a surprise given the court's history in recent years of scaling back patent rights.
ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
2015 Distinguished Barrister &
Up and Coming Lawyer Reception

Tuesday, May 5, 2015 • 4:30 - 7:00 pm
Learn More


ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. OK, now do something about this preverted anacronism

  2. William Hartley prosecutor of Wabash county constantly violates people rights. Withholds statement's, is bias towards certain people. His actions have ruined lives and families. In this county you question him or go out of town for a lawyer,he finds a way to make things worse for you. Unfair,biased and crooked.

  3. why is the State trying to play GOD? Automatic sealing of a record is immoral. People should have the right to decide how to handle a record. the state is playing GOD. I have searched for decades, then you want me to pay someone a huge price to contact my son. THIS is extortion and gestapo control. OPEN THE RECORDS NOW. OPEN THE RECORDS NOW. OPEN THE RECORDS NOW.

  4. I haven't made some of the best choices in the last two years I have been to marion county jail 1 and two on three different occasions each time of release dates I've spent 48 to 72 hours after date of release losing a job being denied my freedom after ordered please help

  5. Out here in Kansas, where I now work as a government attorney, we are nearing the end of a process that could have relevance in this matter: "Senate Bill 45 would allow any adult otherwise able to possess a handgun under state and federal laws to carry that gun concealed as a matter of course without a permit. This move, commonly called constitutional carry, would elevate the state to the same club that Vermont, Arizona, Alaska and Wyoming have joined in the past generation." More reading here: http://www.guns.com/2015/03/18/kansas-house-panel-goes-all-in-on-constitutional-carry-measure/ Time to man up, Hoosiers. (And I do not mean that in a sexist way.)

ADVERTISEMENT